NEW YORK (TheStreet) -- Shares of Five Star Quality Care (FVE) - Get Report are skyrocketing 41.92% to $2.37 on heavy trading volume late Thursday afternoon after the company said it entered into a $112.4 million sale and leaseback deal with Senior Housing Properties Trust (SNH) for seven assisted living communities.

The communities are located in North Carolina, South Carolina, Tennessee and Virginia.

Along with the sale of these communities, Five Star entered a combination lease for these communities for 12.5 years plus renewal options afterward, according to a statement after yesterday's market close.

The initial rent payable by Five Star will be $8.4 million per year. The net sale price for the communities was about $81.8 million in excess of net book value.

Five Star plans to use the proceeds from the sale and leaseback transaction for general business purposes and to repay in full amounts outstanding debt under its secured revolving credit facility, which had $60 million outstanding on June 28.

"This transaction allows us to recognize and utilize a portion of the value of Five Star's owned real estate to improve our financial position while preserving the properties' operating economics within our portfolio," Five Star CEO Bruce Mackey stated.

Newton, MA-based Five Star operates senior living communities, including independent living communities, assisted living and skilled nursing facilities.

About 2.31 million of the company's shares were traded so far afternoon vs. its average volume of 363,021 shares per day.

Shares of Senior Housing Properties Trust are down 1.79% to $20.80 on heavy trading volume late this afternoon. Roughly 3.81 million of the REIT's shares changed hands so far today compared to its average volume of 1.85 million shares per day.

Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on Five Star stock.

The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: FVE

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