REITs Agree to Distribute Ownership of RMR
Management Company to Their Shareholders; RMR Agrees to Seek
Listing on National Stock Exchange; RMR Management Agreements
Amended and Extended for 20 Year Terms
Further Aligns Interests of RMR Management,
REITs and REITs’ Shareholders; Provides Greater Transparency into
RMR Management; REITs Continue to Benefit from Low Cost Management
Structure
Senior Housing Properties Trust (NYSE:SNH), Hospitality
Properties Trust (NYSE:HPT), Select Income REIT (NYSE:SIR) and
Government Properties Income Trust (NYSE:GOV) (each a “REIT” and,
collectively, the “REITs”) today announced that they have acquired
combined economic ownership of approximately half of Reit
Management & Research LLC (“RMR”). Each of the REITs is managed
by RMR and, simultaneously with the REITs’ acquisition of ownership
in RMR, the management agreements with RMR were amended and
extended for 20 year terms. The REITs’ ownership in RMR is held
indirectly through a new holding company of RMR (“RMR INC”).
Pursuant to the agreements entered for this transaction, the REITs
have agreed to distribute approximately half of the RMR INC shares
held by them to their shareholders as a special dividend, and RMR
INC has agreed to facilitate this by filing a registration
statement with the Securities and Exchange Commission (the “SEC”)
to register the RMR INC shares to be distributed and by seeking a
listing of those shares on a national stock exchange upon the
registration statement being declared effective by the SEC.
The purchase price paid by each REIT for its respective
ownership in RMR INC was paid to the historical owners of RMR by
delivery of restricted common shares of each REIT, which are
subject to 10 year lock up agreements and which were valued at the
volume weighted average trading prices for each REITs’ common
shares during the 20 trading days prior to the acquisition, and
cash as follows:
Number of Value of Restricted REIT
Restricted REIT ($ in millions) Common Shares Common Shares Cash
Total SNH 2,345,000 $ 46.8 $ 14.0 $ 60.8 HPT 1,490,000 $ 45.2 $
12.6 $ 57.8 SIR 880,000 $ 20.6 $ 15.9 $ 36.5 GOV 700,000
$ 13.8 $ 3.9
$ 17.7 Total $ 126.4 $ 46.4 $ 172.8
As a result of these transactions, the REITs’ economic ownership
in RMR is as follows:
Shareholder Economic Ownership in
RMR SNH 17.0% HPT 16.2% SIR 10.2% GOV
5.0%
Subtotal REITs
48.4%
Historical Owners of RMR
51.6%
Total
100.0%
It is expected that upon completion of the anticipated
distribution of RMR INC shares to the REITs’ shareholders and
listing of those shares, approximately 24.2% economic ownership in
RMR will be publicly traded. The remaining RMR INC shares held by
the REITs which are not distributed to the REITs’ shareholders will
be unregistered, but these RMR INC shares will not be subject to
any lock up provisions and the REITs will have certain registration
rights for the RMR INC shares that they retain.
In addition to the value of the RMR INC shares distributed to
the REITs’ shareholders, the expected benefits of these
transactions to the REITs’ shareholders include:
- Further alignment of interests among
RMR management, the REITs and the REITs’ shareholders because the
REITs and their shareholders own RMR INC shares.
- Further alignment of interests among
RMR management, the REITs and the REITs’ shareholders because the
historical owners of RMR have become owners of a significant number
of restricted shares of each of the REITs and those shares are
subject to 10 year lock up agreements.
- Providing greater transparency for the
REITs’ shareholders into RMR management, including RMR’s financial
and operating results.
- The REITs will continue to benefit from
low general and administrative costs which RMR management provides
to each REIT.
As of March 31, 2015, RMR had total real estate assets under
management of approximately $22 billion, and the total management
fee revenues of RMR were approximately $200 million for the twelve
months ended March 31, 2015. As of March 31, 2015, RMR managed over
1,000 properties, located in 48 states, Washington, DC, Puerto
Rico, Canada and Australia. RMR currently has approximately 400
employees in 25 offices located throughout the United States.
In addition to managing the REITs, RMR provides management
services to other publicly traded and private businesses,
including: TravelCenters of America, LLC (NYSE: TA), an operator of
travel centers along the U.S. Interstate Highway System, some of
which are owned by HPT; Five Star Quality Care, Inc. (NYSE: FVE),
an operator of senior living communities, some of which are owned
by SNH; Sonesta International Hotels Corporation (“Sonesta”), a
privately owned manager and franchisor of hotels in the U.S., Latin
America, and the Middle East, some of which are owned by HPT; as
well as other privately held businesses. Also, a subsidiary of RMR,
RMR Advisors LLC (“Advisors”), is a SEC registered investment
advisor that manages a mutual fund which invests in securities of
unaffiliated real estate companies, RMR Real Estate Income Fund
(NYSE MKT: RIF). As RMR INC shareholders, the REITs and their
shareholders will benefit from these agreements, as well as from
the extended RMR management agreements with the REITs and any new
business RMR may successfully undertake in the future.
The transactions announced today were accomplished by means of a
so called “UP-C” transaction structure pursuant to which the
historical owners of RMR have retained 10:1 voting rights in RMR
INC so long as they do not sell their ownership interests in RMR to
unrelated third parties. The details of RMR’s historical financial
performance and other information about the transactions described
in this press release will be set forth in a registration statement
to be filed by RMR INC with the SEC. The REITs currently expect to
distribute the RMR INC shares to their shareholders before year end
2015.
Morgan Stanley & Co. LLC acted as financial advisor to a
Joint Special Committee of Independent Trustees of the REITs in
connection with the transactions described in this press release.
In addition: Centerview Partners LLC acted as financial advisor to
a Special Committee of SNH’s Independent Trustees; Houlihan Lokey
Capital, Inc. acted as financial advisor to a Special Committee of
HPT’s Independent Trustees; FBR Capital Markets & Co. acted as
financial advisor to a Special Committee of SIR’s Independent
Trustees; and Reynolds Advisory Partners, LLC acted as financial
advisor to a Special Committee of GOV’s Independent Trustees.
SNH is a REIT which owns senior living communities, medical
office and biotech research properties and other healthcare related
real estate located in 39 states and Washington DC. HPT is a REIT
which owns a diverse portfolio of hotels and travel centers located
in 44 states, Puerto Rico and Canada. SIR is a REIT which owns
properties that are primarily net leased to single tenants located
throughout the United States as well as leased lands on the Island
of Oahu, HI. GOV is a REIT which owns properties primarily leased
to the U.S. Government, the United Nations and various state
governments located throughout the United States. SNH, HPT, SIR and
GOV are headquartered in Newton, MA.
WARNING REGARDING FORWARD
LOOKING STATEMENTS
THIS PRESS RELEASE INCLUDES FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
AND OTHER SECURITIES LAWS. ALSO, WHENEVER THE REITS USE WORDS SUCH
AS BELIEVE, EXPECT, INTEND, ANTICIPATE OR SIMILAR EXPRESSIONS, THEY
ARE MAKING FORWARD LOOKING STATEMENTS. THE FORWARD LOOKING
STATEMENTS IN THIS PRESS RELEASE ARE BASED UPON THE REITS’ CURRENT
BELIEFS AND EXPECTATIONS, BUT THESE FORWARD LOOKING STATEMENTS ARE
NOT GUARANTEED TO OCCUR AND THEY MAY NOT OCCUR FOR VARIOUS REASONS,
INCLUDING SOME REASONS WHICH ARE BEYOND THE REITS’ CONTROL. FOR
EXAMPLE:
- THIS PRESS RELEASE STATES: THE PURCHASE
PRICE PAID BY EACH REIT FOR ITS OWNERSHIP IN RMR INC (AND ITS
ECONOMIC OWNERSHIP IN RMR); THAT MORGAN STANLEY & CO. LLC ACTED
AS FINANCIAL ADVISORS TO A JOINT SPECIAL COMMITTEE OF THE REITS’
INDEPENDENT TRUSTEES; AND THAT OTHER INVESTMENT BANKS ACTED AS
FINANCIAL ADVISORS TO SPECIAL COMMITTEES OF EACH REIT. AN
IMPLICATION OF THESE STATEMENTS MAY BE THAT ANY RMR INC SHARES TO
BE DISTRIBUTED TO THE REITS’ SHAREHOLDERS WILL HAVE MARKET VALUE AT
LEAST EQUAL TO THE VALUE PAID BY THE REITS FOR THOSE SHARES. IN
FACT, THE VALUE OF THE RMR INC SHARES MAY BE DIFFERENT FROM THE
PRICES PAID BY THE REITS. THE MARKET VALUE OF RMR INC SHARES WILL
DEPEND UPON VARIOUS FACTORS, INCLUDING SOME THAT ARE BEYOND THE
REITS’ CONTROL, SUCH AS MARKET CONDITIONS GENERALLY AT THE TIME THE
RMR INC SHARES ARE AVAILABLE FOR TRADING. THERE CAN BE NO ASSURANCE
PROVIDED REGARDING THE PRICE AT WHICH RMR INC SHARES WILL TRADE IF
AND WHEN THEY ARE DISTRIBUTED AND LISTED.
- THIS PRESS RELEASE STATES THAT THE
MANAGEMENT AGREEMENTS BETWEEN THE REITS AND RMR HAVE BEEN AMENDED
AND EXTENDED FOR 20 YEAR TERMS. IN FACT, EACH MANAGEMENT AGREEMENT
INCLUDES TERMS WHICH PERMIT EARLY TERMINATION IN CERTAIN
CIRCUMSTANCES. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THESE
AGREEMENTS WILL REMAIN IN EFFECT FOR 20 YEARS OR FOR SHORTER OR
LONGER TERMS.
- THIS PRESS RELEASE STATES THAT THE
TOTAL REAL ESTATE ASSETS UNDER MANAGEMENT OF RMR WAS APPROXIMATELY
$22 BILLION AS OF MARCH 31, 2015 AND THAT MANAGEMENT FEE REVENUES
OF RMR WERE APPROXIMATELY $200 MILLION FOR THE TWELVE MONTHS ENDED
MARCH 31, 2015. AN IMPLICATION OF THESE STATEMENTS MAY BE THAT
RMR’S REAL ESTATE ASSETS UNDER MANAGEMENT AND REVENUES WILL
CONTINUE AT THESE LEVELS OR EVEN INCREASE IN THE FUTURE. IN FACT,
THE REAL ESTATE ASSETS UNDER MANAGEMENT AND THE MANAGEMENT FEES
WHICH RMR EARNS ARE BASED UPON RMR’S CURRENT MANAGEMENT AGREEMENTS
AND, AS NOTED ABOVE AND BELOW, RMR’S CURRENT MANAGEMENT AGREEMENTS
MAY BE TERMINATED. FURTHERMORE, THE MANAGEMENT FEES WHICH RMR EARNS
ARE BASED UPON FORMULAS IN EACH AGREEMENT WHICH MAY CAUSE THOSE
FEES TO DECLINE. ALSO, THERE CAN BE NO ASSURANCE THAT RMR WILL
SUCCEED IN UNDERTAKING NEW BUSINESS ACTIVITIES IN THE FUTURE.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT RMR’S REAL ESTATE
ASSETS UNDER MANAGEMENT AND REVENUES WILL INCREASE, AND RMR’S REAL
ESTATE ASSETS UNDER MANAGEMENT AND REVENUES MAY DECLINE IN THE
FUTURE.
- THIS PRESS RELEASE REFERENCES THE FACTS
THAT RMR AND ITS SUBSIDIARY, ADVISORS, HAVE MANAGEMENT AGREEMENTS
WITH BUSINESSES OTHER THAN THE REITS, INCLUDING TA, FVE, SONESTA,
RIF AND OTHERS, UNDER WHICH RMR ALSO RECEIVES MANAGEMENT FEES. IN
FACT, RMR’S AND ADVISORS’ CONTRACTS WITH TA, FVE, SONESTA, RIF AND
OTHERS HAVE ONE YEAR TERMS, RENEWABLE ANNUALLY, AND ARE TERMINABLE
IN CERTAIN CIRCUMSTANCES. THERE CAN BE NO ASSURANCE THAT RMR WILL
CONTINUE TO RECEIVE MANAGEMENT FEES FROM THESE RMR MANAGEMENT
AGREEMENTS IN THE FUTURE.
- THIS PRESS RELEASE STATES THAT THE
REITS CURRENTLY EXPECT THAT RMR INC SHARES WILL BE DISTRIBUTED TO
THE REITS’ SHAREHOLDERS BEFORE YEAR END 2015. THE PROCESS OF
PREPARING A REGISTRATION STATEMENT WILL REQUIRE EXTENSIVE LEGAL AND
ACCOUNTING SERVICES AND IS LIKELY TO TAKE CONSIDERABLE TIME. AFTER
A REGISTRATION STATEMENT IS FILED WITH THE SEC, IT WILL BE SUBJECT
TO REVIEW BY THE SEC STAFF, WHICH MAY ALSO TAKE CONSIDERABLE TIME.
THE LISTING OF THE RMR INC SHARES ON A NATIONAL STOCK EXCHANGE WILL
ALSO BE SUBJECT TO RMR INC’S SATISFACTION OF LISTING REQUIREMENTS
AND APPROVAL OF THE APPLICABLE STOCK EXCHANGE. THE REITS CAN
PROVIDE NO ASSURANCE WHEN OR IF THE REGISTRATION STATEMENT WILL BE
DECLARED EFFECTIVE BY THE SEC, THAT THE SHARES WILL BE APPROVED FOR
LISTING ON A NATIONAL STOCK EXCHANGE OR THAT THE DISTRIBUTION OF
RMR INC SHARES WILL OCCUR BEFORE YEAR END 2015 OR EVER.
FOR THE FOREGOING REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS
PRESS RELEASE. EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, THE
REITS DO NOT INTEND TO UPDATE ANY FORWARD LOOKING STATEMENTS IN
THIS PRESS RELEASE AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
This press release refers to a distribution of RMR INC shares
that the REITs have agreed to make to their shareholders. This
distribution will be made only after a registration statement,
including a prospectus, is filed by RMR INC and declared effective
by the SEC. This press release is not an offer to sell or
solicitation of an offer to buy any securities of RMR INC or the
REITs.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150608005541/en/
Senior Housing Properties TrustKimberly Brown,
617-796-8234Director, Investor Relationsir@snhreit.comorHospitality
Properties TrustKatie Strohacker, 617-796-8232Director, Investor
Relationsir@hptreit.comorSelect Income REITJason Fredette,
617-796-8203Director, Investor Relationsir@sirreit.comorGovernment
Properties Income TrustJason Fredette, 617-796-8303Director,
Investor Relationsir@govreit.com
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