DHC - Diversified Healthcare discloses event of default under $450M credit facility

2023-06-29 10:42:06 ET

Diversified Healthcare Trust ( NASDAQ: DHC ) said Thursday a non-monetary event of default has occurred under its $450M credit facility.

The facility requires the REIT to maintain collateral properties with an aggregate appraised value of at least $1.09B.

On June 23, the facility's administrative agent reappraised the 61 medical office and life science properties securing the facility.

Diversified Healthcare ( DHC ) was notified that the reappraised value of the properties declined from $1.34B to $1.05B. The reappraised value declined 22% since the properties were last appraised in January 2021.

Diversified Healthcare ( DHC ) is negotiating a limited waiver to waive the event of default through September 30, the closing date for its merger with Office Properties Income Trust ( OPI ). At that time, Diversified Healthcare's ( DHC ) $450M credit facility will be fully refinanced.

As the REIT has not been in compliance for over two years, with its debt incurrence covenants, Diversified Healthcare ( DHC ) can't issue any new debt or refinance expiring debt.

Its financial constraints are among the main reasons that it recommended that shareholders vote in favor of the pending merger with Office Properties ( OPI ).

Diversified Healthcare ( DHC ) stock, which ended 13.1% higher on Wednesday, fell 4.3% on Thursday.

Earlier, Diversified Healthcare drops as holder plans to vote in favor of Office Properties deal.

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