Seeking Alpha

Might any other Portnoy-managed REITs be dissident targets?

  • A check of other REITs externally managed by the Portnoys' Reit Management & Research - and thus possibly activist targets - finds no noticeable reaction to the dissident shareholder victory which likely means the removal of the entire CommonWealth board.
  • Hospitality Properties Trust (HPT -1.7%), Senior Housing Properties (SNH), Government Properties Income Trust (GOV -0.4%), Select Income REIT (SIR -0.8%),  RMR Real Estate Income Fund (RIF +0.1%). Other companies (not REITs managed by RMR): Five Star Quality Care (FVE -0.3%), TravelCenters of America (TA -1.2%).
Comments (8)
  • Chris DeMuth Jr.
    , contributor
    Comments (4832) | Send Message
     
    Sadly, probably not. CWH had the consent chink in its defensive armor. The Portnoys have other rackets, but they are better defended.
    19 Mar 2014, 12:39 PM Reply Like
  • Rcsam
    , contributor
    Comments (225) | Send Message
     
    You are wrong. This is big deal as CWH still controls SIR,GOV etc through large ownership stakes. They can now kick them off BOD of affilated companies. Big Victory for shareholders
    19 Mar 2014, 12:43 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4832) | Send Message
     
    I hope you are right. That would be different than C/R's expectations in the meetings I've had with them.
    19 Mar 2014, 12:51 PM Reply Like
  • Riskman
    , contributor
    Comments (146) | Send Message
     
    Is there any hope to get rid of Portnoys for HPT and GOV?
    19 Mar 2014, 09:43 PM Reply Like
  • bestotimes
    , contributor
    Comments (6) | Send Message
     
    I believe SIR and GOV would come under the control of CWH. I cannot imagine shareholders of those companies failing to opt for new directors with the blocks of shares currently owned in those two companies by CWH. CALPERS has been active at HPT, and we are very likely to see new directors at that REIT given changes in governance underway. With new directors and new management at HPT, we would see a new relationship develop between HPT and TA, which could only be healthier for both companies. The CEO of TA has a sizable interest in the company, and with the Portnoys gone from HPT, his allegiance would be more aligned with TA shareholders.

     

    That leaves SNH and its lessee/manager, FVE. SNH has been rather docile in putting up with the Portnoys. It remains to be seen whether the fall of the rest of their empire will spark action at SNH. FVE has the greatest cause for action. Its management contracts seem to be less than arm's length in favor of SNH, and it just agreed to allow SNH to sell a property on which it must continue to pay SNH a rental of $2.0 million even though it has no use of the property. Moreover, although FVE is a captive manager for SNH and has not been allowed by the Portnoys to pursue materially any non SNH clients, SNH has publicly stated it plans to diversify its managers to include other FVE operators. In brief, FVE is in Portnoy limbo. A lawsuit similar to the one shareholders of TA brought against HPT to restructure leases may have to occur, unless some other actions happen to restructure the relationship between SNH and FVE. The move for consolidation within the healthcare-housing industry coupled with some indication to the Portnoys that their control of SNH is vulnerable may stir the pot.

     

    The Portnoys are on a slippery slope. I doubt they have much support within the industry. Sam Zell's entry into the CWH shareholder action demonstrates as much. I have not seen one article favorable to their management. The morale at RMR must be tinted with Titanic hues.
    4 Apr 2014, 11:48 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4832) | Send Message
     
    I hope that you are correct, bestoftimes, and I am interested in your comment. Anyone interested in acting on this can do so here: http://bit.ly/QLz4nG
    4 Apr 2014, 12:18 PM Reply Like
  • bestotimes
    , contributor
    Comments (6) | Send Message
     
    Sam Zell this morning on CNBC: Over 99% of shareholders voting in the CWH contest supported the move to remove the former (Portnoy) board of directors, which was 81% of total shareholders. He fully expects his group to be elected to replace the Portnoy board, and they will move to internalize management.

     

    Given the opportunity, I believe HPT/TA shareholders would vote the same way. CALPERS would support such an effort and could be looking for a white knight. It should be easier to find one, now that Corvex/Related showed the pathway.

     

    According to Yahoo, Vanguard funds hold over 20% of the shares in SNH. An article on November 10, 2013 in the Wall Street Journal had the following title: Vanguard Gives Corporate Chiefs A Report Card. The thrust of the article points to Vanguard's increased shareholder activism: "..Vanguard is taking a much harder line this year, going against the managements' wishes in hundreds of proxy votes." "...the shift at Vanguard and other mutual funds could make it more likely that shareholders go against the will of management, particularly in close votes." "That's going to change the outcome of elections radically; mutual funds have typically been the swing votes..." Vanguard does not have to look beyond SNH to find a fruitful field to improve corporate governance.

     

    Vanguard holds a much smaller percentage in FVE, but other sophisticated shareholders could be easily awakened. The pressure to free up FVE to become internally managed and pursue management opportunities outside the Portnoy corral should become overwhelming to anyone paying attention.
    8 Apr 2014, 11:29 AM Reply Like
  • 1880gh
    , contributor
    Comments (68) | Send Message
     
    I feel like diping my toes into fve,any feeling from the board help mike h
    16 Apr 2014, 12:38 PM Reply Like
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