Glass Lewis Joins ISS in Recommending Shareholders of Diversified Healthcare Trust Vote AGAINST the Proposed Merger with Office Properties Income Trust

Flat Footed LLC (together with its affiliates, “FFL” or “we”), a top shareholder of Diversified Healthcare Trust (Nasdaq: DHC) (“DHC” or the “Company”) and the owner of approximately 9.8% of the Company’s outstanding common shares, today commented on Glass, Lewis & Co. (“Glass Lewis”) and Institutional Shareholder Services Inc.’s (“ISS”) recommendations that DHC shareholders vote AGAINST the proposed merger with Office Properties Income Trust (Nasdaq: OPI) (“OPI”) at the Company’s upcoming Special Meeting of Shareholders (the “Special Meeting”) on August 30, 2023.

Marc Andersen, Managing Member of FFL, commented:

“We appreciate that Glass Lewis has joined ISS in recommending that DHC’s shareholders vote AGAINST the proposed merger with OPI. Over the past several months, we have run a facts-based and objective campaign to lay out the deal’s flaws and show the array of viable alternatives that exist. It is encouraging to see that both leading proxy advisory firms and several credible investors have come to similar conclusions. In light of what is now broad public opposition, we urge the Board of Trustees to abandon the transaction in favor of one of the non-dilutive alternatives that we have identified. FFL hopes to work with DHC and its leadership to get past this unfortunate detour and pursue long-term value creation on a standalone basis. We believe DHC has a very bright future as the senior housing market’s fundamentals continually improve.”

In its report, Glass Lewis noted the following:¹

• “[…] we see very little cause for [DHC] investors to support the OPI transaction at this time.”

• “[…] concerns with the current transaction, including a limited and questionably structured process, a dubious structural rationale and what appear to be markedly unfavorable terms for DHC shareholders.”

• “Disclosure regarding the board’s review of other alternatives capable of adequately supporting DHC’s financial needs – including the sale of unencumbered assets […] does not credibly establish a wide variety of specific options were evaluated at length prior to pursuing the OPI agreement […]”

• “[…] we consider RMR and the DHC board are in a uniquely poor position to stoke concern around prospective value destruction, and would maintain the view that vocal opponents to the current deal, including Flat Footed, raise persuasive doubt around whether the DHC board effectively assessed a wider array of financial alternatives.”

• “We believe investors should readily question the board’s apparent disinclination to firmly eliminate prospective conflicts of interest, real or perceived, in connection with a related party transaction involving another entity managed by RMR […]”

• “[…] the underlying industrial logic appears deeply flawed, with few obvious synergies between DHC’s senior housing portfolio and OPI’s existing office property exposure. The lack of a compelling structural fit is demonstrated […]”

Last week, ISS recommended DHC shareholders vote AGAINST the deal in a report that noted:²