Diversified Healthcare Trust Amends Credit and Term Loan Agreements and Provides COVID Related Business Updates

Diversified Healthcare Trust (Nasdaq: DHC) today announced that it has amended the agreements governing its $1 billion unsecured revolving credit facility and $200 million unsecured term loan, and is also providing certain business updates in light of the ongoing COVID-19 (coronavirus) pandemic.

Credit Facility and Term Loan Amendments

On June 30, 2020, DHC amended the agreements governing its $1 billion unsecured revolving credit facility and $200 million unsecured term loan. The amendments modify certain of the financial covenants under these agreements through June 30, 2021, or the Amendment Period, during which, subject to certain conditions, DHC will continue to have access to undrawn amounts under its revolving credit facility.

During the Amendment Period:

DHC will be required to maintain unrestricted liquidity (unrestricted cash and undrawn availability under its revolving credit facility) of not less than $200 million;

DHC’s interest rate premium over LIBOR under its revolving credit facility and term loan will be increased by 50 basis points;

DHC’s ability to pay distributions on its common shares will be limited to paying a cash dividend of $0.01 per common share per quarter and amounts required to maintain its qualification for taxation as a real estate investment trust, or REIT, and to avoid the payment of certain income and excise taxes;

DHC will be subject to certain additional covenants, including additional restrictions on its ability to incur indebtedness (with exceptions for borrowings under its revolving credit facility and certain other categories of secured and unsecured indebtedness), and to acquire real property or make other investments (with exceptions for, among other things, certain categories of capital expenditures and costs); and

DHC will generally be required to apply the net cash proceeds from the disposition of assets, capital markets transactions, debt financings or COVID-19 government stimulus programs to the repayment of outstanding loans under the credit agreement, if any.

DHC has the right to terminate the Amendment Period prior to June 30, 2021, subject to certain conditions.

Office Segment

DHC’s Office Segment, which contains Medical Office and Life Science assets, has maintained strength through the pandemic. As of June 30, 2020, DHC had granted rent deferrals equal to $2.2 million in its Office Segment, which represents only 0.6% of DHC’s annualized total revenues. During the second quarter of 2020, DHC had collected approximately 99% of its Office Segment rents that were due in April, May and June 2020, after giving effect to rent deferrals.

Senior Housing Operating Portfolio (SHOP) Segment

In light of the pandemic, DHC has worked closely with its operator, Five Star Senior Living Inc., or Five Star, to ensure that early and comprehensive measures were taken at DHC’s senior living communities, including active engagement by Five Star with its employees who are responsible for implementing protocols from the Centers for Disease Control and Prevention and/or local-equivalent public health authorities and other best practices measures.

As a result of these proactive measures, DHC’s SHOP Segment has maintained occupancies that are generally consistent with its peers and slightly better than DHC’s expectations. As of March 31, April 30 and May 31, 2020, occupancy in DHC’s SHOP Segment was 81.6%, 79.5% and 78.2%%, respectively. As of June 30, 2020, occupancy in DHC’s SHOP Segment was 77.4%.

Diversified Healthcare Trust (Nasdaq: DHC) is a real estate investment trust (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 March 31, 2020, DHC’s $8.4 billion portfolio included 416 properties in 38 states and Washington, D.C., occupied by more than 600 tenants, and totaling approximately 12 million square feet of medical office and life science properties and more than 30,000 living units. DHC is managed by the operating subsidiary of The RMR Group Inc. an alternative asset management company that is headquartered in Newton, MA.

Contacts

Michael Kodesch, Director, Investor Relations
(617) 796-8234