Five Star rejects $325 million bid for properties

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Five Star Quality Care Inc. has rejected a $325 million bid for 33 senior living properties that it owns, according to documents filed with the U.S. Securities and Exchange Commission and posted on Five Star's website.

The offer was revealed in a formal letter of intent included as part of a Dec. 15 filing by William F. Thomas of Tulsa, OK-based GPA Inc. The document notes that Newton, MA-based Five Star “did not respond favorably to the proposal” when it was first made in a meeting Nov. 30 and that Five Star appears not to have changed its mind since then. GPA maintains that the offer would benefit Five Star, however.

“If we acquired, through our operating company, Five Star's owned properties, Five Star could monetize these assets, which the markets currently do not fully value, while simultaneously raising the capital required to unlock its intrinsic, long-term value without diluting shareholders and without diluting the Company's EPS,” or earnings per share, Thomas wrote in his letter to Five Star President and CEO Bruce J. Mackey Jr. Thomas requested a response after Five Star's upcoming board meeting.

“We strongly believe that the ideas presented in November create a compelling path for all related entities through a long-term alignment of interests,” Thomas said in a Dec. 15 letter to Five Star Managing Director Barry M. Portnoy that was included as part of the SEC filing. Portnoy was part of the Nov. 30 meeting. “When Five Star succeeds, Senior Housing Properties Trust and The RMR Group both benefit financially,” Thomas continued. The real estate investment trust formed Five Star Quality Care in 2000 to manage several of its senior living properties, and the RMR Group provides management services to Five Star. Senior Housing Properties Trust President and COO David J. Hegarty also attended the Nov. 30 meeting.

William F. Thomas and Robert D. Thomas are the co-founders and managing partners of GPA, Gemini Properties and Senior Star Management Co. Gemini is an investment holding company, and Senior Star is a privately held company that owns senior living communities in Iowa, Illinois, Missouri, New Mexico, Ohio and Oklahoma.

In a Dec. 2 SEC filing, Gemini and the Thomases reported they continue to watch Five Star and may continue to purchase its stock. Gemini owns more than 1.8 million shares (3.7%) of Five Star common stock, and the Thomases own or potentially control an additional 6 million shares (12%) of the stock, according to the filing.

Five Star Quality Care operates more than 260 senior living communities across the country — with offerings including independent living, assisted living, memory care, skilled nursing, rehabilitation and continuing care retirement — through its Five Star Senior Living division.

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