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Diversified Healthcare Trust Announces $703 Million Joint Venture for 10 Properties in Its Office Portfolio Segment
DHC to Receive Cash Proceeds of Approximately $653 Million and Retain a 20% Equity Interest in the Joint Venture Selling 80% Joint Venture Equity Interest at
About this update from Diversified Healthcare Trust
[{"type":"text","content":"\nDHC to Receive Cash Proceeds of Approximately $653 Million and Retain a 20% Equity Interest in the Joint Venture\n\nSelling 80% Joint Venture Equity Interest at a 4.98% Capitalization Rate and Expected Gain on Sale of Approximately $320 Million\n\n NEWTON, Mass.--(BUSINESS WIRE)--\nDiversified Healthcare Trust (Nasdaq: DHC) today announced that it has entered into a $703 million joint venture for 10 properties in DHC’s Office Portfolio segment with two global institutional investors. The investors acquired a 41% and 39% equity interest in the joint venture for an investment of approximately $100.7 million and $95.8 million, respectively, and DHC retained a 20% equity interest in the joint venture. The joint venture incurred approximately $456.3 million of secured debt on the properties. The results of operations of the joint venture will be deconsolidated and DHC’s remaining 20% equity interest will be accounted for using the equity method.\n\nDHC expects to use the cash proceeds from this transaction to fund capital expenditures, to reduce outstanding indebtedness and for other general business purposes.\n\nThese Office Portfolio segment properties contain an aggregate of approximately 1.1 million square feet and are located in five states. The 10 property portfolio is being sold at approximately $657 per square foot, or a 4.98% capitalization rate based on full year 2021 actual cash NOI. As of September 30, 2021, these properties were 97% occupied for a weighted average remaining lease term of 6.6 years (by annualized rental income). This transaction is expected to result in a gain on sale of approximately $320 million.\n\nJennifer Francis, President and Chief Executive Officer of DHC, made the following statement about today’s announcement:\n\n“The closing of this joint venture transaction demonstrates the value of our Office Portfolio segment assets, highlighted by the attractive valuation and cap rate achieved, and provides increased balance sheet liquidity for DHC. This enhanced liquidity provides flexibility as we continue to invest in our portfolio to drive operational performance and optimize returns. We are excited to expand our joint venture platform with well-funded institutional investors that offer additional capital raising and deployment opportunities to DHC that will deliver future value to DHC’s shareholders....