Net Loss Attributable to Common Shareholders
of $0.34 Per Share
Normalized FFO Attributable to Common
Shareholders of ($0.06) Per Share
Diversified Healthcare Trust (Nasdaq: DHC) today announced its
financial results for the quarter ended September 30, 2022.
Jennifer Francis, President and Chief Executive Officer of DHC,
made the following statement:
"During the third quarter, leasing demand remained strong in our
Office Portfolio segment, as we executed 221,000 square feet of new
and renewal leases at a 2.4% roll up from prior rents. As a result
of the consistent strength in leasing over the past several
quarters, same property cash basis NOI in the Office Portfolio
segment increased 4.7% year-over-year and 1.2% from the second
quarter.
The recovery of our SHOP segment continues to progress, with
average occupancy increasing 110 basis points from the second
quarter. However, SHOP results were negatively impacted in part by
the effects of Hurricane Ian, which increased operating expenses by
over $4.1 million during the quarter, and by cost increases related
to labor, utilities and food. Despite these setbacks, we are seeing
strengthening demand for senior living and expect continued
occupancy and rate growth in our SHOP segment, leading to future
stabilization. With over $800 million of cash at quarter-end and no
significant debt maturities until 2024, we believe that we have
sufficient liquidity to execute on our business plan and position
the company for long-term, sustainable growth."
Quarterly Results:
- Reported net loss attributable to common shareholders of $81.5
million, or $0.34 per share.
- Reported normalized funds from operations, or Normalized FFO,
attributable to common shareholders of ($14.2) million, or ($0.06)
per share.
As of and For the Three Months
Ended
September 30, 2022
June 30, 2022
September 30, 2021
Occupancy
Office Portfolio (period end)
85.9%
88.1%
91.3%
SHOP (average day for period)
74.7%
73.6%
71.3%
Same Property Occupancy
Office Portfolio (period end)
90.2%
91.1%
91.4%
SHOP (average day for period)
75.3%
74.1%
73.4%
Three Months Ended
September 30, 2022
June 30, 2022
Change
September 30, 2021
Change
Same Property Cash Basis NOI (dollars
in thousands)
Office Portfolio
$27,971
$27,650
1.2%
$26,714
4.7%
SHOP
$5,368
$12,878
(58.3)%
$7,326
(26.7)%
Total Consolidated Same Property Cash
Basis NOI
$41,668
$50,419
(17.4)%
$44,026
(5.4)%
Reconciliations of net income (loss) attributable to common
shareholders determined in accordance with U.S. generally accepted
accounting principles, or GAAP, to funds from operations, or FFO,
attributable to common shareholders and Normalized FFO attributable
to common shareholders for the quarters ended September 30, 2022
and 2021 appear later in this press release. Reconciliations of net
income (loss) attributable to common shareholders determined in
accordance with GAAP to net operating income, or NOI, and Cash
Basis NOI, and a reconciliation of NOI to same property NOI and a
calculation of same property Cash Basis NOI, for the quarters ended
September 30, 2022, June 30, 2022 and September 30, 2021, as
applicable, also appear later in this press release.
Office Portfolio
Segment:
- Same property Cash Basis NOI increased compared to the third
quarter of 2021 primarily resulting from increased net leasing
activity, partially offset by increases in utility expenses due to
higher energy rates caused by inflation, as well as decreases in
occupancy at certain of DHC's comparable properties.
- DHC entered into new and renewal leases for an aggregate of
220,910 rentable square feet at weighted average rents that were
2.4% higher than prior rents for the same space.
SHOP Segment:
- Same property Cash Basis NOI decreased compared to the third
quarter of 2021 primarily resulting from increases in operating
expenses due to cost increases related to labor, utilities, food
and sales and marketing, and the impact of Hurricane Ian at certain
of DHC’s senior living communities located in Florida. These
increases in operating expenses were partially offset by higher
rates and occupancy.
- Recent same property occupancy rates in DHC's senior housing
operating portfolio, or SHOP, segment consisting of 120 communities
are as follows:
2021
2022
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
SHOP Same Property Average
Occupancy
73.9 %
74.2 %
74.1 %
74.4 %
74.1 %
73.8 %
73.9 %
73.9 %
74.4 %
74.8 %
75.2 %
75.8 %
Sequential Occupancy Change
0.3
(0.1)
0.3
(0.3)
(0.3)
0.1
—
0.5
0.4
0.4
0.6
- Recent occupancy rates for the 107 senior living communities
transitioned from Five Star Senior Living to 10 other managers in
DHC's SHOP segment are as follows:
2021
2022
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
SHOP Other Operator Managed Communities
Average Occupancy
67.4 %
69.8 %
70.0 %
70.9 %
71.9 %
72.1 %
73.2 %
72.5 %
73.1 %
74.2 %
Sequential Occupancy Change
2.4
0.2
0.9
1.0
0.2
1.1
(0.7)
0.6
1.1
Liquidity and Financing
Activities:
- As of September 30, 2022, DHC had approximately $800.8 million
of cash and cash equivalents and restricted cash.
- In July 2022, DHC prepaid approximately $15.3 million of
secured debt encumbering two of its senior living communities with
an annual interest rate of 5.75% and a maturity date in October
2022, using cash on hand.
- In October 2022, DHC repaid approximately $10.3 million of
secured debt encumbering one of its life science properties with an
annual interest rate of 4.85% and a maturity date in October 2022,
using cash on hand.
Acquisition Activities:
- In July 2022, DHC acquired a life science property located in
California with approximately 89,000 square feet for a purchase
price of approximately $82.0 million, excluding closing costs.
Conference Call:
At 10:00 a.m. Eastern Time tomorrow morning, President and Chief
Executive Officer, Jennifer Francis, and Chief Financial Officer
and Treasurer, Richard Siedel, will host a conference call to
discuss DHC's third quarter 2022 financial results. The conference
call telephone number is (877) 329-4297. Participants calling from
outside the United States and Canada should dial (412) 317-5435. No
pass code is necessary to access the call from either number.
Participants should dial in about 15 minutes prior to the scheduled
start of the call. A replay of the conference call will be
available through 11:59 p.m. on Thursday, November 10, 2022. To
access the replay, dial (412) 317-0088. The replay pass code is
2402366.
A live audio webcast of the conference call will also be
available in a listen-only mode on DHC's website, www.dhcreit.com.
Participants wanting to access the webcast should visit DHC's
website about five minutes before the call. The archived webcast
will be available for replay on DHC's website following the call
for about one week. The transcription, recording and
retransmission in any way of DHC's third quarter conference call
are strictly prohibited without the prior written consent of
DHC.
Supplemental Data:
A copy of DHC's Third Quarter 2022 Supplemental Operating and
Financial Data is available for download at DHC's website,
www.dhcreit.com. DHC's website is not incorporated as part of this
press release.
DHC is a real estate investment trust, or REIT, 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,
2022, DHC’s approximately $7.0 billion portfolio included 379
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 more than $37 billion in assets under management as of
September 30, 2022 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.
Non-GAAP Financial
Measures:
DHC presents certain "non-GAAP financial measures" within the
meaning of applicable rules of the Securities and Exchange
Commission, or SEC, including FFO attributable to common
shareholders, Normalized FFO attributable to common shareholders,
NOI, Cash Basis NOI, same property NOI and same property Cash Basis
NOI for the three and nine months ended September 30, 2022 and
2021, as well as certain of these measures for the three quarters
prior to the quarter ended September 30, 2022. These measures do
not represent cash generated by operating activities in accordance
with GAAP and should not be considered alternatives to net income
(loss) or net income (loss) attributable to common shareholders as
indicators of DHC's operating performance or as measures of DHC's
liquidity. These measures should be considered in conjunction with
net income (loss) and net income (loss) attributable to common
shareholders as presented in DHC's condensed consolidated
statements of income (loss). DHC considers these non-GAAP measures
to be appropriate supplemental measures of operating performance
for a REIT, along with net income (loss) and net income (loss)
attributable to common shareholders. DHC believes these measures
provide useful information to investors because by excluding the
effects of certain historical amounts, such as depreciation and
amortization, they may facilitate a comparison of DHC's operating
performance between periods and with other REITs and, in the case
of NOI, Cash Basis NOI, same property NOI and same property Cash
Basis NOI, reflecting only those income and expense items that are
generated and incurred at the property level may help both
investors and management to understand the operations of DHC's
properties.
Please see the pages attached hereto for a more detailed
statement of DHC's operating results and financial condition, and
for an explanation of DHC's calculation of FFO attributable to
common shareholders, Normalized FFO attributable to common
shareholders, NOI, Cash Basis NOI, same property NOI and same
property Cash Basis NOI and a reconciliation of those amounts to
amounts determined in accordance with GAAP.
DIVERSIFIED HEALTHCARE
TRUST
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS)
(amounts in thousands, except
per share data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Revenues:
Rental income
$
63,960
$
101,403
$
191,767
$
306,555
Residents fees and services
258,960
236,013
754,914
739,926
Total revenues
322,920
337,416
946,681
1,046,481
Expenses:
Property operating expenses
289,096
266,073
823,904
818,096
Depreciation and amortization
60,407
68,702
175,927
202,743
General and administrative
6,179
8,870
20,671
25,538
Acquisition and certain other transaction
related costs
289
3,108
1,826
15,179
Impairment of assets
—
—
—
(174
)
Total expenses
355,971
346,753
1,022,328
1,061,382
(Loss) gain on sale of properties
(5,044
)
200
322,064
30,838
Losses on equity securities, net
(2,674
)
(14,755
)
(21,384
)
(26,943
)
Interest and other income (1)
4,099
976
6,760
19,849
Interest expense (including net
amortization of debt premiums, discounts and issuance costs of
$1,908, $3,948, $6,698 and $9,777, respectively)
(46,936
)
(64,493
)
(160,042
)
(192,241
)
Loss on modification or early
extinguishment of debt
—
—
(30,043
)
(2,410
)
(Loss) income from continuing operations
before income tax expense and equity in earnings of investees
(83,606
)
(87,409
)
41,708
(185,808
)
Income tax expense
(13
)
(595
)
(845
)
(1,024
)
Equity in earnings of investees
2,127
—
8,685
—
Net (loss) income
(81,492
)
(88,004
)
49,548
(186,832
)
Net income attributable to noncontrolling
interest
—
(1,339
)
—
(4,238
)
Net (loss) income attributable to common
shareholders
$
(81,492
)
$
(89,343
)
$
49,548
$
(191,070
)
Weighted average common shares outstanding
(basic and diluted)
238,344
238,008
238,231
237,905
Per common share
amounts (basic and diluted):
Net (loss) income attributable to common
shareholders
$
(0.34
)
$
(0.38
)
$
0.21
$
(0.80
)
(1)
DHC recognized funds received under the
Coronavirus Aid, Relief, and Economic Security Act of $125 and $786
during the three months ended September 30, 2022 and 2021,
respectively, and $1,084 and $18,967 during the nine months ended
September 30, 2022 and 2021, respectively.
DIVERSIFIED HEALTHCARE
TRUST
FUNDS FROM OPERATIONS AND
NORMALIZED FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON
SHAREHOLDERS
(amounts in thousands, except
per share data)
(unaudited)
Calculation of FFO and Normalized FFO
Attributable to Common Shareholders(1):
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net (loss) income attributable to common
shareholders
$
(81,492
)
$
(89,343
)
$
49,548
$
(191,070
)
Depreciation and amortization
60,407
68,702
175,927
202,743
Loss (gain) on sale of properties
5,044
(200
)
(322,064
)
(30,838
)
Impairment of assets
—
—
—
(174
)
Losses on equity securities, net
2,674
14,755
21,384
26,943
FFO adjustments attributable to
noncontrolling interest
—
(5,273
)
—
(15,821
)
Equity in earnings of unconsolidated joint
ventures
(2,127
)
—
(8,685
)
—
Share of FFO from unconsolidated joint
ventures
2,137
—
9,516
—
Adjustments to reflect DHC's share of FFO
attributable to an equity method investment
(1,639
)
(2,440
)
(5,037
)
(3,409
)
FFO attributable to common
shareholders
(14,996
)
(13,799
)
(79,411
)
(11,626
)
Acquisition and certain other transaction
related costs
289
3,108
1,826
15,179
Loss on modification or early
extinguishment of debt
—
—
30,043
2,410
Adjustments to reflect DHC's share of
Normalized FFO attributable to an equity method investment
540
1,242
1,079
2,626
Normalized FFO attributable to common
shareholders
$
(14,167
)
$
(9,449
)
$
(46,463
)
$
8,589
Weighted average common shares outstanding
(basic and diluted)
238,344
238,008
238,231
237,905
Per common share
data (basic and diluted):
Net (loss) income attributable to common
shareholders
$
(0.34
)
$
(0.38
)
$
0.21
$
(0.80
)
FFO attributable to common
shareholders
$
(0.06
)
$
(0.06
)
$
(0.33
)
$
(0.05
)
Normalized FFO attributable to common
shareholders
$
(0.06
)
$
(0.04
)
$
(0.20
)
$
0.04
Distributions declared
$
0.01
$
0.01
$
0.03
$
0.03
(1)
DHC calculates FFO attributable to common
shareholders and Normalized FFO attributable to common shareholders
as shown above. FFO attributable to common shareholders is
calculated on the basis defined by the National Association of Real
Estate Investment Trusts, which is net income (loss) attributable
to common shareholders, calculated in accordance with GAAP,
excluding any gain or loss on sale of properties, equity in
earnings or losses of unconsolidated joint ventures, loss on
impairment of real estate assets, gains or losses on equity
securities, net, if any, including adjustments to reflect DHC's
proportionate share of FFO of DHC's equity method investment in
AlerisLife Inc. (Nasdaq: ALR) and DHC's proportionate share of FFO
from its unconsolidated joint ventures, plus real estate
depreciation and amortization of consolidated properties and minus
FFO adjustments attributable to noncontrolling interest, as well as
certain other adjustments currently not applicable to DHC. In
calculating Normalized FFO attributable to common shareholders, DHC
adjusts for the items shown above. FFO attributable to common
shareholders and Normalized FFO attributable to common shareholders
are among the factors considered by DHC's Board of Trustees when
determining the amount of distributions to its shareholders. Other
factors include, but are not limited to, requirements to maintain
DHC's qualification for taxation as a REIT, limitations in the
agreements governing DHC's debt, the availability to DHC of debt
and equity capital, DHC's expectation of its future capital
requirements and operating performance, and DHC's expected needs
for and availability of cash to pay its obligations. Other real
estate companies and REITs may calculate FFO attributable to common
shareholders and Normalized FFO attributable to common shareholders
differently than DHC does.
DIVERSIFIED HEALTHCARE
TRUST
CALCULATION AND RECONCILIATION
OF NOI AND CASH BASIS NOI (1)
(dollars in thousands)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Calculation of
NOI and Cash Basis NOI:
Revenues:
Rental income
$
63,960
$
101,403
$
191,767
$
306,555
Residents fees and services
258,960
236,013
754,914
739,926
Total revenues
322,920
337,416
946,681
1,046,481
Property operating expenses
(289,096
)
(266,073
)
(823,904
)
(818,096
)
NOI
33,824
71,343
122,777
228,385
Non-cash straight line rent adjustments
included in rental income
(2,738
)
(1,679
)
(7,193
)
(3,804
)
Lease value amortization included in
rental income
42
(1,848
)
204
(5,563
)
Non-cash amortization included in property
operating expenses
(199
)
(199
)
(597
)
(597
)
Cash Basis NOI
$
30,929
$
67,617
$
115,191
$
218,421
Reconciliation of
Net Income (Loss) Attributable to Common Shareholders to NOI and
Cash Basis NOI:
Net (loss) income attributable to common
shareholders
$
(81,492
)
$
(89,343
)
$
49,548
$
(191,070
)
Net income attributable to noncontrolling
interest
—
1,339
—
4,238
Net (loss) income
(81,492
)
(88,004
)
49,548
(186,832
)
Equity in earnings of investees
(2,127
)
—
(8,685
)
—
Income tax expense
13
595
845
1,024
Loss on modification or early
extinguishment of debt
—
—
30,043
2,410
Interest expense
46,936
64,493
160,042
192,241
Interest and other income
(4,099
)
(976
)
(6,760
)
(19,849
)
Losses on equity securities, net
2,674
14,755
21,384
26,943
Loss (gain) on sale of properties
5,044
(200
)
(322,064
)
(30,838
)
Impairment of assets
—
—
—
(174
)
Acquisition and certain other transaction
related costs
289
3,108
1,826
15,179
General and administrative
6,179
8,870
20,671
25,538
Depreciation and amortization
60,407
68,702
175,927
202,743
NOI
33,824
71,343
122,777
228,385
Non-cash straight line rent adjustments
included in rental income
(2,738
)
(1,679
)
(7,193
)
(3,804
)
Lease value amortization included in
rental income
42
(1,848
)
204
(5,563
)
Non-cash amortization included in property
operating expenses
(199
)
(199
)
(597
)
(597
)
Cash Basis NOI
$
30,929
$
67,617
$
115,191
$
218,421
(1)
The calculations of NOI, Cash Basis NOI,
same property NOI and same property Cash Basis NOI exclude certain
components of net income (loss) attributable to common shareholders
in order to provide results that are more closely related to DHC's
property level results of operations. DHC calculates NOI and Cash
Basis NOI as shown above and same property NOI and same property
Cash Basis NOI as shown below. 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
defines Cash Basis NOI as NOI excluding non-cash straight line rent
adjustments, lease value amortization, lease termination fee
amortization, if any, and non-cash amortization included in
property operating expenses. DHC calculates same property NOI and
same property Cash Basis NOI in the same manner that it calculates
the corresponding NOI and Cash Basis NOI amounts, except that it
only includes same properties in calculating same property NOI and
same property Cash Basis NOI. DHC uses NOI, Cash Basis NOI, same
property NOI and same property Cash Basis NOI to evaluate
individual and company-wide property level performance. Other real
estate companies and REITs may calculate NOI, Cash Basis NOI, same
property NOI and same property Cash Basis NOI differently than DHC
does.
DIVERSIFIED HEALTHCARE
TRUST
Calculation and Reconciliation
of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash
Basis NOI by Segment (1)
(dollars in thousands)
(unaudited)
Office
Portfolio
For the Three Months
Ended
Calculation of NOI and Cash Basis
NOI:
9/30/2022
6/30/2022
3/31/2022
12/31/2021
9/30/2021
Rental income
$
55,254
$
52,610
$
54,997
$
89,950
$
91,520
Property operating expenses
(24,179
)
(22,026
)
(23,447
)
(32,313
)
(32,386
)
NOI
$
31,075
$
30,584
$
31,550
$
57,637
$
59,134
NOI
$
31,075
$
30,584
$
31,550
$
57,637
$
59,134
Less:
Non-cash straight line rent adjustments
included in rental income
2,573
2,532
1,511
1,827
1,800
Lease value amortization included in
rental income
(59
)
(74
)
(122
)
1,631
1,830
Non-cash amortization included in property
operating expenses
199
199
199
200
199
Cash Basis NOI
$
28,362
$
27,927
$
29,962
$
53,979
$
55,305
Reconciliation of NOI to Same Property
NOI:
NOI
$
31,075
$
30,584
$
31,550
$
57,637
$
59,134
Less:
NOI of properties not included in same
property results
2,440
2,080
3,334
29,236
31,518
Same Property NOI (2)
$
28,635
$
28,504
$
28,216
$
28,401
$
27,616
Reconciliation of Same Property NOI to
Same Property Cash Basis NOI:
Same Property NOI (2)
$
28,635
$
28,504
$
28,216
$
28,401
$
27,616
Less:
Non-cash straight line rent adjustments
included in rental income
514
793
1,187
1,230
941
Lease value amortization included in
rental income
(59
)
(74
)
(132
)
(144
)
(137
)
Non-cash amortization included in property
operating expenses
209
135
172
98
98
Same Property Cash Basis NOI (2)
$
27,971
$
27,650
$
26,989
$
27,217
$
26,714
(1)
See page 7 for the calculation of NOI and a reconciliation of
net income (loss) attributable to common shareholders determined in
accordance with GAAP to that amount. See footnote 1 on page 7 of
this press release for a definition of NOI, Cash Basis NOI, same
property NOI and same property Cash Basis NOI, and page 3 for a
description of why management believes they are appropriate
supplemental measures and a description of how management uses
these measures.
(2)
Consists of properties owned and in service continuously since
July 1, 2021; excludes properties classified as held for sale or
out of service undergoing redevelopment, if any, and medical office
and life science properties owned by unconsolidated joint ventures
in which DHC owns an equity interest.
DIVERSIFIED HEALTHCARE
TRUST
Calculation and Reconciliation
of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash
Basis NOI by Segment (1)
(dollars in thousands)
(unaudited)
SHOP
For the Three Months
Ended
Calculation of NOI and Cash Basis
NOI:
9/30/2022
6/30/2022
3/31/2022
12/31/2021
9/30/2021
Residents fees and services
$
258,960
$
250,506
$
245,448
$
234,697
$
236,013
Property operating expenses
(264,722
)
(244,040
)
(245,295
)
(241,403
)
(233,687
)
NOI / Cash Basis NOI
$
(5,762
)
$
6,466
$
153
$
(6,706
)
$
2,326
Reconciliation of NOI / Cash Basis NOI
to Same Property NOI / Same Property Cash Basis NOI:
NOI / Cash Basis NOI
$
(5,762
)
$
6,466
$
153
$
(6,706
)
$
2,326
Less:
NOI / Cash Basis NOI of properties not
included in same property results
(11,130
)
(6,412
)
(9,332
)
(9,545
)
(5,000
)
Same Property NOI / Same Property Cash
Basis NOI (2)
$
5,368
$
12,878
$
9,485
$
2,839
$
7,326
(1)
See page 7 for the calculation of NOI and a reconciliation of
net income (loss) attributable to common shareholders determined in
accordance with GAAP to that amount. See footnote 1 on page 7 of
this press release for a definition of NOI, Cash Basis NOI, same
property NOI and same property Cash Basis NOI, and page 3 for a
description of why management believes they are appropriate
supplemental measures and a description of how management uses
these measures.
(2)
Consists of properties owned and which have been operated by the
same operator continuously since July 1, 2021; excludes properties
classified as held for sale or closed, if any.
DIVERSIFIED HEALTHCARE
TRUST
Calculation and Reconciliation
of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash
Basis NOI (1)
(dollars in thousands)
(unaudited)
Consolidated
For the Three Months
Ended
Calculation of NOI and Cash Basis
NOI:
9/30/2022
6/30/2022
3/31/2022
12/31/2021
9/30/2021
Rental income / residents fees and
services
$
322,920
$
313,028
$
310,733
$
336,731
$
337,416
Property operating expenses
(289,096
)
(266,066
)
(268,742
)
(273,716
)
(266,073
)
NOI
$
33,824
$
46,962
$
41,991
$
63,015
$
71,343
NOI
$
33,824
$
46,962
$
41,991
$
63,015
$
71,343
Less:
Non-cash straight line rent adjustments
included in rental income
2,738
2,710
1,745
2,042
1,679
Lease value amortization included in
rental income
(42
)
(57
)
(105
)
1,648
1,848
Non-cash amortization included in property
operating expenses
199
199
199
200
199
Cash Basis NOI
$
30,929
$
44,110
$
40,152
$
59,125
$
67,617
Reconciliation of NOI to Same Property
NOI:
NOI
$
33,824
$
46,962
$
41,991
$
63,015
$
71,343
Less:
NOI of properties not included in same
property results
(8,690
)
(4,527
)
(5,802
)
19,691
26,518
Same Property NOI (2)
$
42,514
$
51,489
$
47,793
$
43,324
$
44,825
Reconciliation of Same Property NOI to
Same Property Cash Basis NOI:
Same Property NOI (2)
$
42,514
$
51,489
$
47,793
$
43,324
$
44,825
Less:
Non-cash straight line rent adjustments
included in rental income
679
992
1,400
1,445
820
Lease value amortization included in
rental income
(42
)
(57
)
(115
)
(127
)
(119
)
Non-cash amortization included in property
operating expenses
209
135
172
98
98
Same Property Cash Basis NOI (2)
$
41,668
$
50,419
$
46,336
$
41,908
$
44,026
(1)
See page 7 for the calculation of NOI and a reconciliation of
net income (loss) attributable to common shareholders determined in
accordance with GAAP to that amount. See footnote 1 on page 7 of
this press release for a definition of NOI, Cash Basis NOI, same
property NOI and same property Cash Basis NOI, and page 3 for a
description of why management believes they are appropriate
supplemental measures and a description of how management uses
these measures.
(2)
Consists of properties owned, in service and operated by the
same operator continuously since July 1, 2021; excludes properties
classified as held for sale, closed or out of service undergoing
redevelopment, if any, and medical office and life science
properties owned by unconsolidated joint ventures in which DHC owns
an equity interest.
DIVERSIFIED HEALTHCARE
TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(dollars in thousands)
(unaudited)
September 30, 2022
December 31, 2021
Assets
Real estate properties
$
6,596,866
$
6,813,556
Accumulated depreciation
(1,784,935
)
(1,737,807
)
Total real estate properties, net
4,811,931
5,075,749
Investments in unconsolidated joint
ventures
159,476
215,127
Cash and cash equivalents
691,040
634,848
Restricted cash
109,765
382,097
Acquired real estate leases and other
intangible assets, net
48,432
48,746
Other assets, net
251,842
266,947
Total assets
$
6,072,486
$
6,623,514
Liabilities and
Shareholders' Equity
Revolving credit facility
$
700,000
$
800,000
Senior unsecured notes, net
2,316,493
2,806,811
Secured debt and finance leases, net
40,936
69,713
Accrued interest
32,157
29,845
Assumed real estate lease obligations,
net
1,205
2,556
Other liabilities
275,640
252,199
Total liabilities
3,366,431
3,961,124
Total shareholders' equity
2,706,055
2,662,390
Total liabilities and shareholders'
equity
$
6,072,486
$
6,623,514
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. Whenever DHC uses words such as
“believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”,
"will", “may” and negatives or derivatives of these or similar
expressions, DHC 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. Forward-looking statements involve
known and unknown risks, uncertainties and other factors, some of
which are beyond DHC's control. For example,
- Ms. Francis's statement regarding the strong leasing results
and roll up in rents from 2022 third quarter leasing activity in
DHC's Office Portfolio segment may imply that future leasing
results in DHC's Office Portfolio segment will continue to be
positive and that such positive leasing results will improve the
financial performance of DHC's Office Portfolio segment. However,
DHC's ability to realize positive leasing activity and occupancy
depends on various factors, including market conditions and
tenants' demands for DHC's Office Portfolio properties, the timing
of lease expirations and DHC's ability to successfully compete for
tenants, among other factors. As a result, DHC may not realize
positive leasing activity or occupancy in future periods,
- Ms. Francis's statement regarding year-over-year and sequential
increases in DHC's same property Office Portfolio segment cash
basis NOI may imply that DHC will continue to realize these
improvements and that its Office Portfolio segment cash basis NOI
will increase in future periods. However, DHC may not be able to
maintain these or other improvements with respect to its Office
Portfolio segment and Office Portfolio segment cash basis NOI may
not improve or may decline,
- Ms. Francis's statements regarding the continuing recovery at
DHC's SHOP segment, with occupancy growth in DHC's SHOP segment,
and expected future occupancy and rate growth due to strengthening
demand for senior living and resulting stabilization, may imply
that DHC's senior living communities will continue to recover and
realize occupancy and rate growth in future sequential quarters
from its SHOP segment. However, the projected future demand for
senior living may not be realized and DHC's operators may not
successfully compete for any such demand that may occur or
otherwise. Further, DHC's SHOP segment is subject to various risks,
many of which are beyond its control, including the continued
impacts of and market reaction in response to the COVID-19
pandemic, high inflation, rising interest rates, geopolitical risks
or other economic, market or industry conditions, including a
possible recession. As a result, DHC may not realize any such
occupancy or rate growth in future periods, and DHC's occupancy
and/or rates may decline, and
- Ms. Francis states that DHC has sufficient liquidity to execute
on its business plan and position DHC for long-term, sustainable
growth; however, if economic conditions worsen, or if DHC and its
managers and tenants otherwise fail to profitably operate their
businesses or DHC incurs unexpected capital expenditures, DHC may
be required to utilize all or a significant portion of its cash and
cash equivalents to fund its business and operations. In addition,
pursuant to DHC's credit agreement, the borrowing capacity under
its revolving credit facility will be reduced to $586.4 million in
January 2023 and, as such, DHC will be required to repay $113.6
million under its revolving credit facility by that time. If DHC is
unable to refinance or replace its debt as it matures, its
liquidity may decline; therefore, DHC may not be able to maintain
sufficient liquidity or execute on its business plan and position
itself for long-term, sustainable growth, and DHC's financial
results and condition may be adversely impacted as a result.
The information contained in DHC's filings with the SEC,
including under “Risk Factors” in DHC's periodic reports, or
incorporated therein, 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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221102005913/en/
Michael Kodesch, Director, Investor Relations (617) 796-8234
www.dhcreit.com
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