Newton, MA (December 20, 2002): Senior Housing Properties Trust (NYSE: SNH) today announced that a Massachusetts court declined to preliminarily enjoin the sale by Marriott International, Inc. (NYSE: MAR) of management contracts for 31 senior living communities.
The 31 senior living communities are owned by SNH, leased to Five Star Quality Care, Inc. (AMEX: FVE) and managed by Marriott Senior Living Services, Inc., a 100% subsidiary of Marriott. On December 2, 2002, SNH and FVE sought and obtained a temporary order from the Massachusetts Superior Court which prohibited Marriott from assigning or transferring these management contracts. At that time SNH announced that this order would be reviewed at a court hearing held later in December. The further hearing was held on Wednesday, December 17 and an order denying SNH's request for an injunction before trial was issued on Friday, December 20, 2002. Today's decision does not end this Massachusetts case. A trial is expected to be held during 2003 which will finally decide the transfer rights and obligations under the management contracts of SNH, FVE, Marriott and any Marriott transferee.
A related court case is pending in the Circuit Court for Montgomery County, Maryland. In that Maryland case, Marriott has sued SNH and FVE to prohibit termination of these same 31 management contracts. SNH and FVE had served notice to Marriott that the contracts would terminate because of home office costs and insurance charges which Marriott improperly allocated to the managed communities, because unfair profits were realized by Marriott from purchases for the account of the managed communities which are directed by Marriott to its affiliates, because Marriott used FVE's working capital for Marriott's own purposes without interest and for other reasons. The Maryland court enjoined the contract terminations on November 27, pending a hearing to be held in December. The Maryland court hearing has now been rescheduled to January 2003.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THE FOREGOING PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND THE FEDERAL SECURITIES LAWS. FOR EXAMPLE, THE FACTS THAT MASSACHUSETTS AND MARYLAND COURTS HAVE ISSUED PRELIMINARY ORDERS WHICH PERMIT OR PROHIBIT ACTIONS BY MARRIOTT, SNH AND FVE MAY IMPLY THAT THE FINAL OUTCOME OF THESE CASES WILL ALSO PERMIT OR PROHIBIT THOSE ACTIONS. HOWEVER, AFTER FURTHER HEARINGS, ONE OR BOTH OF THESE COURTS MAY REVOKE THE PRIOR ORDERS OR ISSUE NEW AND DIFFERENT ORDERS. SIMILARLY, SNH'S ASSERTIONS THAT MARRIOTT HAS IMPROPERLY ALLOCATED CHARGES TO THE MARRIOTT COMMUNITIES, IMPROPERLY PROFITED FROM SALES BY MARRIOTT AFFILIATES TO THOSE COMMUNITIES OR USED FVE'S WORKING CAPITAL FOR MARRIOTT'S OWN PURPOSES WITHOUT INTEREST ARE BEING DISPUTED BY MARRIOTT. DISCOVERY DURING LAWSUITS OR DECISIONS BY COURTS MAY RESULT IN DIFFERENT AND CONTRARY CONCLUSIONS. THE PENDING LITIGATION MAY BE EXPENSIVE AND MIGHT HAVE UNEXPECTED OUTCOMES. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON THESE FORWARD LOOKING STATEMENTS.