Diversified Healthcare Trust Releases Investor Presentation Highlighting Benefits of Pending Merger with Office Properties Income Trust
Highlights of the presentation include:
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The compelling value and upside potential for DHC shareholders: The transaction consideration represents a
37% premium to DHC’s share price on April 10, 2023, the day prior to the merger announcement, and a20% premium to DHC’s 30-day average closing share price as of that date. DHC shareholders will also benefit from OPI’s annual dividend of per share, a$0.14 7267% increase over DHC’s current dividendi. Following the closing of the transaction, DHC shareholders will own42% of the combined company, enabling them to participate in the considerable upside of a REIT with a diversified, high-quality portfolio, lower leverage and enhanced access to capital to invest in growth initiatives to drive shareholder returns.
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The significant downside risk for DHC and shareholders if the merger is not completed: DHC is currently restricted from issuing or refinancing any debt because DHC is currently not in compliance with its debt incurrence covenants. As such, DHC cannot access debt markets in time to address its
in debt maturities coming due within the next 12 months. If the merger is not approved, DHC will likely have to take actions detrimental to DHC and dilutive to its shareholders. By contrast, a merger with OPI is expected to immediately address DHC’s covenant compliance and pending debt maturities.$700 million
- A Special Committee of the DHC Board conducted a robust process in consultation with independent advisors and unanimously determined the OPI merger is the best strategic alternative for DHC shareholders: In addition to the DHC Board’s consideration of a significant number of alternatives to address DHC’s financial position over the past two years, a special committee of independent directors of the DHC Board evaluated potential strategic alternatives that may be available to DHC, in addition to the OPI combination. The DHC Special Committee met 25 times over five months to review these alternatives and a potential OPI transaction and ultimately negotiated a price nearly double OPI’s initial offer. The pending transaction is structured to maximize the benefit to DHC shareholders whereas the other alternatives would be value destructive and would not effectively address DHC’s covenant compliance issues.
- Investors campaigning against the merger are primarily debtholders whose economic interests do not align with those of DHC shareholders: Flat Footed’s and D.E. Shaw’s debt investments in DHC securities are 4.7x and 3.0x larger than their DHC equity positions, respectivelyii. The solutions these investors have proposed have already been considered and rejected by the DHC Board. No other alternative would provide shareholders with the upside offered by the OPI merger. Some conflicted debtholders, such as Flat Footed and D.E. Shaw, stand to benefit if the merger is not consummated, as DHC would then need to restructure its debt and bondholders would have considerable leverage to extract concessions from DHC that would negatively impact the value of DHC common stock.
Advisors
BofA Securities is acting as exclusive financial advisor to the DHC special committee and Sullivan & Cromwell LLP is acting as legal advisor to the DHC special committee in this transaction.
The DHC Board of Trustees Unanimously Recommends that DHC Shareholders Vote
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Vote the “WHITE” proxy card today! |
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Vote “FOR” the OPI – DHC Merger on the “WHITE” proxy card. |
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Discard any gold proxy card you may receive (or any voting form with gold border). |
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If shareholders have questions or require assistance voting their shares on the “WHITE” proxy card, please contact DHC’s proxy solicitor: |
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D.F. King & Co., Inc. |
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(800) 431-9633 (Toll-Free) |
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(212) 269-5550 (Call Collect) |
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About Diversified Healthcare Trust
DHC is a real estate investment trust focused on owning high-quality healthcare properties located throughout
Warning Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever DHC uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, it is making forward-looking statements. These forward-looking statements are based upon DHC’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by DHC’s forward-looking statements as a result of various factors. For example: (a) OPI and DHC have entered into a definitive merger agreement and the proposed merger is expected to close in the third quarter of 2023. However, the closing of the proposed merger is subject to the satisfaction or waiver of closing conditions, including DHC shareholder approval and the financing or any consents or approvals required or contemplated in connection with the proposed merger, some of which are beyond DHC’s control, and DHC cannot be sure that any or all of these conditions will be satisfied or waived. Accordingly, the proposed merger may not close on the contemplated terms or at all or it may be delayed; (b) OPI may not be able to recast its existing revolving credit facility on favorable terms as expected in connection with the proposed merger; (c) DHC shareholders are expected to benefit from an annual distribution of
These risks, as well as other risks associated with the proposed transaction between DHC and OPI, are more fully discussed under “Risk Factors” in the definitive proxy statement filed by DHC with the Securities and Exchange Commission (the “SEC”) on July 21, 2023. The information contained in DHC's periodic reports filed with the SEC, including under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or incorporated therein, also identifies important factors that could cause DHC's actual results to differ materially from those stated in or implied by DHC's forward-looking statements. DHC's filings with the SEC are available on the SEC's website at www.sec.gov and are also accessible on DHC’s website at the following link: SEC Filings. The documents provided in this section are provided for historical purposes only. The information contained in each document is accurate only as of the date each document was originally issued or such earlier date stated in those documents. DHC does not undertake any obligation to update any information contained in these documents. For current information about DHC, please refer to DHC’s most recent public SEC Filings.
You should not place undue reliance upon any forward-looking statements. Except as required by law, DHC does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
Important Additional Information About the Merger
This press release may be deemed to be solicitation material in respect of the proposed merger between DHC and OPI. In connection with the proposed merger, OPI filed a registration statement on Form S-4 with the SEC containing a joint proxy statement/prospectus of DHC and OPI. On July 21, 2023, the registration statement was declared effective by the SEC and DHC and OPI each filed with the SEC and commenced mailing to their respective shareholders the definitive joint proxy statement/prospectus. The proposed transaction involving DHC and OPI will be submitted to DHC’s and OPI’s shareholders for their consideration at special meetings of shareholders to be held on August 30, 2023. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT DHC, OPI AND THE PROPOSED MERGER. Investors are also able to obtain copies of the registration statement and the joint proxy statement/prospectus and other relevant documents (when they become available) free of charge at the SEC’s website (www.sec.gov). Additional copies of documents filed by DHC with the SEC may be obtained for free on DHC’s Investor Relations website at www.dhcreit.com/investors or by contacting the DHC Investor Relations department at 1-617-796-8234.
In addition to the registration statement and the joint proxy statement/prospectus, DHC files annual, quarterly and current reports and other information with the SEC. DHC’s filings with the SEC are also available to the public from commercial document-retrieval services and at the website maintained by the SEC at www.sec.gov.
No Offer or Solicitation
This press release is for informational purposes only and is not intended to and does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, any securities or a solicitation of any vote or approval in any jurisdiction with respect to the proposed merger or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the
Participants in the Solicitation
DHC and certain of its trustees and executive officers, OPI and certain of its trustees and executive officers, and RMR and its parent and certain of their respective directors, officers and employees may be deemed to be participants in the solicitation of proxies from DHC’s and OPI’s shareholders in connection with the proposed merger. Certain information regarding these trustees, executive officers, directors, officers and employees and a description of their direct and indirect interests are set forth in the registration statement and the joint proxy statement/prospectus filed with the SEC by DHC and/or OPI. Information about DHC’s trustees and executive officers is also included in the proxy statement for DHC’s 2023 annual meeting of shareholders, which was filed with the SEC on April 20, 2023. Information about OPI’s trustees and executive officers is also included in the proxy statement for OPI’s 2023 annual meeting of shareholders, which was filed with the SEC on April 6, 2023. Copies of the foregoing documents may be obtained as provided above.
A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
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i After giving effect to the exchange ratio of 0.147; OPI dividend per common share is
ii Ratio reflects principal amount of debt owned by each respective entity as of July 19, 2023, compared to their equity holdings based upon cost basis disclosed in each entity’s most recent Schedule 13D filings.
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Investor Contacts:
Melissa McCarthy, Manager, Investor Relations
(617) 796-8234
Tom Germinario
D.F. King & Co., Inc.
(212) 493-6922
Media Contact:
Andrew Siegel / Michael Reilly
Joele Frank
212-355-4449
Source: Diversified Healthcare Trust