Diversified Healthcare Trust closed a $140 million mortgage financing secured by 14 seniors housing communities in nine states with 1,375 units that are managed by Five Star Senior Living, an operating division of AlerisLife Inc. This non-recourse, three-year loan has an initial maturity date of March 31, 2028, and two one-year extension options, subject to certain conditions. DHC intends to use the loan proceeds to redeem a portion of its outstanding 9.75% senior notes due 2025.
The loan has a variable interest rate based on SOFR plus a margin of 2.5% per annum with 24 months of interest-only payments and two six-month extension options of the interest only period, subject to certain conditions. In connection with this financing, DHC purchased a one-year interest rate cap with SOFR strike rate equal to 4.5%. The loan to value ratio on the financing is approximately 62% and the implied cap rate of the collateral communities based on the appraised value is 7%, or $164,000 per unit. The loan also allows for a portion of the principal to be prepaid with a prepayment penalty of 2% in year one, 1% in year two and no penalty thereafter.
As previously disclosed, DHC has executed three additional term sheets with various lenders for total loan proceeds of approximately $200 million. The loans are expected to close in the next 45 days.
