Diversified Healthcare Trust Announces Amendment to Credit Agreement
February 15 2023 - 6:16PM
Business Wire
Amends Certain Financial Covenants Through
Maturity
Retains Flexibility to Fund Capital
Expenditures
Diversified Healthcare Trust (Nasdaq: DHC) today announced that
it has amended its credit facility. The key terms of the amendment
include:
- The waiver of the Fixed Charge Coverage Ratio has been extended
through the date of maturity January 15, 2024;
- DHC has retained the ability to fund up to $400 million of
capital expenditures per year but has agreed not to make additional
investments in real property with certain limited exceptions;
- The minimum liquidity requirement was decreased from $200
million to $100 million;
- The credit facility commitments have been reduced from $586.4
million to $450 million;
- The interest rate premium increased by 40 basis points;
and
- In addition, among other things, DHC no longer has the ability
to reborrow funds.
Jennifer Francis, President and Chief Executive Officer of DHC,
made the following statement:
“This credit facility amendment provides us needed covenant
relief while we continue to execute on our plan to invest capital
in our properties and work with our senior living operators as they
recover from the effects of the pandemic.”
Wells Fargo Securities, LLC, RBC Capital Markets, Citibank, N.A.
and PNC Capital Markets LLC acted as Joint Lead Arrangers for the
amendment to DHC’s credit agreement. Wells Fargo Bank, National
Association is the Administrative Agent and Collateral Agent for
the facility.
DHC is a real estate investment trust, or REIT, focused on
owning high-quality healthcare properties located throughout the
United States. DHC seeks diversification across the health services
spectrum by care delivery and practice type, by scientific research
disciplines and by property type and location. As of September 30,
2022, DHC’s approximately $7.0 billion portfolio included 379
properties in 36 states and Washington, D.C., occupied by
approximately 500 tenants, and totaling approximately 9 million
square feet of life science and medical office properties and more
than 27,000 senior living units. DHC is managed by The RMR Group
(Nasdaq: RMR), a leading U.S. alternative asset management company
with more than $37 billion in assets under management as of
December 31, 2022 and more than 35 years of institutional
experience in buying, selling, financing and operating commercial
real estate. To learn more about DHC, visit www.dhcreit.com.
WARNING REGARDING
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 DHC uses words such as “believe”, “expect”,
“anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and
negatives or derivatives of these or similar expressions, DHC is
making forward-looking statements. These forward-looking statements
are based upon DHC’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 DHC’s forward-looking statements as a result of
various factors. Forward-looking statements involve known and
unknown risks, uncertainties and other factors, some of which are
beyond DHC's control. For example:
- Ms. Francis states that DHC’s credit facility provides DHC with
covenant relief as DHC continues to invest capital in its
properties and work with its senior living operators as they
recover from the effects of the pandemic. This statement may imply
that DHC's operating results and financial position will improve as
a result of the amendment to DHC’s credit agreement and investment
in its properties and efforts with respect to its senior living
operators. However, DHC's business is subject to various risks,
including risks outside its control. As a result, DHC may not
realize the benefits it expects from the amendment to its credit
agreement, investment in its properties or efforts with respect to
its senior living operators. Further, if the duration and severity
of the COVID-19 pandemic and its impacts on DHC and its managers
and tenants significantly worsen for a sustained period, DHC may be
required to utilize all or a significant portion of its cash and
cash equivalents to fund its business and operations, which may
reduce or eliminate the financial flexibility DHC believes it has
achieved, and
- Implications of the amendment could be that DHC will have
sufficient liquidity under its credit agreement to fund its
operations and repayment of debt. DHC is currently fully drawn
under its credit facility and could also be required to repay its
outstanding debt in the event of non-compliance with its credit
agreement or its senior unsecured notes indentures or their
supplements. In addition, DHC has no additional options to extend
the maturity date of its credit facility. DHC may therefore
experience future liquidity constraints, as it is currently unable
to incur additional debt under its credit agreement or the
agreements governing its public debt, and will be limited to cash
on hand to fund its operations and repayment of debt or may be
forced to raise additional sources of capital or take other
measures to maintain adequate liquidity.
The information contained in DHC’s filings with the SEC
including under “Risk Factors” in DHC’s periodic reports, or
incorporated therein, identifies other important factors that could
cause DHC’s actual results to differ materially from those stated
in or implied by DHC’s forward-looking statements. DHC’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, DHC does not intend to update or
change any forward-looking statements as a result of new
information, future events or otherwise.
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the Nasdaq. No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230215005929/en/
Melissa McCarthy, Manager, Investor Relations (617) 796-8234
www.dhcreit.com
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