Moody's cuts Diversified Healthcare

Moody's Investors Service said it downgraded the ratings of Diversified Healthcare Trust (DHC) including its corporate family rating to Caa3 from B3, its guaranteed senior unsecured notes to Caa3 from B3, and its senior unsecured notes to Ca from Caa1. The speculative grade liquidity rating was maintained at SGL-4.

“The ratings downgrades reflect DHC's weak liquidity and refinancing risk as the REIT faces the maturity of its revolver and $250 million unsecured bonds in 2024. DHC suffered substantial cash flow declines in its senior housing operating portfolio over the past few years, which has raised net debt/EBITDA to very high levels and the timing and prospects for turning around this business remains uncertain,” Moody’s said in a press release.

The lower rating also reflects the potential for DHC to conduct an exchange the agency would view as distressed, Moody’s said.

The rating outlook remains negative.

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