Wells Fargo Securities, Citigroup Global Markets, PNC Capital Markets and RBC Capital Markets acted as joint lead arrangers on an amendment to Diversified Healthcare Trust’s revolving credit loan agreement. In addition, Wells Fargo Securities and PNC served as joint lead arrangers for an amendment to Diversified Healthcare Trust’s term loan agreement. Wells Fargo is the administrative agent for both facilities.
The amendments provide for a waiver of certain financial covenants under the credit and term loan agreements through June 30, 2022, during which period, subject to certain conditions, Diversified Healthcare Trust will continue to have access to undrawn amounts under its revolving credit facility, and also provide Diversified Healthcare Trust with the option to further extend the revolving credit facility maturity date. The key terms of the amendments include:
- Certain financial covenants under the credit and term loan facilities have been waived through June 30, 2022.
- Diversified Healthcare Trust has an additional option to extend the maturity of the revolving credit facility to January 2024.
- The revolving credit facility commitments have been reduced from $1 billion to $800 million.
- Diversified Healthcare Trust pledged the equity interests of certain of its subsidiaries which own properties with an undepreciated book value of $1.4 billion as of Dec. 31, 2020, and agreed to provide first mortgage liens on 91 medical office and life science properties owned by these subsidiaries to secure its obligations under the credit and term loan facilities.
- The interest rate premiums over LIBOR under the credit and term loan facilities increased by up to 30 basis points.
- Diversified Healthcare Trust has the ability to fund up to $250 million of capital expenditures, as defined, per year, which increases to $350 million per year following Diversified Healthcare Trust’s repayment of its $200 million term loan.
- Certain other covenants and conditions, including restrictions on Diversified Healthcare Trust’s ability to make distributions, to incur debt and to acquire real property (in each case subject to various exceptions), and the requirement that Diversified Healthcare Trust maintain a minimum liquidity of $200 million and remain in place through the waiver period.
- Diversified Healthcare Trust also is generally required to apply any net cash proceeds from dispositions or debt refinancings to repay its senior notes due in December 2021, its $200 million term loan and any outstanding borrowings under its revolving credit facility.
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Diversified Healthcare Trust is a real estate investment trust focused on owning healthcare properties located throughout the United States.
