Diversified Healthcare Trust, Office Properties Income Trust Cancel Merger Agreement, Leaving DHC’s Future in Question

by Jeff Shaw

NEWTON, Mass. — Diversified Healthcare Trust (NASDAQ: DHC) and Office Properties Income Trust (NASDAQ: OPI) have mutually agreed to terminate their previously announced merger agreement dated April 11, 2023, pursuant to which OPI had agreed to acquire all outstanding common shares of DHC. 

The mutual termination was approved by the respective special committees and boards of trustees of OPI and DHC. The parties have agreed that each company will bear its costs and expenses in connection with the terminated transaction pursuant to the terms of the merger agreement, and that neither party will pay any termination fee as a result of the mutual decision to terminate the merger agreement.

Several large shareholders, including Flat Footed, a Wyoming-based investor that owns 9.8 percent of DHC, vocally opposed the merger. The shareholder vote was canceled, presumably when the companies realized the merger would not pass.

The RMR Group (NASDAQ: RMR), an alternative asset management firm based in Newton, manages both REITs and acquires properties on behalf of the entities. RMR also makes acquisitions on behalf of Service Properties Trust and Industrial Logistics Properties Trust.

The failure of the merger transaction leaves the future of DHC in doubt. In its second-quarter 2023 financial results, the company said “there is substantial doubt about its ability to continue as a going concern.” The REIT defaulted on its $450 million credit facility in June, as the appraised value of the collateral properties dropped 22 percent in a year and a half.

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