Diversified Healthcare Trust shareholder Flat Footed filed a preliminary proxy statement with the Securities and Exchange Commission on Wednesday formally expressing opposition to the real estate investment trust’s proposed merger with Office Properties Income Trust.
The investor has a 9.4% stake in Newton, MA-based DHC.
The REIT, with a senior housing operating portfolio that included 237 communities with 25,346 living units as of April, entered into an agreement in April to combine with OPI. The merger is expected to be completed in the third quarter, resulting in a REIT named Diversified Properties Trust.
In the deal, OPI would acquire all of the outstanding common shares of DHC in an all-share transaction, which was unanimously recommended by special committees of the respective boards of OPI and DHC and then unanimously approved by the respective full boards. It is subject to the approval of DHC and OPI shareholders and other customary closing conditions.
The deal won’t happen, however, if Flat Footed has anything to say about it.
Per the preliminary proxy statement, the investor is soliciting proxies from holders of DHC common shares to vote against each of DHC’s proposals at a special meeting. The date of the meeting has not yet been announced.
“We believe the board of trustees has failed DHC’s stakeholders by pursuing the proposed merger, which would unnecessarily burden the company with OPI’s rapidly declining commercial office properties,” the shareholders wrote. The deal, they said, disproportionately benefits OPI and the RMR Group “at DHC’s direct expense.” The RMR Group manages both DHC and OPI.
Flat Footed’s SEC filing includes a proposal to adjourn the special meeting to a later date.
The SEC filing follows a May 23 public letter in which the shareholder said that it intended to vote against the proposed merger. Flat Footed said that DHC has not yet responded to its letter.
DHC had not responded to a request for comment from the McKnight’ Business Daily by the production deadline.
