D
iversified Healthcare Trust (Nasdaq: DHC) has secured a $140 million mortgage financing deal, bolstering its financial foundation through the acquisition of 14 senior living communities across nine states. These properties, totaling 1,375 units and managed by Five Star Senior Living, a division of AlerisLife Inc., have been valued at an impressive $163,500 per unit.

    The non-recourse loan, set to mature on March 31, 2028, offers two one-year extension options contingent upon specific conditions. The proceeds from this financing will be used to partially redeem DHC's outstanding senior notes due in 2025. Notably, the loan features a variable interest rate tied to the Secured Overnight Financing Rate (SOFR) plus a 2.50% margin per annum.

    To mitigate potential risks, DHC has purchased an interest rate cap with a SOFR strike rate of 4.50%. The financing includes 24 months of interest-only payments and two six-month extension options for this period. With a loan-to-value ratio of approximately 62%, the deal demonstrates the value of DHC's senior housing operating portfolio.

    "We're making steady progress in reducing our financing costs, and this loan showcases the significant value of our SHOP assets," said Matt Brown, Chief Financial Officer and Treasurer of DHC. "With $145 million in cash reserves and an additional $200 million in secured financings expected to close within 45 days, we remain confident in our ability to address upcoming debt maturities while driving growth and delivering value for shareholders."