Diversified Healthcare Trust Closes $941 Million Zero Coupon Senior Secured Notes with a Maturity Date in January 2026, and a One-Year Extension Option
December 22 2023 - 7:00AM
Business Wire
Repaid in Full $450 Million Secured Credit
Facility and Issued Notice of Redemption of $250 Million of Senior
Unsecured Notes Maturing in May 2024
Immediately Regained Compliance with Debt
Incurrence Covenants upon Closing
Diversified Healthcare Trust (Nasdaq: DHC) today announced that
it has consummated the offering of an aggregate principal amount of
$941 million of senior secured notes due January 2026, with a
12-month extension option, subject to the satisfaction of certain
conditions and payment of an extension fee. The sale of the notes
generated approximately $750 million in gross proceeds before
issuance costs and will accrete at a rate of 11.25% annually,
compounded semi-annually. If the 12-month extension option is
exercised, interest payments will be due semi-annually during the
extension period at an initial interest rate of 11.25% with
increases of 50 basis points every 90 days that the notes remain
outstanding. The notes are guaranteed on a joint, several and
senior secured basis by subsidiaries of DHC that own the properties
comprising the collateral for the notes and on a joint, several and
unsecured basis by all subsidiaries of DHC that previously
guaranteed its existing senior notes due 2025 and 2031. DHC
believes that the collateral properties have an estimated fair
value of approximately $1.57 billion.
The net proceeds from this transaction, after initial purchaser
discounts and offering costs, are approximately $732 million and
are being used to repay all of DHC’s outstanding debt maturing in
2024, and for general business purposes. DHC repaid its $450
million secured credit facility and, in connection with the
offering, issued a notice of redemption for its outstanding 4.750%
Senior Notes due in May 2024. In connection with the offering, DHC
immediately regained compliance with the incurrence covenants under
its remaining public debt agreements.
B. Riley Securities, BMO Capital Markets, BofA Securities,
Citigroup, Morgan Stanley, PNC Capital Markets LLC, UBS Investment
Bank and Wells Fargo Securities acted as joint book-running
managers for the offering.
The notes have not and will not be registered under the
Securities Act of 1933, as amended (the “Securities Act”), any
state securities laws or the securities laws of any other
jurisdiction, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
under the Securities Act or any applicable state securities laws.
The new notes were offered only to persons reasonably believed to
be qualified institutional buyers under Rule 144A under the
Securities Act and outside the United States only to non-U.S.
investors in compliance with Regulation S under the Securities
Act.
This press release does not constitute an offer to sell, or a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction. This press release also does not constitute a notice
of redemption with respect to the redemption of DHC’s 4.750% Senior
Notes due 2024.
About Diversified Healthcare Trust
DHC is a real estate investment trust 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,
2023, DHC’s approximately $7.2 billion portfolio included 376
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 approximately $36 billion in assets under management as of
September 30, 2023 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 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 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. In addition, although DHC is immediately in compliance with
the debt incurrence covenants under its remaining public debt
agreements as a result of this transaction and the repayment of
DHC’s secured credit facility and the redemption of its outstanding
4.750% Senior Notes due in May 2024, DHC may not be able to execute
on additional financing strategies or have sufficient liquidity
available to fund its capital projects as it currently expects, and
DHC may not be able to continue to invest in the growth and
recovery of its senior living communities as a result of economic
and market conditions or other reasons.
Actual results may differ materially from those contained in or
implied by DHC’s forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors, some of which are beyond DHC’s control.
The information contained in DHC’s filings with the Securities
and Exchange Commission (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.
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version on businesswire.com: https://www.businesswire.com/news/home/20231221666854/en/
Melissa McCarthy, Manager, Investor Relations (617) 796-8234
Diversified Healthcare (NASDAQ:DHC)
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