Just weeks after AlerisLife was taken private in what we would call a bit of an inside deal, the REIT that owns most of its assets, Diversified Healthcare Trust (DHC), is being merged into Office Properties Income Trust (OPI), an office REIT with current tenant retention of about 50%. You know what they say when you have two lemons, time to make some lemonade. A little sugar may have to be added to make this one sweet enough.
DHC had fallen on hard times, with a market cap of just under $300 million and a quarterly dividend of just one penny per share. Oh, and the share price had a range of $0.61 to $2.98 per share in the last 12 months, but had been over $8.00 per share in March 2020. In the merger with OPI, DHC shareholders will receive OPI shares for an implied value of $1.70 per DHC share. This comes to a 20% premium. Thanks for nothing over the years.
The new name for the merged entity will be Diversified Properties Trust, and OPI’s senior management will be running the show. But no need to shed a tear for DHC management. DHC CEO Jennifer Clark will still have her job at The RMR Group, which had been the manager of both DHC and OPI, as will Secretary Jennifer Clark and CFO Richard Seidel. And who controls RMR? None other than Adam Portnoy, who also controls AlerisLife, DHC and OPI. Don’t you love it when a plan comes together.
