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Phyllis Hollis Appointed Independent Trustee
Matthew Brown Appointed CFO, Effective October 1, 2023
B. Riley Securities Engaged as Financial Advisor
Diversified Healthcare Trust (NASDAQ:DHC) today announced changes to its Board of Trustees and executive leadership team, and other actions to address its near term capital needs, including DHC's pending debt maturities.
Phyllis Hollis has been appointed as an Independent Trustee of the DHC Board, effective September 26, 2023. Ms. Hollis previously worked as an executive at an investment bank and has extensive experience in finance and executing capital markets transactions. Ms. Hollis will serve on DHC's Audit Committee as well as its Compensation Committee, which she will chair.
Adam Portnoy, Chair of DHC's Board, made the following statement:
"On behalf of the DHC Board, I am excited to welcome Phyllis as our newest Board member. Phyllis is a recognized industry veteran with substantial executive and finance experience. We look forward to drawing on her insights and perspectives as we consider alternatives to address DHC's near term financing needs and generally oversee DHC's path forward."
In addition, DHC has appointed Matthew Brown as Chief Financial Officer and Treasurer, effective October 1, 2023. Mr. Brown is a Senior Vice President of The RMR Group (NASDAQ:RMR) where he oversees the accounting and finance functions. Mr. Brown is a certified public accountant and previously served as Chief Financial Officer of Office Properties Income Trust (NASDAQ:OPI).
DHC also announced that B. Riley Securities has been engaged as its financial advisor to help it evaluate options to address near term capital needs, including upcoming debt maturities. As previously disclosed, DHC is not and has not been for the past two years in compliance with the debt incurrence covenants in its bond indentures. As a result, DHC cannot incur new debt or refinance existing indebtedness. DHC has $700 million in indebtedness maturing in the first half of 2024 and has previously disclosed that it does not expect to be in covenant compliance until late 2024 at the earliest. In addition, DHC's Senior Housing Operating Portfolio, or SHOP, requires significant capital investments over the next couple of years in order to effectuate a positive turn-around in the SHOP business. Among the alternatives being considered to address DHC's near term capital needs are raising permissible new capital from investors and selling assets. DHC also plans to engage in discussions with its lenders regarding its bank debt maturing in January 2024.
Today's actions follow the resignation of two of DHC's Board members who served on the DHC Board's special committee in connection with DHC's terminated merger with Office Properties Income Trust. Both Board members stated in their resignation letters that their resignation was not a result of any disagreement with the Company. Following Ms. Hollis's appointment, the DHC Board is now comprised of six Trustees, 67% of whom are Independent Trustees, 50% of whom are women and 33% of whom are from underrepresented communities. The DHC Nominating and Governance Committee has retained Korn Ferry, a leading executive search firm, to support its search for additional Independent Trustee candidates as part of its Board refreshment process.
