Diversified Healthcare Trust Strikes Major Deal to Sell Assets
Diversified Healthcare Trust Sells Senior Living Communities
Diversified Healthcare Trust (NASDAQ: DHC) has decided to sell 18 of its triple net leased senior living communities to Brookdale Senior Living Inc. (NYSE: BKD) for a substantial $135 million. This strategic decision stems from DHC's ongoing effort to optimize its property portfolio while enhancing financial liquidity.
These 18 senior living communities, which consist of 876 units, have been under Brookdale’s management since February 2003. The sale not only represents a significant financial transaction but also shows DHC's commitment to reducing leverage and improving cash flow. Proceeds from the sale will be directed towards paying down an impressive $941 million in senior secured notes that are due in January 2026.
Enhancing Liquidity and Optimizing Portfolio
Chris Bilotto, the President and Chief Executive Officer of DHC, articulated this move as part of an ongoing initiative to streamline their portfolio. He stated that this transaction monetizes their NNN portfolio at a premium valuation exceeding $150,000 per unit, which reflects a robust annualized income cap rate of 7.3%. This improvement in liquidity is expected to aid in consolidating its financial position.
Properties Included in the Sale
The properties undergoing transfer to Brookdale cover various states, with each facility catering primarily to assisted living and memory care residents:
- 14001 W. Meeker Boulevard, Sun City West, AZ - 46 units
- 8271 South Continental Divide Road, Littleton, CO - 50 units
- 1416 Country Club Blvd., Cape Coral, FL - 42 units
- ... and several more, with the full list detailed in investor communications.
Future Outlook for DHC
As the transaction advances, it is set to close in the fourth quarter of 2024, pending customary closing conditions. This strategic maneuver aligns with DHC's roadmap for growth within the healthcare real estate investment sector.
DHC specializes in owning high-quality healthcare properties across the United States, boasting a diverse portfolio encompassing 370 properties in 36 states and Washington, D.C. Their holdings include approximately 8.4 million square feet dedicated to life sciences and medical office properties, alongside more than 27,000 senior living units.
About Diversified Healthcare Trust
DHC continues to be a significant player in the real estate investment trust landscape, managed by The RMR Group (NASDAQ: RMR). With over 41 billion in assets under management and more than 35 years of commercial real estate experience, DHC is on a steady path toward enhancing its service delivery across various healthcare provisions.
To keep up with DHC’s latest developments, interested parties can visit their official website for more detailed information.
Frequently Asked Questions
What prompted Diversified Healthcare Trust to sell these properties?
The sale aims to optimize DHC's portfolio and enhance liquidity by reducing leverage through the proceeds from the transaction.
What is the value of the transaction with Brookdale?
The transaction is valued at $135 million, translating to approximately $154,000 per unit.
When is the expected closing date for the transaction?
The transaction is expected to close in the fourth quarter of 2024, subject to standard closing conditions.
How does this sale impact DHC's financial status?
By using the proceeds from the sale to pay down $941 million of senior secured notes, DHC aims to enhance its liquidity and reduce overall leverage.
Who manages Diversified Healthcare Trust?
DHC is managed by The RMR Group, a prominent alternative asset management company with significant experience in real estate.
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