8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  April 2, 2019

SENIOR HOUSING PROPERTIES TRUST

(Exact Name of Registrant as Specified in Its Charter)

Maryland

(State or Other Jurisdiction of Incorporation)

001-15319	04-3445278
(Commission File Number)	(IRS Employer Identification No.)
Two Newton Place, 255 Washington Street, Suite 300 Newton, Massachusetts	02458-1634
(Address of Principal Executive Offices)	(Zip Code)

617-796-8350

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Item 7.01.  Regulation FD Disclosure.

On April 2, 2019, Senior Housing Properties Trust, or SNH, issued a press release announcing a restructuring of its business relationships with Five Star Senior Living Inc., or Five Star, pursuant to a transaction agreement with Five Star, and also released an investor presentation containing additional detail on the restructuring transactions. Copies of that press release and investor presentation are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K.

Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits.

99.1	Press Release dated April 2, 2019. (Furnished herewith).
99.2	Investor Presentation dated April 2, 2019. (Furnished herewith).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SENIOR HOUSING PROPERTIES TRUST
By:	/s/ Richard W. Siedel, Jr.
Name:	Richard W. Siedel, Jr.
Title:	Chief Financial Officer and Treasurer

Dated:  April 2, 2019

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE	Contact:
	Brad Shepherd, Senior Director, Investor Relations
	(617) 796-8234

Senior Housing Properties Trust Announces Restructuring of

Business Arrangements with Five Star Senior Living

Senior Living Communities Leased to Five Star will Convert to Management Agreements

SNH and SNH Shareholders to Have Combined 85% Ownership of Five Star

Conference Call Scheduled for 10:00 a.m. Eastern Time on April 2, 2019

Newton, MA (April 2, 2019): Senior Housing Properties Trust (Nasdaq: SNH) today announced that it has entered into a definitive agreement to modify its existing business arrangements with Five Star Senior Living Inc. (Nasdaq: FVE), or Five Star.  Effective January 1, 2020, the existing five master leases for 184 of SNH’s senior living communities (19,979 living units) that are leased to Five Star as well as the existing management agreements and pooling agreements with Five Star for 77 of SNH’s senior living communities (10,135 living units) will be terminated and replaced with new management agreements for all 261 Five Star operated senior living communities.

Simultaneous with the conversion of SNH’s existing agreements with Five Star into new management agreements with Five Star, SNH and SNH shareholders will receive Five Star common shares equal to approximately 85% ownership of Five Star in aggregate after taking into account SNH’s current ownership.  As part of the transaction announced today, SNH shareholders will receive, by way of a distribution of the right to receive Five Star common shares from SNH and subject to certain conditions, Five Star common shares equal to approximately 51% ownership of Five Star post issuance, effective as of January 1, 2020.  SNH will also increase its current 8.3% ownership of Five Star to approximately 34% post issuance. SNH currently plans to retain this ownership of Five Star for the foreseeable future.

John Harrington, chair of the special committee of SNH’s Board of Trustees comprised solely of Independent Trustees, which led the negotiations of this transaction, made the following statement regarding today’s announcement:

“The transaction announced today was the result of numerous meetings of the special committee and its advisors over the past four months.  We began this process by evaluating multiple options

to address the impact that Five Star’s rapidly deteriorating financial position could have on our 261 Five Star operated senior living communities, which represent a significant amount of our revenues and net operating income.  Some of the options we considered included evaluating whether we should engage new operators rather than Five Star to run some or all the communities as well as whether we should try to sell the entire portfolio.  We ultimately concluded for a variety of reasons that the transaction announced today was the best option for SNH and our shareholders in light of the difficult circumstances we faced.”

In addition to SNH’s and SNH shareholders’ increased ownership of Five Star, details of the transaction include the following:

·Commencing February 1, 2019, Five Star’s aggregate monthly rent payable to SNH under the five master leases with Five Star was reduced from approximately $17.4 million to $11.0 million, and Five Star has paid its February rent payment, which was previously deferred to March 31, 2019, at this reduced amount.

·SNH has purchased from Five Star approximately $50.0 million of fixed assets and improvements related to the leased senior living communities.

·SNH has provided a $25 million short term revolving credit facility to Five Star that is secured by six of Five Star’s wholly-owned senior living communities.  The interest rate under this credit facility is 6.0% per year on any drawn amounts and matures on January 1, 2020.  There is currently no amount outstanding under this credit facility.

·Simultaneous with SNH and SNH shareholders receiving Five Star common shares, Five Star will reduce Five Star’s indebtedness under the SNH credit facility and SNH will assume certain of Five Star’s liabilities and/or make a cash payment to Five Star equal to $75 million in aggregate.

Due to the lower cash flow SNH will receive from its senior living communities operated by Five Star, SNH anticipates that it will need to lower its common share distribution rate in the future.  SNH currently expects to pay an annual distribution of $0.55 to $0.65 per common share going forward, which is based on a target distribution payout ratio of approximately 80% of projected cash available for distribution in the future.  This new distribution rate is expected to begin with SNH’s next regularly scheduled quarterly distribution announcement later this month.

To reduce leverage, SNH expects to sell properties valued at up to $900 million to achieve a target debt to adjusted EBITDA ratio of approximately 6.0x by the end of 2019.  As part of these property sales, SNH plans to focus its efforts primarily on selling underperforming senior living communities and non-healthcare related assets, including standalone skilled nursing facilities and wellness centers.

Jennifer Francis, President and Chief Operating Officer of SNH, made the following statement regarding today’s announcement:

“The transaction announced today provides an immediate and long-term solution to stabilize our largest operator and protect the value of our senior living communities.  In fact, we believe Five Star will be a healthy company at the end of this transaction, with projected annual EBITDA of $20 to $30 million, minimal capital expenditure requirements, low leverage and continued direct ownership in 20 senior living communities.  We also believe it makes sense that SNH and its shareholders receive the bulk of this benefit in the form of Five Star ownership.  In addition, we believe receiving Five Star common shares may help compensate SNH shareholders for our lower distribution rate going forward.”

“The transaction announced today also provides SNH with greater asset management oversight of its senior living portfolio going forward as well as positions SNH and SNH shareholders to realize possible financial upside in the future.  Our long-term strategy remains unchanged, with a focus on growing our medical office and life science buildings portfolio, and we expect that our medical office and life science building portfolio will increase as a percentage of our total property portfolio at the end of our announced disposition program.  While our portfolio of senior living communities is expected to decrease as a percentage of our total property portfolio in the future, today’s announcement underscores our commitment to ensuring all of our properties are positioned for long-term success.”

This transaction was unanimously approved by both the special committee of SNH’s Board of Trustees and the entire SNH Board of Trustees.  This transaction does not require approval by SNH’s shareholders.  The issuances of Five Star common shares to SNH and SNH shareholders in connection with this transaction are subject to the approval of Five Star’s stockholders.  SNH and ABP Trust, which collectively own approximately 44% of outstanding Five Star common shares, have both agreed to vote their shares in favor of the issuance of Five Star shares.

The transaction is expected to close on January 1, 2020 after the requisite regulatory approval process is completed, and to maintain compliance with complex tax rules affecting real estate investment trusts, or REITs, including limitations on the amount of ownership a REIT may own in a tenant during any calendar year.

Morgan Stanley is acting as exclusive financial advisor to the special committee of SNH’s Board of Trustees and Sullivan & Worcester LLP is acting as legal counsel to the special committee of SNH’s Board of Trustees in this transaction.

Conference Call:

At 10:00 a.m. Eastern Time this morning, President and Chief Operating Officer, Jennifer Francis, and Chief Financial Officer and Treasurer, Rick Siedel, will host a conference call to discuss the transaction. Following management’s remarks, there will be a question and answer period for analysts.  A copy of the definitive agreement regarding the transaction between SNH and Five Star will be filed with the Securities and Exchange Commission, or SEC, on a Current Report on Form 8-K.  SNH will also provide a presentation regarding the transaction that will be available on its website at www.snhreit.com and furnished with the SEC as an exhibit to a Current Report on Form 8-K.  SNH’s website is not incorporated as part of this news release.

The conference call telephone number is (877) 270-2148. Participants calling from outside the United States and Canada should dial (412) 902-6510. No pass code is necessary to access the call from either number.  Participants should dial in about 15 minutes prior to the scheduled start of the call.  A replay of the conference call will be available through 11:59 p.m. on April 9, 2019. To access the replay, dial (412) 317-0088. The replay pass code is 10130144.

A live audio webcast of the conference call will also be available in a listen only mode on SNH’s website.  Participants wanting to access the webcast should visit SNH’s website about five minutes before the call.  The archived webcast will be available for replay on both websites following the call for about one week.  The transcription, recording and retransmission in any way of SNH’s conference call are strictly prohibited without the prior written consent of SNH.

About Senior Housing Properties Trust

Senior Housing Properties Trust is a REIT which owns senior living communities, medical office buildings and wellness centers throughout the United States.  SNH is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, MA.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER SNH USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, SNH IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON SNH’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR, AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY SNH’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

·THIS PRESS RELEASE STATES THAT SNH ENTERED INTO A DEFINITIVE AGREEMENT TO MODIFY ITS EXISTING BUSINESS ARRANGEMENTS WITH FIVE STAR AND THAT CERTAIN OF THESE ARRANGEMENTS ARE EXPECTED TO BE EFFECTIVE JANUARY 1, 2020.  THESE ARRANGEMENTS ARE SUBJECT TO CONDITIONS, INCLUDING, AMONG OTHERS, THE RECEIPT OF REQUISITE APPROVAL BY FIVE STAR’S STOCKHOLDERS AND CERTAIN LICENSING AND OTHER APPROVALS. SNH CANNOT BE SURE THAT ANY OR ALL OF SUCH CONDITIONS WILL BE SATISFIED.  ACCORDINGLY, THESE TRANSACTIONS MAY NOT BECOME EFFECTIVE AS OF JANUARY 1, 2020 OR AT ALL, OR THE TERMS OF SUCH TRANSACTIONS AND THE OTHER TRANSACTIONS MAY CHANGE.

·MR. HARRINGTON’S STATEMENT IN THIS PRESS RELEASE THAT THE TRANSACTION ANNOUNCED TODAY WAS THE BEST OPTION FOR SNH AND SNH SHAREHOLDERS MAY IMPLY THAT THIS OPTION WILL ACHIEVE BETTER RESULTS FOR SNH AND SNH SHAREHOLDERS IN THE FUTURE THAN OTHER OPTIONS. HOWEVER, SNH CANNOT BE SURE THAT THIS OPTION WILL ACHIEVE BETTER RESULTS FOR SNH AND SNH SHAREHOLDERS IN THE FUTURE.

·SNH EXPECTS TO RETAIN APPROXIMATELY 34% OF OWNERSHIP OF FIVE STAR FOR THE FORESEEABLE FUTURE. HOWEVER, SNH MAY SELL SOME OR ALL OF ITS FIVE STAR COMMON SHARES. SNH’S OWNERSHIP OF FIVE STAR MAY ALSO BE DILUTED IN THE FUTURE.

·SNH PLANS TO PAY AN ANNUAL DISTRIBUTION OF $0.55 TO $0.65 PER COMMON SHARE GOING FORWARD, BASED ON A TARGET DISTRIBUTION PAYOUT RATIO OF APPROXIMATELY 80% OF PROJECTED CASH AVAILABLE FOR DISTRIBUTION IN THE FUTURE. SNH’S DISTRIBUTION WILL BE SET AND RESET FROM TIME TO TIME BY SNH’S BOARD OF TRUSTEES. THE SNH BOARD WILL CONSIDER MANY FACTORS WHEN SETTING THE DISTRIBUTION, INCLUDING SNH’S HISTORICAL AND PROJECTED NET INCOME, NORMALIZED FUNDS FROM OPERATIONS, THE THEN CURRENT AND EXPECTED NEEDS AND AVAILABILITY OF CASH TO PAY SNH’S OBLIGATIONS, DISTRIBUTIONS WHICH SNH MAY BE REQUIRED TO BE PAID TO MAINTAIN ITS TAX STATUS AS A REIT AND OTHER FACTORS DEEMED RELEVANT BY SNH’S BOARD OF TRUSTEES IN ITS DISCRETION. ACCORDINGLY, FUTURE SNH DISTRIBUTIONS MAY BE INCREASED OR DECREASED AND SNH CANNOT BE SURE AS TO THE RATE AT WHICH FUTURE DISTRIBUTIONS WILL BE PAID.

·SNH EXPECTS TO SELL UP TO $900 MILLION OF PROPERTIES TO REDUCE ITS LEVERAGE TO STATED TARGETS. HOWEVER, SNH MAY NOT BE ABLE TO SUCCESSFULLY SELL PROPERTIES IN THE FUTURE. ALSO, SNH MAY SELL PROPERTIES AT PRICES THAT ARE LESS THAN THEIR CARRYING VALUES AND SNH MAY INCUR FUTURE LOSSES.

·MS. FRANCIS’S STATEMENTS IN THIS PRESS RELEASE REGARDING THE IMMEDIATE AND LONG-TERM SOLUTION PROVIDED BY THE TRANSACTION ANNOUNCED TODAY, SNH’S BELIEF IN FIVE STAR BEING A HEALTHY COMPANY AT THE CONCLUSION OF THE TRANSACTION AND SNH’S LONG-TERM STRATEGY ARE CONTINGENT UPON THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE DEFINITIVE AGREEMENT BETWEEN SNH AND FIVE STAR. THESE TRANSACTIONS MAY NOT OCCUR AND THE BENEFITS OF THESE TRANSACTIONS MAY NOT MATERIALIZE AND/OR FIVE STAR’S FINANCIAL CONDITION MAY FURTHER DETERIORATE DESPITE THESE AGREEMENTS. IN ADDITION, FIVE STAR MAY NOT BE A HEALTHY COMPANY AT THE CONCLUSION OF THE TRANSACTION. SNH MAY ALSO NOT BE ABLE TO SUCCESSFULLY IMPLEMENT ITS LONG-TERM STRATEGY.

·MS. FRANCIS’S STATEMENT THAT FIVE STAR IS PROJECTED TO HAVE ANNUAL EBITDA OF $20 TO $30 MILLION FOLLOWING THE CLOSING OF THE TRANSACTION HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT NECESSARILY INDICATIVE OF FIVE STAR’S EXPECTED FINANCIAL POSITION OR RESULTS OF OPERATIONS FOR ANY FUTURE PERIOD. IN FACT, FIVE STAR’S ACTUAL ANNUAL EBITDA FOLLOWING THE CLOSING OF THE TRANSACTION WILL BE SUBJECT TO MARKET CONDITIONS AND OTHER FACTORS, SOME OF WHICH ARE BEYOND FIVE STAR’S CONTROL, AND FIVE STAR’S ANNUAL EBITDA FOR FUTURE PERIODS FOLLOWING THE CLOSING OF THE TRANSACTION MAY BE SIGNIFICANTLY LOWER THAN IS STATED IN THIS PRESS RELEASE.

THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SEC INCLUDING UNDER “RISK FACTORS” IN SNH’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE SNH’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY SNH’S FORWARD LOOKING STATEMENTS. SNH’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, SNH DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

(end)

EX-99.2

Exhibit 99.2

SNH Nasdaq Listed

S E N I O R H O U S I N G P R O P E R T I E S T R U S T WARNING CONCERNING FORWARD LOOKING STATEMENTS THIS PRESENTATION CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER SENIOR HOUSING PROPERTIES TRUST (NASDAQ: SNH), OR SNH, USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, SNH IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON SNH’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY SNH’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE: • SNH ENTERED INTO A DEFINITIVE AGREEMENT TO MODIFY ITS EXISTING BUSINESS ARRANGEMENTS WITH FIVE STAR SENIOR LIVING INC., OR FIVE STAR. AS DESCRIBED HEREIN, CERTAIN OF THESE ARRANGEMENTS ARE EXPECTED TO BE EFFECTIVE JANUARY 1, 2020. THESE ARRANGEMENTS ARE SUBJECT TO CONDITIONS, INCLUDING, AMONG OTHERS, THE RECEIPT OF REQUISITE APPROVAL BY FIVE STAR’S STOCKHOLDERS AND CERTAIN LICENSING APPROVALS. SNH CANNOT BE SURE THAT ANY OR ALL OF SUCH CONDITIONS WILL BE SATISFIED. ACCORDINGLY, THESE TRANSACTIONS MAY NOT BECOME EFFECTIVE AS OF JANUARY 1, 2020 OR AT ALL, OR THE TERMS OF SUCH TRANSACTIONS AND THE OTHER TRANSACTIONS MAY CHANGE. • SNH EXPECTS TO RETAIN APPROXIMATELY 34% OWNERSHIP OF FIVE STAR FOR THE FORESEEABLE FUTURE. HOWEVER, SNH MAY SELL SOME OR ALL OF THE SHARES OF COMMON STOCK OF FIVE STAR IT OWNS. SNH’S OWNERSHIP OF FIVE STAR MAY ALSO BE DILUTED IN THE FUTURE. • SNH EXPECTS TO PAY AN ANNUAL DISTRIBUTION OF APPROXIMATELY $0.55 TO $0.65 PER COMMON SHARE GOING FORWARD, BASED ON A TARGET DISTRIBUTION PAYOUT RATIO OF 80% OF PROJECTED CASH AVAILABLE FOR DISTRIBUTION IN THE FUTURE. SNH’S DISTRIBUTION WILL BE SET AND RESET FROM TIME TO TIME BY SNH’S BOARD OF TRUSTEES. THE SNH BOARD WILL CONSIDER MANY FACTORS WHEN SETTING THE DISTRIBUTION, INCLUDING SNH’S HISTORICAL AND PROJECTED NET INCOME, NORMALIZED FUNDS FROM OPERATIONS, THE THEN CURRENT AND EXPECTED NEEDS AND AVAILABILITY OF CASH TO PAY SNH’S OBLIGATIONS, DISTRIBUTIONS WHICH SNH MAY BE REQUIRED TO BE PAID TO MAINTAIN ITS TAX STATUS AS A REAL ESTATE INVESTMENT TRUST, OR REIT, AND OTHER FACTORS DEEMED RELEVANT BY SNH’S BOARD OF TRUSTEES IN ITS DISCRETION. ACCORDINGLY, FUTURE SNH DISTRIBUTIONS MAY BE INCREASED OR DECREASED AND SNH CANNOT BE SURE AS TO THE RATE AT WHICH FUTURE DISTRIBUTIONS WILL BE PAID. • SNH EXPECTS TO SELL UP TO $900 MILLION OF PROPERTIES TO REDUCE ITS LEVERAGE TO STATED TARGETS. HOWEVER, SNH MAY NOT BE ABLE TO SUCCESSFULLY SELL PROPERTIES IN THE FUTURE. ALSO, SNH MAY SELL PROPERTIES AT PRICES THAT ARE LESS THAN THEIR CARRYING VALUES AND SNH MAY INCUR FUTURE LOSSES. • SNH MAY SELL THE SHARES OF COMMON STOCK OF THE RMR GROUP INC., OR RMR, IT OWNS. THE COMPLETION OF ANY SALE OF SNH’S RMR COMMON SHARES WILL BE SUBJECT TO VARIOUS CONDITIONS AND CONTINGENCIES. IF THESE CONDITIONS ARE NOT SATISFIED OR THE SPECIFIED CONTINGENCIES DO NOT OCCUR, ANY SALE BY SNH OF ITS RMR COMMON SHARES MAY BE DELAYED OR MAY NOT BE COMPLETED. • SNH EXPECTS TO REALIZE A NUMBER OF BENEFITS FROM THE TRANSACTIONS CONTEMPLATED BY THE DEFINITIVE AGREEMENTS BETWEEN SNH AND FIVE STAR, INCLUDING POSITIONING SNH FOR GREATER POTENTIAL UPSIDE, CREATING, AND PRESERVING ITS RELATIONSHIP WITH, A FINANCIALLY STABLE SENIOR LIVING OPERATOR, AND EXPANDED MANAGEMENT OVERSIGHT. THESE STATEMENTS ARE CONTINGENT UPON THE CONSUMMATION OF THE TRANSACTIONS WHICH MAY NOT OCCUR. IN ADDITION, FUTURE SUPPLY AND DEMAND IN SENIOR LIVING MAY BE DIFFERENT THAN SNH CURRENTLY EXPECTS. FURTHER, EVEN IF THESE TRANSACTIONS OCCUR, THE EXPECTED BENEFITS MAY NOT MATERIALIZE. • FIVE STAR IS PROJECTED TO HAVE ANNUAL EBITDA OF $20 TO $30 MILLION FOLLOWING THE CLOSING OF THE TRANSACTION HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT NECESSARILY INDICATIVE OF FIVE STAR’S EXPECTED FINANCIAL POSITION OR RESULTS OF OPERATIONS FOR ANY FUTURE PERIOD. IN FACT, FIVE STAR’S ACTUAL ANNUAL EBITDA FOLLOWING THE CLOSING OF THE TRANSACTION WILL BE SUBJECT TO MARKET CONDITIONS AND OTHER FACTORS, SOME OF WHICH ARE BEYOND FIVE STAR’S CONTROL, AND FIVE STAR’S ANNUAL EBITDA FOR FUTURE PERIODS FOLLOWING THE CLOSING OF THE TRANSACTION MAY BE SIGNIFICANTLY LOWER THAN IS STATED IN THIS PRESENTATION. THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN SNH’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE SNH’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY SNH’S FORWARD LOOKING STATEMENTS. SNH’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV. YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, SNH DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. 2

S E N I O R H O U S I N G P R O P E R T I E S T R U S T TRANSACTION SUMMARY & TIMING New Management Agreements with Five Star SNH and Five Star will enter into new management agreements to operate all of SNH’s communities currently leased by Five Star and currently managed by Five Star.  SNH and SNH Shareholders to Receive Five Star Shares Five Star will issue common shares to increase SNH’s and SNH shareholders’ combined ownership to approximately 85% of Five Star.(1)  Conversion Date Agreement Date Transition Period April 1, 2019 January 1, 2020 + SNH to complete the required regulatory approval process to convert leased communities to a RIDEA management structure. Short-term financial restructuring immediately improves Five Star’s financial position and liquidity as well as helps SNH facilitate the transition to a RIDEA management structure. Five Star stockholders vote required to approve the issuances of Five Star common shares to SNH and SNH shareholders. + + 3 (1)Not including any shares currently owned by SNH shareholders.

S E N I O R H O U S I N G P R O P E R T I E S T R U S T SUMMARY OF BENEFITS Maximize the Value and Performance of SNH’s Investments in Senior Living 20 10% Positions SNH for Greater Potential Financial Upside Current senior living supply and demand fundamentals at historic lows coupled with expected future demand increases creates potential for greater financial upside for SNH and SNH shareholders in the future. 16 8% 12 6% 8 4% 4 2% 0 0% 85+ Population Growth Rate (%) Enables SNH and SNH Shareholders to Share Additional Upside from Investment in Five Star SNH and SNH shareholders will own 85% of Five Star and will benefit from sharing in Five Star’s potential future profitability. Five Star will be a healthy company at the end of this transaction, with projected annual EBITDA of $20 to $30 million, minimal capital expenditure requirements, low leverage and continued direct ownership in 20 senior living communities. Maintains Relationship with One Financially Stable National Senior Living Operator Allows SNH to retain the efficiencies of working with a large financially stable national operator in contrast to forming new relationships with a number of small, local, and potentially unstable operators throughout the U.S. (2) Allows Greater Asset Management Oversight The RIDEA management structure will allow SNH to more actively manage the Five Star senior living real estate through a more robust senior living asset management group. (1) Source: U.S. Census Bureau “2014 National Population Projections”. (2) Blue states represent states where Five Star currently operates senior housing communities. 4 Millions Age 85+ Population Growth (1)

S E N I O R H O U S I N G P R O P E R T I E S T R U S T SNH OBJECTIVES & KEY CONSIDERATIONS One Time Solution Single event versus incremental approach. Alignment Transaction structured to align interests for both top and bottom line senior living community performance. Stabilization Transaction provides immediate stability and materially improves long term financial outlook for senior living operator. Flexibility Ability for greater asset management role by SNH, including the sales of senior living communities at SNH’s discretion. 5

S E N I O R H O U S I N G P R O P E R T I E S T R U S T ALTERNATIVE OPTIONS Multiple alternatives were considered by the special committee of SNH’s Board of Trustees. Some Options Included: • Default/bankruptcy would result in loss of control over the process, the deterioration of operations of SNH’s senior living communities and a loss of asset value. Limited universe of potential operators with scale and/or without competitor relationships. Unlikely to be a market for well capitalized operators to assume a new lease with strong lease coverage. • • • • • This option only works with adequate lease coverage and tenant credit. Loss of significant rent without gaining control of asset management. Tenant benefits the most from any improvement in performance and market conditions in the future. • Because of tax rules that limit a REIT’s ownership in a manager, this option only works through a joint venture or with multiple partners. Potentially different investment horizon. Shared control. • • • • Limited buyer universe for such a large portfolio. Valuation would likely be negatively affected by recent financial performance and challenging operating environment. Solution: Agreements 6 New Management •Conversion of Five Star leases to RIDEA management structure. •Immediately addresses Five Star’s deteriorating financial position and liquidity challenges and also materially improves long term financial outlook. •Issuances of Five Star common shares to SNH and SNH shareholders in consideration of lease termination and capital infusion. Sale of the Portfolio Acquire Five Star Reduce Five Star Rent and Restructure Five Star’s Leases Lease Default / Bankruptcy / Replace Five Star

S E N I O R H O U S I N G P R O P E R T I E S T R U S T HIGHLIGHTS OF NEW MANAGEMENT AGREEMENTS 15-year term commencing January 1st, 2020, with two, five-year extensions at Five Star’s option, conditioned on portfolio financial performance. Five Star will receive a base management fee of 5% of gross revenues at the community level. Five Star may earn an incentive fee of 15% of property level EBITDA in excess of a performance target on a combined basis for the total managed portfolio, which fee cannot exceed 1.5% of gross revenue. SNH will have the right to terminate the new management agreements for non-performing assets and in the event of a change of control at Five Star. 7 Termination Rights Incentive Fee Management Fee Term

S E N I O R H O U S I N G P R O P E R T I E S T R U S T CURRENT ENVIRONMENT & FUTURE DEMOGRAPHICS Senior Housing Supply-Demand Trends (1) 16 9% 11,000 92% 10,000 8% 91% 9,000 7% 12 8,000 90% 6% 7,000 5% 6,000 89% 8 5,000 4% 4,000 88% 3% 3,000 4 2% 2,000 87% 1,000 1% 0 86% 0 0% Inventory Growth Absorption Stabilized Occupancy 85+ Population Growth Rate (%) Challenging Current Operating Environment Compelling Long-Term Demographics 85+ population projected to grow over 30% in the next five years. National healthcare spending is projected to grow at an average rate of 5.5% per year and reach $5.7 trillion by 2026. (3) - - - - New supply outpacing absorption. Increasing competition for labor and labor costs. Capital needed to compete with new construction. - Five Star’s lease coverage and liquidity have deteriorated. Future growth warrants transition to RIDEA management structure today. (1) (2) (3) Source: National Investment Center for the Seniors Housing and Care Industry (NIC), as of Q4 2018. Source: U.S. Census Bureau, “2014 National Population Projections”. Source: Centers for Medicare & Medicaid Services, www.cms.gov. 8 Units Millions Age 85+ Population Growth (2)

S E N I O R H O U S I N G P R O P E R T I E S T R U S T TRANSITION PERIOD Transition period provides for the approval of license transfers for each of the currently leased senior living communities.  Reduced Fixed Rent Payments The monthly rent payments under the existing five master leases has been reduced to $11 million per month effective February 1, 2019. Purchase of Property, Plant & Equipment SNH has purchased from Five Star approximately $50 million of fixed assets and improvements related to the leased communities. Short Term Credit Facility SNH has provided Five Star with a $25 million revolving credit facility secured by six senior living communities wholly-owned by Five Star with an interest rate of 6.0% per year and a maturity of January 1, 2020. $75 Million Payment (When Five Star Stock Issued to SNH and its Shareholders) Five Star will reduce indebtedness under the SNH short term credit facility and SNH will assume certain of Five Star’s liabilities, and/or make a cash payment to Five Star equal to $75 million in aggregate. 9 Agreement Execution DateTarget Conversion D ate April 1, 2019J anuary 1 , 2020

S E N I O R H O U S I N G P R O P E R T I E S T R U S T CONVERSION Existing Five Star Master Leases New Five S tar Management Agreements 261 Senior Living Communities Existing Five Star Management Agreements 30,114 Living Units The conversion is expected to occur on January 1, 2020 in order to maintain compliance with complex tax rules affecting REITs, including limitations on the amount a REIT may own of a tenant during any calendar year. 10 77 Senior Living Communities 10,135 Living Units 184 Senior Living Communities 19,979 Living Units

S E N I O R H O U S I N G P R O P E R T I E S T R U S T FIVE STAR OWNERSHIP The issuances of Five Star common shares to SNH and SNH shareholders are subject to the approval of Five Star’s stockholders. FVE Existing Ownership FVE Post Conversion (1) Structure (1) Ownership Structure FVE & RMR Insiders Other FVE 1% Stockholders 8% ABP Trust 6% FVE & RMR Insiders 7% + SNH & ABP Trust, which collectively own approximately 44% of Five Star, have both agreed to vote their shares in favor of the issuances of Five Star common shares. + Insiders own an additional 7% of Five Star’s outstanding shares bringing the total ownership of affiliates and insiders to over 50%. 11 (1) Existing ownership percentages and post conversion estimates based on Five Star’s fully diluted shares outstanding as of 12/31/2018. (2) Not including any shares currently owned by SNH shareholders.

S E N I O R H O U S I N G P R O P E R T I E S T R U S T OTHER CONSIDERATIONS Leverage To achieve a target annualized Adjusted EBITDA ratio of approximately 6.0x, SNH expects to sell assets valued up to $900 million as part of its near term capital structure. ASSET SALES FOCUS: - - - Standalone skilled nursing facilities. Senior living communities, medical office buildings or wellness centers that are underperforming. May sell some or all of the common shares of The RMR Group Inc. it owns. SNH’s portfolio of medical office and life science buildings is expected to increase as a percentage of the overall portfolio and senior living communities are expected to decrease as a percentage of the overall portfolio. Distribution Due to the lower cash flow SNH will receive from the senior living communities operated by Five Star, SNH anticipates that it will need to lower its common share distribution rate. - - - SNH expects to pay an annual distribution of $0.55 to $0.65 per common share. Based on a target distribution ratio of approximately 80% of projected cash available for distribution. The new distribution payout rate is expected to begin with the next regularly scheduled quarterly distribution announcement later this month. 12

S E N I O R H O U S I N G P R O P E R T I E S T R U S T Senior Living Community Summary Post Restructure Coral Springs, FL The Gables, Winchester, MA 13 Five Star Premier Residence of Pompano Beach, Pompano Beach, FL Eagles Landing Senior Living, Stockbridge, GA Fieldstone Place, Clarksville, TN Park Summit, The Forum at Deer Creek, Deerfield Beach, FL Managed senior living 261 30,114 communities Brookdale Senior Living18940 9 private senior living companies25 2,742 (combined) Subtotal triple net leased senior 43 3,682 living communities Total senior living communities304 33,796 The Forum at Desert Harbor, Peoria, AZ

S E N I O R H O U S I N G P R O P E R T I E S T R U S T SUMMARY OF BENEFITS Maximize the Value and Performance of SNH’s Investments in Senior Living 20 10% Positions SNH for Greater Potential Financial Upside Current senior living supply and demand fundamentals at historic lows coupled with expected future demand increases creates potential for greater financial upside for SNH and SNH shareholders in the future. 16 8% 12 6% 8 4% 4 2% 0 0% 85+ Population Growth Rate (%) Enables SNH and SNH Shareholders to Share Additional Upside from Investment in Five Star SNH and SNH shareholders will own 85% of Five Star and will benefit from sharing in Five Star’s potential future profitability. Five Star will be a healthy company at the end of this transaction, with projected annual EBITDA of $20 to $30 million, minimal capital expenditure requirements, low leverage and continued direct ownership in 20 senior living communities. Maintains Relationship with One Financially Stable National Senior Living Operator Allows SNH to retain the efficiencies of working with a large financially stable national operator in contrast to forming new relationships with a number of small, local, and potentially unstable operators throughout the U.S. (2) Allows Greater Asset Management Oversight The RIDEA management structure will allow SNH to more actively manage the Five Star senior living real estate through a more robust senior living asset management group. (1) Source: U.S. Census Bureau “2014 National Population Projections”. (2) Blue states represent states where Five Star currently operates senior housing communities. 14 Millions Age 85+ Population Growth (1)