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Diversified Healthcare Trust, or DHC, has announced changes to its board and executive leadership team, and has enlisted the services of a financial adviser, as it seeks solutions to its financial needs following the calling off of a proposed merger with Office Properties Income Trust, or OPI, last month.

Phyllis Hollis has been appointed as an independent trustee to the board of the Newton, MA-based real estate investment trust, effective Tuesday, following the Monday resignations of Daniel LePage and David Pierce, both of whom served on the board’s special committee connected to the OPI merger. The two said their resignations were not the result of disagreements with other board members or management.

Adam Portnoy, DHC Board chair, said he was “excited” to welcome Hollis to the body. “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,” he said.

Hollis will serve on the board’s Audit Committee and will chair its Compensation Committee. She has been the CEO of Hollis Advisory since 2018. Before that, she was CEO, chief marketing officer and chief operating officer for CAVU Securities, a New York-based investment bank.

Additionally, DHC said that the board’s Nominating and Governance Committee has hired executive search firm Korn Ferry to assist in its search for additional independent trustee candidates as part of its “board refreshment process.”

Remaining board members include independent trustees Lisa Harris Jones, the third member of the special committee connected to the merger; Jeffrey Sommers and John Harrington; and managing trustees Portnoy and Jennifer Francis, who is DHC’s president and CEO.

The REIT also announced that Matthew Brown has been appointed as DHC’s chief financial officer and treasurer, effective Oct. 1, following the resignation of Richard Siedel, which is effective Sept. 30. Brown is a senior vice president of The RMR Group, where he oversees accounting and finance functions. He previously was CFO of OPI.

The RMR Group manages DHC, OPI and AlerisLife, the parent company of Five Star Senior Living, a primary operator in DHC’s senior housing operating portfolio. Portnoy is president and CEO of the RMR Group, where Francis also is an executive vice president. Portnoy also is the sole and controlling shareholder, as well as an officer, of the company that took AlerisLife private in March.

Evaluating options

DHC further announced late Tuesday that B. Riley Securities has been hired as its financial adviser to help evaluate options to address near-term capital needs, including upcoming debt maturities. The REIT has not been in compliance with its debt covenants for the past two years and does not expect to be in compliance until late 2024 at the earliest. As a result, the company cannot incur new debt or refinance existing debt.

DHC has $700 million in debt maturing in the first half of 2024. The company also has said that its senior housing operating portfolio requires significant capital investments to complete a positive turnaround. A monthly senior housing operating portfolio performance update released Monday showed that the portfolio continues to struggle in its post-pandemic recovery.

Among the alternatives being considered to address its situation are raising new capital from investors and selling assets. DHC also plans to communicate with its lenders regarding debt that is maturing in January.

DHC and OPI called off their planned merger earlier this month after facing opposition from proxy advisory firms Egan-Jones, ISS and Glass Lewis as well as shareholders Flat Footed and hedge fund D.E. Shaw, all of which recommended that shareholders vote against the action.

In May, a month after the companies’ intent to merge was announced, Francis said during the REIT’s first-quarter earnings call that current conditions raised “substantial doubt” about the firm’s ability to continue as a going concern as a stand-alone company. At the end of June, DHC announced that a “non-monetary event of default” had occurred under its $450 million credit facility.During a second-quarter earnings call in August, Francis said that if the merger did not close as expected in the third quarter, then DHC would be forced to defer capital investment in its portfolio, significantly delaying the turnaround in its senior housing operating portfolio and forcing it to raise “expensive rescue financing.”