SENIOR HOUSING PROPERTIES TRUST (NASDAQ:SNH) Files An 8-K Other EventsItem 8.01. Other Events.
As previously reported in our Quarterly Report on Form10-Q for the quarter ended September30, 2017, or our Quarterly Report, on November8, 2017, we entered a transaction agreement with Five Star to which we agreed to acquire six senior living communities from Five Star for an aggregate purchase price of approximately $104.0 million, including our assumption of approximately $34.0 million of mortgage debt securing certain of these senior living communities and excluding closing costs. On December27, 2017 and January19, 2018, we acquired, and Five Star began managing for our account, two of these senior living communities located in Alabama and Indiana and one of these senior living communities located in Tennessee, respectively, for an aggregate purchase price of approximately $58.8 million. In connection with those acquisitions, we entered management agreements with Five Star for each of these senior living communities and two new pooling agreements with Five Star. The remaining acquisitions under the transaction agreement are expected to occur as third party approvals are received between now and the end of the first quarter of 2018.
The foregoing references to the transaction agreement and to our management and pooling agreements with Five Star are qualified in their entirety by reference to the descriptions of those documents included in our Quarterly Report under “Item 5. Other Information” and to the full text of the transaction agreement, including the forms of management and pooling agreements and other exhibits and schedules thereto, a copy of which is incorporated by reference as Exhibit10.1 to this Current Report on Form8-K and to the copies of Pooling Agreement No.12 and Pooling Agreement No.13 filed as Exhibits 99.1 and 99.2 to this Current Report on Form8-K.
Information Regarding Certain Relationships and Related Person Transactions
Five Star was our 50% owned subsidiary until we distributed its common shares to our shareholders in 2001. We are currently one of Five Star’s largest stockholders, owning, as of September30, 2017, 4,235,000 of Five Star’s common shares, or 8.5% of Five Star’s outstanding common shares. Five Star is our largest tenant and the manager of our managed senior living communities. One of our Managing Trustees, Barry Portnoy, is a managing director of Five Star. Five Star’s chief financial officer and treasurer was formerly our Chief Financial Officer and Treasurer. The RMR Group LLC, or RMR LLC, provides management services to both us and Five Star. The RMR Group Inc., the managing member of RMR LLC, is controlled by ABP Trust, which is owned by Barry Portnoy and his son, Adam Portnoy. A subsidiary of ABP Trust is currently Five Star’s largest stockholder, owning, as of September30, 2017, 17,999,999 of Five Star’s common shares, or 36.0% of Five Star’s outstanding common shares. Five Star’s president and chief executive officer, chief financial officer and treasurer and senior vice president and general counsel are officers of RMR LLC. Our executive officers are officers of RMR LLC. Because of the continuing relationships between us and Five Star, the terms of the transaction agreement and our management and pooling arrangements with Five Star were negotiated and approved by special committees of our Board of Trustees and Five Star’s board of directors composed of our Independent Trustees and Five Star’s independent directors who are not also Trustees or directors of the other party, which committees were represented by separate counsel.
For further information about these and other such relationships and related person transactions, please see our Quarterly Report, our Annual Report on Form10-K for the year ended December31, 2016, or our Annual Report, our definitive Proxy Statement for our 2017 Annual Meeting of Stockholders, or our Proxy Statement, and our other filings with the Securities and Exchange Commission, or the SEC, including Notes 10, 11, and 12 to our condensed consolidated financial statements included in our Quarterly Report and the sections captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements” of our Quarterly Report, Notes 5, 6, and 7 to our consolidated financial statements included in our Annual Report and the sections captioned “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements” of our Annual Report and the section captioned “Related Person Transactions” and the information regarding our Trustees and executive officers included in our Proxy Statement. In addition, please see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise as a result of these and other such relationships and related person transactions. Our filings with the SEC and copies of certain of our agreements with these related parties are publicly available as exhibits to our public filings with the SEC and accessible at the SEC’s website, www.sec.gov.
