B. Riley Securities, a middle-market investment bank and subsidiary of B. Riley Financial, served as lead left bookrunner to Diversified Healthcare Trust in its $941 million zero coupon senior secured notes offering.
Diversified Healthcare Trust intends to use proceeds from the transaction to repay all of its outstanding debt maturing in 2024 and for general business purposes. In connection with this transaction and the repayment of these outstanding debts, Diversified Healthcare Trust will immediately regain compliance with the incurrence covenants under its remaining public debt agreements.
Diversified Healthcare Trust is an owner of U.S. real estate focused on healthcare and life sciences. It owns assets with an approximate gross book value of $7.2 billion, including more than 370 properties in 36 states. Its properties range from multi-specialty physician offices to more than 250 senior living communities to multi-building life science campuses. Diversified Healthcare Trust is managed by The RMR Group, a U.S. alternative asset management company with approximately $36 billion in assets under management as of Sept. 30, 2023, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate.
“We appreciate the trust [Diversified Healthcare Trust] placed with B. Riley and are proud to have executed on this critical engagement,” Patrice McNicoll, co-head of investment banking at B. Riley Securities, said. “This outcome is reflective of our multi-disciplined deal team that brought a differentiated approach, and we look forward to continuing our partnership with The RMR Group.”
“Congratulations to the entire [Diversified Healthcare Trust] team. It was a privilege to collaborate with them and create this timely, bespoke solve,” Jimmy Baker, president and head of capital markets at B. Riley Securities, said. “We also appreciate the many lenders who constructively helped us deliver this solution that retired all 2024 maturities, bringing the company immediately back into compliance with debt incurrence covenants.”
The sale of the notes generated approximately $750 million in gross proceeds 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.
B. Riley’s investment banking team was led by McNicoll, Larry Goldsmith and Brian Taylor and included Perry Mandarino, Mason Boh, Connor Boyle and Mickey Sacks.
B. Riley’s capital markets team was led by Baker and Chad Ritchie and included Ryan Aceto, Dawn Farrell, Kathy Innis and Samuel Cook.
