Secured overnight financing rate 4.33% on May 5 vs 4.36% on May 2

Secured overnight financing rate 4.33% on May 5 vs 4.36% on May 2

Diversified Healthcare Trust (DHC) has closed a $140 million mortgage financing secured by 14 senior living communities, located in nine states and consisting of 1,375 units managed by Five Star Senior Living. This non-recourse, three-year loan has an initial maturity date of March 31, 2028, with two one-year extension options subject to certain conditions [1].

The loan, which has a variable interest rate based on the Secured Overnight Financing Rate (SOFR) plus a margin of 2.50% per annum, includes 24 months of interest-only payments and two six-month extension options. DHC also purchased a one-year interest rate cap with a SOFR strike rate equal to 4.50% [1]. The loan to value ratio on the financing is approximately 62%, and the implied capitalization rate of the collateral communities based on the appraised value is 7.0%, or $163,500 per unit. The loan allows for a portion of the principal to be prepaid with a prepayment penalty of 2% in year one, 1% in year two, and no penalty thereafter [1].

DHC intends to use the loan proceeds to redeem a portion of its outstanding 9.75% senior notes due 2025. Additionally, DHC has executed three term sheets with various lenders for total loan proceeds of approximately $200 million, which loans are expected to close in the next 45 days [1].

VSE Corporation has announced the successful refinancing of its Term Loan A and Revolving Credit Facility. The company entered into a new $300 million Term Loan A and a $400 million revolving credit facility, both maturing on May 2, 2030. These facilities refinance and replace the company's previous debt arrangements, which were scheduled to mature in October 2026 [2].

The new facilities bear interest at the SOFR plus 175 basis points, representing a reduction of approximately 60 basis points compared to the terms of the prior facilities. This refinancing comes at a time when the SOFR rate has decreased from 4.36% on May 2 to 4.33% on May 5, reflecting a slight reduction in financing costs [2].

References:
[1] https://www.businesswire.com/news/home/20250331883340/en/Diversified-Healthcare-Trust-Closes-%24140-Million-Mortgage-Financing-Secured-by-14-SHOP-Properties
[2] https://www.marketscreener.com/quote/stock/VSE-CORPORATION-11326/news/VSE-Corporation-Completes-Refinancing-of-Term-Loan-and-Revolver-49805125/