Senior Star Execs Make $325 Million Play for Five Star Portfolio

Five Star Quality Care’s (NYSE: FVE) senior housing assets are not for sale, the company said late last month in response to a push by the owners of Tulsa-based Senior Star to sell its portfolio of senior housing properties.

But Senior Star’s executives says the proposed deal warrants more consideration.

Five Star Quality Care is being pressed by Senior Star to sell 33 senior living properties to Gemini Properties, an affiliate of Senior Star, for $325 million, as disclosed in a Dec. 15 filing with the U.S. Securities and Exchange Commission. Such a deal, if accepted, would bring Senior Star’s rising portfolio from a dozen-plus properties to nearly 50.


The filing references three letters, with two addressed to Five Star Quality Care President and CEO Bruce Mackey, Jr., and one addressed to Five Star Quality Care Managing Director Barry Portnoy. In a letter to Mackey, Senior Star Principal William Thomas referenced a meeting between the two companies on Nov. 30, during which Five Star rejected Senior Star’s initial bid to purchase the 33 properties.

The proposed transaction represents “a very viable, strategic option for successfully repositioning Five Star and unlocking value for all shareholders,” Thomas writes.

Additionally, if Senior Star were to acquire Five Star’s owned properties, “Five Star could monetize these assets, which the markets currently do not fully value, while simultaneously raising the capital required to unlock its intrinsic, long-term value without diluting shareholders and without diluting the company’s EPS,” Thomas writes. The company declined to comment further on the offer.


Senior Star, a longtime owner and operator of senior living communities, based in Tulsa, Oklahoma, currently manages 14 properties. Since its inception, the privately-held company has strategically grown its portfolio, with plans for future expansion. In a March interview with Senior Housing News, company co-founder Robert Thomas said Senior Star anticipated doubling the size of the company within the next five years.

An acquisition of the Five Star Properties would add roughly 3,000 units to Senior Star’s 2,200 currently under management.

As of June 2015, Five Star Quality Care owned 31 private pay communities with 3,064 units, according to public company filings. The company is an operator and owner of senior living and skilled nursing properties that was created in 2000 by Senior Housing Properties Trust (NYSE: SNH) to manage troubled nursing homes for SNH.

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Five Star Quality Care did not return Senior Housing News’ requests for comment as of press time.

Written by Elizabeth Ecker and Mary Kate Nelson

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