Diversified Healthcare Sees No Path To Refinance $700M In Debt

Diversified Healthcare Trust said in a statement Monday that it sees “no path” to refinance $700M in debt until mid-2024, well after the debt is due.

The company, which specializes in senior housing but has inked an unfinished merger with Office Properties Income Trust, said the debt wall means there is “substantial doubt” about DHC's ability to remain in business. As an alternative to going out of business, the REIT's management recommends that the merger go forward.

OPI agreed to acquire Diversified Healthcare Trust in April in an all-stock deal that would create a new entity called Diversified Properties Trust. The rationale for the deal, according to OPI, is that DHC would reduce its exposure to the troubled office sector.

OPI has 160 office properties totaling about 21M SF. The merger would add DHC's 105 healthcare, life sciences and senior housing properties totaling 8.8M SF.

In its statement, DHC also reported weak numbers. Its senior housing net operating income was $32.7M in aggregate, or $6.5M per month on average, from January through May. That is $9.9M, or only 60%, what DHC said is necessary for it to keep current with its debt.

DHC stock was down almost 8% on Monday and is off nearly 7% year-over-year. OPI, on the other hand, gained about 7.5% on Monday, though it is down nearly 62% since this time last year.

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