Diversified Healthcare Belief, of Newton, Mass., has closed a $120 million mortgage mortgage secured by eight properties inside DHC’s medical workplace and life science portfolio.
The properties are positioned in seven states and whole about 725,000 sq. toes. As of the tip of March, the weighted common remaining lease time period for these properties was 5.4 years and the general occupancy was 93 %.
The non-recourse mortgage has an implied capitalization charge of seven.2 % primarily based on the mixture appraised worth for the collateral properties and a loan-to-value ratio of roughly 50 %.
The mortgage is an interest-only 10-year mortgage with a 6.864 % all-in fastened rate of interest. DHC intends to make use of about half of the mortgage proceeds to redeem a portion of its excellent 9.750 % senior notes due in 2025. The REIT will use the rest of the mortgage proceeds to fund capital investments and enhance liquidity.
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The lenders have been Wells Fargo Financial institution N.A., Financial institution of Montreal and UBS AG.
DHC didn’t reply to Industrial Property Govt’s request for added data.
Debt points
In April 2023, Workplace Properties Earnings Belief entered right into a definitive merger settlement with Diversified Healthcare Belief, in an all-share transaction valuing the mixed firm at $12.4 billion. Each REITs are managed by The RMR Group, an alternate asset administration agency.
Because the shareholder vote neared, DHC despatched a number of letters to its shareholders highlighting the merger’s upside for DHC, together with fixing “a collection of extreme and time-sensitive challenges for DHC associated to the Firm’s debt covenants….”
On the finish of August 2023, nonetheless, DHC introduced that the 2 REITs had mutually agreed to terminate the merger settlement. Later that month, DHC said that, because it had beforehand reported, it “shouldn’t be and has not been for the previous two years in compliance with the debt incurrence covenants in its bond indentures. In consequence, DHC can’t incur new debt or refinance current indebtedness. DHC has $700 million in indebtedness maturing within the first half of 2024 and has beforehand disclosed that it doesn’t anticipate to be in covenant compliance till late 2024 on the earliest.”
