Diversified Healthcare Trust · NASDAQ:DHC
Diversified Healthcare Trust — Merger or Acquisition (April 2023)
16 slides from Diversified Healthcare Trust's merger presentation, Apr 11, 2023
Slide 1: Office Properties Income Trust to Merge with Diversified Healthcare Trust
Office Properties Income Trust to Merge with Diversified Healthcare Trust APRIL 11, 2023 CREATING A DIVERSIFIED REIT WITH A BROAD PORTFOLIO, DEFENSIVE TENANT BASE AND STRONG GROWTH POTENTIAL
Slide 2: Warning Regarding Forward-Looking Statements
WARNING REGARDING FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever Office Properties Income Trust (“OPI”) and Diversified Healthcare Trust (“DHC”) use
Slide 3: Transaction Overview
3 TRANSACTION OVERVIEW 1. Based on OPI’s closing share price of $11.55 on April 10, 2023. 2. Based on total gross assets (total assets plus accumulated depreciation) of each company at December 31, 2022. • Strategic merger between Office Properties Income Trust (OPI) and Diversified Healthcare Trust
Slide 4: OPI Strategic Rationale
4 OPI STRATEGIC RATIONALE • Structural office sector headwinds are likely to negatively affect office owners in the future. • Difficult financing environment for office properties. • OPI office portfolio will require increased capital investment in the future. • Unsustainable current dividend rate.
Slide 5: DHC Strategic Rationale
5 DHC STRATEGIC RATIONALE • Restricted from issuing or refinancing debt because of debt covenants and not expected to be in compliance until mid-2024. • $700 million of debt coming due by mid-2024. • High leverage levels and limited liquidity. • SHOP recovery is underway, but additional investment i
Slide 6: Establishes a Leading Diversified REIT
6 ESTABLISHES A LEADING DIVERSIFIED REIT Properties 160 105 265 Square Feet (MSF) 21.0 8.8 29.8 WALT1 6.6 5.8 6.4 % Investment Grade Tenants2 62.7% 44.8% 57.5% Expiring Leases 2023-20261 40.8% 37.7% 39.9% Occupancy (based on SF) 90.6% 84.7% 88.9% % Annualized Rental Income from Top 20 Tenants 58.3%
Slide 7: Greater Scale & Geographic Diversification
7 Office GREATER SCALE & GEOGRAPHIC DIVERSIFICATION Life Science Medical Office Senior Living 1. Based on total gross assets (total assets plus accumulated depreciation) of each company at December 31, 2022. 2. Based on property count. San Diego, CA San Antonio, TX Fort Myers, FL Atlanta, GA 539 Num
Slide 8: Diversified and Stable Tenant Base
8 DIVERSIFIED AND STABLE TENANT BASE Top Tenants Combined Portfolio Diversification1 MOB, LS and Office Diversified Tenants2 1. Based on gross asset value at December 31, 2022. 2. Based on annualized rental income. Excludes SHOP segment. Senior Living 40% Office 35% MOB 12% LS 9% Other 4% Top 20 Ten
Slide 9: MOB, LS and Office Segment: Secure and Stable Income
9 MOB, LS AND OFFICE SEGMENT: SECURE AND STABLE INCOME Tenant Industry Diversification Combined Portfolio Positioned to Deliver Secure and Stable Cash Flow That Is Supported By a Diversified Tenant Base and Well Laddered Lease Expiration Schedule Well Laddered Lease Expiration Schedule 10.4% 13.5% 7
Slide 10: SHOP Segment: Substantial Growth Potential
10 SHOP SEGMENT: SUBSTANTIAL GROWTH POTENTIAL San Diego, CA Multi-tenant Life Science Square feet: 185,979 1. Represents comparative pro forma actual results for the wholly owned portfolio as of December 31, 2022. Geographically diversified portfolio of well-located assets across the United States.
Slide 11: Senior Living Sector Recovery Is Underway
11 SENIOR LIVING SECTOR RECOVERY IS UNDERWAY Age 80+ Population Growth1 0 5 10 15 20 25 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023E 2025E 2027E 2029E Millions 1. Source: Population estimates from the Organization for Economic Co-Operation and Development (OECD) as of February 2023. 2. Source:
Slide 12: Revenue Enhancing Capex
12 REVENUE ENHANCING CAPEX A Track Record of Successful Development & Redevelopment Projects Demonstrates Manager’s Ability to Deliver Meaningful Value Creation MOB, LS & Office Project Cost Project Spend to Date Stabilized Yield1 Completed projects (last 3 years) $142 $130 10.4% In-process projects
Slide 13: Accretion, Synergies and Sources & Uses
13 • Expected to be accretive to OPI’s NFFO and CAD in 2H 2024 and immediately accretive to DHC shareholders. • Limited integration risk given common management by RMR, with expected annual G&A synergies of $2 million to $3 million. Cash Sources Total Sources Cash Uses $525 Total Uses $525 Bridge lo
Slide 14: Pro Forma Capitalization
14 PRO FORMA CAPITALIZATION Pro Forma Debt Structure / Debt Composition1 ($ in millions) OPI 12/31/2022 DHC 12/31/2022 Adj. Combined Company OPI revolving credit facility $195 $0 $0 $195 DHC credit facility 0 450 (450) 0 Bridge loan 0 0 368 368 Mortgage debt 50 25 0 75 Unsecured notes 2,212 2,350 0
Slide 15: Strategic and Financial Objectives
15 STRATEGIC AND FINANCIAL OBJECTIVES Combined Company Business Plan Through 2025 • Continued focus on increasing cash flows from SHOP with goal of surpassing 2019 NOI by 2H 2024. • Maintain stable cash flows from MOB, LS and office properties. • Continue high return capex investments in properties
Slide 16: Creating a Diversified REIT With a Broad Portfolio, Defensive Tenant Base and Strong Growth Potential
CREATING A DIVERSIFIED REIT WITH A BROAD PORTFOLIO, DEFENSIVE TENANT BASE AND STRONG GROWTH POTENTIAL Office Properties Income Trust to Merge with Diversified Healthcare Trust APRIL 11, 2023
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