Diversified Healthcare Trust Closes $941 Million Zero Coupon Senior Secured Notes with a Maturity Date in January 2026, and a One-Year Extension Option

Diversified Healthcare Trust (Nasdaq: DHC) today announced that it has consummated the offering of an aggregate principal amount of $941 million of senior secured notes due January 2026, with a 12-month extension option, subject to the satisfaction of certain conditions and payment of an extension fee. The sale of the notes generated approximately $750 million in gross proceeds before issuance costs 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. The notes are guaranteed on a joint, several and senior secured basis by subsidiaries of DHC that own the properties comprising the collateral for the notes and on a joint, several and unsecured basis by all subsidiaries of DHC that previously guaranteed its existing senior notes due 2025 and 2031. DHC believes that the collateral properties have an estimated fair value of approximately $1.57 billion.

The net proceeds from this transaction, after initial purchaser discounts and offering costs, are approximately $732 million and are being used to repay all of DHC’s outstanding debt maturing in 2024, and for general business purposes. DHC repaid its $450 million secured credit facility and, in connection with the offering, issued a notice of redemption for its outstanding 4.750% Senior Notes due in May 2024. In connection with the offering, DHC immediately regained compliance with the incurrence covenants under its remaining public debt agreements.

B. Riley Securities, BMO Capital Markets, BofA Securities, Citigroup, Morgan Stanley, PNC Capital Markets LLC, UBS Investment Bank and Wells Fargo Securities acted as joint book-running managers for the offering.

The notes have not and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), any state securities laws or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act or any applicable state securities laws. The new notes were offered only to persons reasonably believed to be qualified institutional buyers under Rule 144A under the Securities Act and outside the United States only to non-U.S. investors in compliance with Regulation S under the Securities Act.