NEWTON, MA-In the first round of what promises to be a long court case, a state court declined to preliminarily enjoin Marriott International Inc. from selling management contracts for 31 senior living communities.

The 31 senior living communities are owned by Senior Housing Properties trust and leased to locally based Five Star Quality Care Inc. The communities are managed by Marriott Senior Living Services, a subsidiary of Marriott International.

Five Star and Senior Housing had obtained a temporary order from the Massachusetts Superior Court which prevented Marriott from assigning or transferring these contracts.

Bruce Mackey, CFO of Five Star, tells that “we feel we have certain rights regarding the sale [of these contracts.]” Mackey emphasizes that his company still thinks Marriott does a good job but “ we don’t feel we’re getting the deal that we should” be getting. Mackey points out that Marriott charges the highest possible allocation of insurance based on revenues and because of that Five Star is getting the short end of the stick. Calls to Marriott were not returned by press time.

Mackey notes that Marriott is selling its entire senior living division. “They want out of this business but we want a fair deal,” he says. “When we bought these properties it was based on revenue history but they want to pump revenues and they don’t care about the bottom line.” Now, he says, they’re losing money because of the insurance allocation.

Marriott was the manager in place when Five Star bought the properties–Five Star spun off from Senior Housing–and Marriott thinks their contract was unfairly terminated. But Mackey contends that Marriott’s contract was terminated because the company doesn’t think Marriott was treating them fairly.

Five Star is also bringing Marriott to court in Maryland. If Marriott does sell the contracts Mackey says the companies will still be fighting it out n court but he adds that “it’s hard to imagine who will buy these contracts” because of the court case.

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