Diversified Healthcare Trust Provides Monthly SHOP Performance Update

NEWTON, Mass.–(BUSINESS WIRE)–Diversified Healthcare Trust (Nasdaq: DHC) today provided an update regarding the recent performance of its Senior Housing Operating Portfolio, or SHOP, segment.


Monthly Unaudited Results in DHC’s Total SHOP Comparable Properties:

December 2023 occupancy was 80.0%, 580 basis points below December 2019, and 10 basis points below November 2023.

December 2023 Resident Fees and Services revenue was $96.0 million, $6.4 million, or 6.2%, below December 2019, and $1.4 million, or 1.4%, above November 2023.

December 2023 net operating income, or NOI, was $2.8 million, $9.8 million, or 77.9%, below December 2019, and $3.3 million, or 54.4%, below November 2023.

December 2023 NOI margin was 2.9%, 930 basis points below December 2019, and 350 basis points below November 2023.

Year to Date Unaudited Results in DHC’s Total SHOP Comparable Properties:

Year to date occupancy through December 31, 2023 was 78.7%, 760 basis points below the same period in 2019.

Year to date Resident Fees and Services revenue through December 31, 2023 was $1.1 billion, $106.7 million, or 8.7%, below the same period in 2019.

Year to date NOI through December 31, 2023 was $74.8 million, $127.7 million, or 63.1%, below the same period in 2019.

Year to date NOI margin through December 31, 2023 was 6.7%, 980 basis points below the same period in 2019.

 

Diversified Healthcare Trust (1)

 

SHOP – ALR/Five Star Managed and Other Operator Managed Results of Operations

(dollars in thousands, except average monthly rate)

 

 

2019 Pro Forma (4)

COMPARABLE (2)

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

YTD

 

ALR/Five Star Managed Communities

 

Number of Properties

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

Number of Units

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,951

 

 

16,951

 

 

16,951

 

 

16,951

 

 

16,951

 

 

Occupancy

 

88.0

%

 

88.0

%

 

88.0

%

 

88.0

%

 

87.9

%

 

88.0

%

 

87.9

%

 

87.9

%

 

87.3

%

 

87.1

%

 

86.9

%

 

87.0

%

 

87.6

%

 

Average Monthly Rate

$

4,709

 

$

5,099

 

$

4,723

 

$

4,833

 

$

4,703

 

$

4,834

 

$

4,695

 

$

4,695

 

$

4,756

 

$

4,755

 

$

4,824

 

$

4,729

 

$

4,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residents Fees and Services

$

72,761

 

$

71,079

 

$

72,954

 

$

72,277

 

$

72,562

 

$

72,250

 

$

72,451

 

$

72,447

 

$

70,879

 

$

73,102

 

$

71,586

 

$

72,593

 

$

866,941

 

 

Property Operating Expenses

 

(57,168

)

 

(53,411

)

 

(59,496

)

 

(56,989

)

 

(58,708

)

 

(56,515

)

 

(60,161

)

 

(59,247

)

 

(58,304

)

 

(59,880

)

 

(57,938

)

 

(61,220

)

 

(699,037

)

 

NOI (3)

$

15,593

 

$

17,668

 

$

13,458

 

$

15,288

 

$

13,854

 

$

15,735

 

$

12,290

 

$

13,200

 

$

12,575

 

$

13,222

 

$

13,648

 

$

11,373

 

$

167,904

 

 

NOI Margin

 

21.4

%

 

24.9

%

 

18.4

%

 

21.2

%

 

19.1

%

 

21.8

%

 

17.0

%

 

18.2

%

 

17.7

%

 

18.1

%

 

19.1

%

 

15.7

%

 

19.4

%

 

 

Other Operator Managed Communities

 

Number of Properties

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

Number of Units

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,154

 

 

7,154

 

 

7,154

 

 

7,061

 

 

7,061

 

 

Occupancy

 

82.5

%

 

82.6

%

 

82.6

%

 

82.6

%

 

82.5

%

 

82.6

%

 

82.7

%

 

82.6

%

 

82.6

%

 

82.6

%

 

82.5

%

 

82.3

%

 

82.6

%

 

Average Monthly Rate

$

5,889

 

$

6,344

 

$

5,929

 

$

6,041

 

$

5,896

 

$

6,011

 

$

5,889

 

$

5,855

 

$

5,872

 

$

5,799

 

$

5,926

 

$

5,813

 

$

5,935

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residents Fees and Services

$

30,304

 

$

29,501

 

$

30,539

 

$

30,100

 

$

30,336

 

$

29,956

 

$

30,355

 

$

30,158

 

$

29,256

 

$

29,865

 

$

29,512

 

$

29,815

 

$

359,697

 

 

Property Operating Expenses

 

(26,798

)

 

(24,627

)

 

(27,785

)

 

(26,329

)

 

(27,284

)

 

(26,260

)

 

(27,853

)

 

(27,539

)

 

(27,145

)

 

(28,053

)

 

(26,802

)

 

(28,664

)

 

(325,139

)

 

NOI (3)

$

3,506

 

$

4,874

 

$

2,754

 

$

3,771

 

$

3,052

 

$

3,696

 

$

2,502

 

$

2,619

 

$

2,111

 

$

1,812

 

$

2,710

 

$

1,151

 

$

34,558

 

 

NOI Margin

 

11.6

%

 

16.5

%

 

9.0

%

 

12.5

%

 

10.1

%

 

12.3

%

 

8.2

%

 

8.7

%

 

7.2

%

 

6.1

%

 

9.2

%

 

3.9

%

 

9.6

%

 

 

Total SHOP Comparable

 

Number of Properties

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

Number of Units

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,105

 

 

24,105

 

 

24,105

 

 

24,012

 

 

24,012

 

 

Occupancy

 

86.6

%

 

86.6

%

 

86.6

%

 

86.6

%

 

86.5

%

 

86.5

%

 

86.5

%

 

86.5

%

 

86.0

%

 

85.9

%

 

85.7

%

 

85.8

%

 

86.3

%

 

Average Monthly Rate

$

5,004

 

$

5,410

 

$

5,024

 

$

5,135

 

$

5,001

 

$

5,128

 

$

4,994

 

$

4,985

 

$

5,035

 

$

5,017

 

$

5,101

 

$

5,000

 

$

5,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residents Fees and Services

$

103,065

 

$

100,580

 

$

103,493

 

$

102,377

 

$

102,898

 

$

102,206

 

$

102,806

 

$

102,605

 

$

100,135

 

$

102,967

 

$

101,098

 

$

102,408

 

$

1,226,638

 

 

Property Operating Expenses

 

(83,966

)

 

(78,038

)

 

(87,281

)

 

(83,318

)

 

(85,992

)

 

(82,775

)

 

(88,014

)

 

(86,786

)

 

(85,449

)

 

(87,933

)

 

(84,740

)

 

(89,884

)

 

(1,024,176

)

 

NOI (3)

$

19,099

 

$

22,542

 

$

16,212

 

$

19,059

 

$

16,906

 

$

19,431

 

$

14,792

 

$

15,819

 

$

14,686

 

$

15,034

 

$

16,358

 

$

12,524

 

$

202,462

 

 

NOI Margin

 

18.5

%

 

22.4

%

 

15.7

%

 

18.6

%

 

16.4

%

 

19.0

%

 

14.4

%

 

15.4

%

 

14.7

%

 

14.6

%

 

16.2

%

 

12.2

%

 

16.5

%

 

 

 

 

2023

 

 

COMPARABLE (2)

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

YTD

 

ALR/Five Star Managed Communities

Number of Properties

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

 

117

 

Number of Units

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,995

 

 

16,951

 

 

16,951

 

 

16,951

 

 

16,951

 

 

16,951

 

Occupancy

 

78.0

%

 

77.9

%

 

78.5

%

 

78.7

%

 

78.8

%

 

79.3

%

 

79.5

%

 

79.9

%

 

80.0

%

 

80.5

%

 

80.6

%

 

80.4

%

 

79.4

%

Average Monthly Rate

$

4,278

 

$

4,907

 

$

4,384

 

$

4,541

 

$

4,417

 

$

4,549

 

$

4,405

 

$

4,411

 

$

4,582

 

$

4,423

 

$

4,538

 

$

4,429

 

$

4,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residents Fees and Services

$

58,695

 

$

60,666

 

$

60,434

 

$

60,769

 

$

61,178

 

$

61,309

 

$

61,524

 

$

61,831

 

$

62,160

 

$

62,375

 

$

62,026

 

$

62,397

 

$

735,364

 

Property Operating Expenses

 

(52,606

)

 

(51,786

)

 

(54,777

)

 

(50,892

)

 

(54,500

)

 

(54,324

)

 

(55,532

)

 

(55,526

)

 

(55,153

)

 

(55,470

)

 

(55,602

)

 

(58,398

)

 

(654,566

)

NOI (3)

$

6,089

 

$

8,880

 

$

5,657

 

$

9,877

 

$

6,678

 

$

6,985

 

$

5,992

 

$

6,305

 

$

7,007

 

$

6,905

 

$

6,424

 

$

3,999

 

$

80,798

 

NOI Margin

 

10.4

%

 

14.6

%

 

9.4

%

 

16.3

%

 

10.9

%

 

11.4

%

 

9.7

%

 

10.2

%

 

11.3

%

 

11.1

%

 

10.4

%

 

6.4

%

 

11.0

%

 

Other Operator Managed Communities

Number of Properties

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

 

106

 

Number of Units

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,130

 

 

7,154

 

 

7,154

 

 

7,154

 

 

7,061

 

 

7,061

 

Occupancy

 

74.2

%

 

75.9

%

 

76.2

%

 

76.6

%

 

76.3

%

 

77.2

%

 

77.6

%

 

77.8

%

 

77.9

%

 

78.5

%

 

78.8

%

 

79.1

%

 

77.2

%

Average Monthly Rate

$

5,665

 

$

5,944

 

$

5,662

 

$

5,668

 

$

5,566

 

$

5,749

 

$

5,675

 

$

5,723

 

$

6,095

 

$

5,740

 

$

5,853

 

$

5,816

 

$

5,762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residents Fees and Services

$

30,788

 

$

29,808

 

$

31,504

 

$

30,938

 

$

31,303

 

$

31,664

 

$

32,461

 

$

32,933

 

$

33,981

 

$

32,953

 

$

32,638

 

$

33,631

 

$

384,602

 

Property Operating Expenses

 

(33,025

)

 

(30,118

)

 

(32,590

)

 

(31,725

)

 

(32,096

)

 

(31,472

)

 

(32,549

)

 

(33,946

)

 

(32,181

)

 

(33,042

)

 

(33,003

)

 

(34,868

)

 

(390,615

)

NOI (3)

$

(2,237

)

$

(310

)

$

(1,086

)

$

(787

)

$

(793

)

$

192

 

$

(88

)

$

(1,013

)

$

1,800

 

$

(89

)

$

(365

)

$

(1,237

)

$

(6,013

)

NOI Margin

 

(7.3

)%

 

(1.0

)%

 

(3.4

)%

 

(2.5

)%

 

(2.5

)%

 

0.6

%

 

(0.3

)%

 

(3.1

)%

 

5.3

%

 

(0.3

)%

 

(1.1

)%

 

(3.7

)%

 

(1.6

)%

 

Total SHOP Comparable

Number of Properties

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

 

223

 

Number of Units

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,125

 

 

24,105

 

 

24,105

 

 

24,105

 

 

24,012

 

 

24,012

 

Occupancy

 

76.9

%

 

77.3

%

 

77.8

%

 

78.1

%

 

78.1

%

 

78.7

%

 

79.0

%

 

79.3

%

 

79.4

%

 

79.9

%

 

80.1

%

 

80.0

%

 

78.7

%

Average Monthly Rate

$

4,671

 

$

5,206

 

$

4,751

 

$

4,868

 

$

4,749

 

$

4,897

 

$

4,774

 

$

4,793

 

$

5,023

 

$

4,804

 

$

4,919

 

$

4,832

 

$

4,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residents Fees and Services

$

89,483

 

$

90,474

 

$

91,938

 

$

91,707

 

$

92,481

 

$

92,973

 

$

93,985

 

$

94,764

 

$

96,141

 

$

95,328

 

$

94,664

 

$

96,028

 

$

1,119,966

 

Property Operating Expenses

 

(85,631

)

 

(81,904

)

 

(87,367

)

 

(82,617

)

 

(86,596

)

 

(85,796

)

 

(88,081

)

 

(89,472

)

 

(87,334

)

 

(88,512

)

 

(88,605

)

 

(93,266

)

 

(1,045,181

)

NOI (3)

$

3,852

 

$

8,570

 

$

4,571

 

$

9,090

 

$

5,885

 

$

7,177

 

$

5,904

 

$

5,292

 

$

8,807

 

$

6,816

 

$

6,059

 

$

2,762

 

$

74,785

 

NOI Margin

 

4.3

%

 

9.5

%

 

5.0

%

 

9.9

%

 

6.4

%

 

7.7

%

 

6.3

%

 

5.6

%

 

9.2

%

 

7.2

%

 

6.4

%

 

2.9

%

 

6.7

%

 

(1)

 

The information regarding DHC’s SHOP segment results for October, November and December 2023 and year to date 2023, and on a pro forma basis for the 2019 periods indicated, reflects preliminary estimates with respect to certain results of DHC for such periods, based on currently available information. Because the quarterly financial close process and review for those periods is not yet complete, DHC’s final results upon completion of its quarterly close process and review may vary from these preliminary estimates.

(2)

 

Comparable properties consist of properties owned and in service continuously since January 1, 2019; excludes properties classified as held for sale, closed or out of service and communities previously leased to operators that did not provide monthly financial results.

(3)

 

The calculation of NOI shown excludes certain components of net income (loss) in order to provide results that are more closely related to DHC’s property level results of operations. DHC defines NOI as income from its real estate less its property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that DHC records as depreciation and amortization. DHC calculates comparable property NOI in the same manner that it calculates the corresponding NOI amount, except that it only includes comparable properties in calculating comparable property NOI. DHC uses NOI and comparable property NOI to evaluate individual and company wide property level performance. Other real estate companies and real estate investment trusts, or REITs, may calculate NOI and comparable property NOI differently than DHC does.

(4)

 

Many of the senior living communities currently operated on DHC’s behalf in its SHOP segment were leased in 2019. DHC believes pro forma operating results are a meaningful supplemental performance measure as they present historical community level operating results regardless of the form of contractual arrangements. The table presents pro forma residents fees and services revenue, pro forma property operating expenses and pro forma NOI as if the communities had been managed for DHC’s account throughout all periods presented to assist in understanding community level operating results.

Calculation and Reconciliation of NOI and Comparable Property NOI for SHOP Segment

(dollars in thousands)

For the Twelve Months Ended

12/31/2019

12/31/2023

Calculation of NOI:

SHOP

 

Restructuring Transaction

 

Pro Forma

SHOP

Rental income

$

137,898

 

 

$

(137,898

)

 

$

 

 

$

 

Residents fees and services

 

433,597

 

 

840,045

 

 

1,273,642

 

 

1,151,908

 

Property operating expenses

 

(356,722

)

 

 

(706,779

)

 

 

(1,063,501

)

 

 

(1,075,091

)

NOI

 

214,773

 

 

(4,632

)

 

210,141

 

 

76,817

 

 

 

 

 

 

 

 

 

Reconciliation of NOI to Comparable Property NOI:

NOI

$

214,773

 

 

$

(4,632

)

 

$

210,141

 

 

$

76,817

 

NOI of properties not included in comparable results

 

(1,247

)

 

(6,432

)

 

(7,679

)

 

(2,032

)

Comparable property NOI

$

213,526

 

 

$

(11,064

)

 

$

202,462

 

 

$

74,785

 

For the Twelve Months Ended

12/31/2019

12/31/2023

SHOP

 

Restructuring Transaction

 

Pro Forma

SHOP

 

Revenues:

 

 

 

 

 

 

 

Rental income

$

137,898

 

$

(137,898

)

$

 

$

 

Residents fees and services

 

433,597

 

 

 

840,045

 

 

 

1,273,642

 

 

 

1,151,908

 

Total revenues

 

571,495

 

 

702,147

 

 

1,273,642

 

 

1,151,908

 

 

 

 

 

 

 

 

 

Expenses:

Property operating expenses

 

356,722

 

 

 

706,779

 

 

 

1,063,501

 

 

 

1,075,091

 

Depreciation and amortization

 

132,637

 

 

 

 

132,637

 

 

175,926

 

Impairment of assets

 

65,822

 

 

 

 

 

 

65,822

 

 

 

4,346

 

Total expenses

 

555,181

 

 

706,779

 

 

1,261,960

 

 

1,255,363

 

 

 

 

 

 

 

 

 

Gain on sale of properties

 

15,207

 

 

 

 

15,207

 

 

2,802

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

1,581

 

Interest expense

 

(3,058

)

 

 

 

(3,058

)

 

(551

)

Loss on early extinguishment of debt

 

(17

)

 

 

 

 

 

(17

)

 

 

 

Net income (loss)

 

28,446

 

 

(4,632

)

 

23,814

 

 

(99,623

)

 

 

 

 

 

 

 

 

Add (less): Interest expense

 

3,058

 

 

551

 

Interest and other income

 

 

 

 

 

 

 

 

(1,581

)

Depreciation and amortization

 

132,637

 

 

175,926

 

Impairment of assets

 

 

 

 

 

65,822

 

 

 

4,346

 

Gain on sale of properties

 

(15,207

)

 

(2,802

)

Loss on early extinguishment of debt

 

 

 

 

 

17

 

 

 

 

NOI

 

210,141

 

 

76,817

 

NOI of properties not included in comparable results

 

 

 

 

 

(7,679

)

 

 

(2,032

)

Comparable property NOI

$

202,462

 

$

74,785

 

About Diversified Healthcare Trust:

DHC is a real estate investment trust focused on owning high-quality healthcare properties located throughout the United States. DHC seeks diversification across the health services spectrum by care delivery and practice type, by scientific research disciplines and by property type and location. As of September 30, 2023, DHC’s approximately $7.2 billion portfolio included 376 properties in 36 states and Washington, D.C., occupied by approximately 500 tenants, and totaling approximately 9 million square feet of life science and medical office properties and more than 27,000 senior living units. DHC is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with approximately $36 billion in assets under management as of September 30, 2023 and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. To learn more about DHC, visit www.dhcreit.com.

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, the information regarding DHC’s SHOP segment results provided in this press release reflects certain preliminary estimates based on currently available information, and DHC’s final results upon completion of its quarterly financial close process and review may vary from these preliminary estimates, and as a result, the information provided herein may not provide a meaningful measure of DHC’s SHOP segment results as expected.

The information contained in DHC’s periodic reports filed with the Securities and Exchange Commission, or 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.

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.

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.

Contacts

Melissa McCarthy, Manager, Investor Relations

(617) 796-8234