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:
- September 2023 occupancy was 79.4%, 660 basis points below
September 2019, and 10 basis points above August 2023.
- September 2023 Resident Fees and Services revenue was $96.1
million, $4.0 million, or 4.0%, below September 2019, and $1.4
million, or 1.5%, above August 2023.
- September 2023 net operating income, or NOI, was $8.8 million,
$5.9 million, or 40.0%, below September 2019, and $3.5 million, or
66.4% above August 2023.
- September 2023 NOI margin was 9.2%, 550 basis points below
September 2019, and 360 basis points above August 2023.
Year to Date Unaudited Results in DHC’s
Total SHOP Comparable Properties:
- Year to date occupancy through September 30, 2023, was 78.3%,
820 basis points below the same period in 2019.
- Year to date Resident Fees and Services revenue through
September 30, 2023, was $833.9 million, $86.2 million, or 9.4%,
below the same period in 2019.
- Year to date NOI through September 30, 2023, was $59.1 million,
$99.4 million, or 62.7%, below the same period in 2019.
- Year to date NOI margin through September 30, 2023, was 7.1%,
1,010 basis points below the same period in 2019.
Diversified Healthcare Trust(1)
(dollars in thousands, except average monthly rate)
2023
COMPARABLE (2)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
YTD
ALR/Five Star Managed
Communities
Number of Properties
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
Occupancy
78.0%
77.9%
78.5%
78.7%
78.8%
79.3%
79.5%
79.9%
80.0%
79.0%
Average Monthly Rate
$
4,278
$
4,907
$
4,384
$
4,541
$
4,417
$
4,549
$
4,405
$
4,411
$
4,582
$
4,492
Residents Fees and Services
$
58,695
$
60,666
$
60,434
$
60,769
$
61,178
$
61,309
$
61,524
$
61,831
$
62,160
$
548,566
Property Operating Expenses
(52,606)
(51,786)
(54,777)
(50,892)
(54,500)
(54,324)
(55,532)
(55,526)
(55,153)
(485,096)
NOI (3)
$
6,089
$
8,880
$
5,657
$
9,877
$
6,678
$
6,985
$
5,992
$
6,305
$
7,007
$
63,470
NOI Margin
10.4%
14.6%
9.4%
16.3%
10.9%
11.4%
9.7%
10.2%
11.3%
11.6%
Other Operator Managed
Communities
Number of Properties
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
Occupancy
74.2%
75.9%
76.2%
76.6%
76.3%
77.2%
77.6%
77.8%
77.9%
76.7%
Average Monthly Rate
$
5,665
$
5,944
$
5,662
$
5,668
$
5,566
$
5,749
$
5,675
$
5,723
$
6,095
$
5,748
Residents Fees and Services
$
30,788
$
29,808
$
31,504
$
30,938
$
31,303
$
31,664
$
32,461
$
32,933
$
33,981
$
285,380
Property Operating Expenses
(33,025)
(30,118)
(32,590)
(31,725)
(32,096)
(31,472)
(32,549)
(33,946)
(32,181)
(289,702)
NOI (3)
$
(2,237)
$
(310)
$
(1,086)
$
(787)
$
(793)
$
192
$
(88)
$
(1,013)
$
1,800
$
(4,322)
NOI Margin
(7.3)%
(1.0)%
(3.4)%
(2.5)%
(2.5)%
0.6%
(0.3)%
(3.1)%
5.3%
(1.5)%
Total SHOP Comparable
Number of Properties
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
Occupancy
76.9%
77.3%
77.8%
78.1%
78.1%
78.7%
79.0%
79.3%
79.4%
78.3%
Average Monthly Rate
$
4,671
$
5,206
$
4,751
$
4,868
$
4,749
$
4,897
$
4,774
$
4,793
$
5,023
$
4,855
Residents Fees and Services
$
89,483
$
90,474
$
91,938
$
91,707
$
92,481
$
92,973
$
93,985
$
94,764
$
96,141
$
833,946
Property Operating Expenses
(85,631)
(81,904)
(87,367)
(82,617)
(86,596)
(85,796)
(88,081)
(89,472)
(87,334)
(774,798)
NOI (3)
$
3,852
$
8,570
$
4,571
$
9,090
$
5,885
$
7,177
$
5,904
$
5,292
$
8,807
$
59,148
NOI Margin
4.3%
9.5%
5.0%
9.9%
6.4%
7.7%
6.3%
5.6%
9.2%
7.1%
2019 Pro Forma (4)
COMPARABLE (2)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
YTD
ALR/Five Star Managed
Communities
Number of Properties
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
Occupancy
88.0%
88.0%
88.0%
88.0%
87.9%
88.0%
87.9%
87.9%
87.3%
87.9%
Average Monthly Rate
$
4,709
$
5,099
$
4,723
$
4,833
$
4,703
$
4,834
$
4,695
$
4,695
$
4,756
$
4,779
Residents Fees and Services
$
72,761
$
71,079
$
72,954
$
72,277
$
72,562
$
72,250
$
72,451
$
72,447
$
70,879
$
649,660
Property Operating Expenses
(57,168)
(53,411)
(59,496)
(56,989)
(58,708)
(56,515)
(60,161)
(59,247)
(58,304)
(519,999)
NOI (3)
$
15,593
$
17,668
$
13,458
$
15,288
$
13,854
$
15,735
$
12,290
$
13,200
$
12,575
$
129,661
NOI Margin
21.4%
24.9%
18.4%
21.2%
19.1%
21.8%
17.0%
18.2%
17.7%
20.0%
Other Operator Managed
Communities
Number of Properties
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
Occupancy
82.5%
82.6%
82.6%
82.6%
82.5%
82.6%
82.7%
82.6%
82.6%
82.6%
Average Monthly Rate
$
5,889
$
6,344
$
5,929
$
6,041
$
5,896
$
6,011
$
5,889
$
5,855
$
5,872
$
5,965
Residents Fees and Services
$
30,304
$
29,501
$
30,539
$
30,100
$
30,336
$
29,956
$
30,355
$
30,158
$
29,256
$
270,505
Property Operating Expenses
(26,798)
(24,627)
(27,785)
(26,329)
(27,284)
(26,260)
(27,853)
(27,539)
(27,145)
(241,620)
NOI (3)
$
3,506
$
4,874
$
2,754
$
3,771
$
3,052
$
3,696
$
2,502
$
2,619
$
2,111
$
28,885
NOI Margin
11.6%
16.5%
9.0%
12.5%
10.1%
12.3%
8.2%
8.7%
7.2%
10.7%
Total SHOP Comparable
Number of Properties
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
Occupancy
86.6%
86.6%
86.6%
86.6%
86.5%
86.5%
86.5%
86.5%
86.0%
86.5%
Average Monthly Rate
$
5,004
$
5,410
$
5,024
$
5,135
$
5,001
$
5,128
$
4,994
$
4,985
$
5,035
$
5,076
Residents Fees and Services
$
103,065
$
100,580
$
103,493
$
102,377
$
102,898
$
102,206
$
102,806
$
102,605
$
100,135
$
920,165
Property Operating Expenses
(83,966)
(78,038)
(87,281)
(83,318)
(85,992)
(82,775)
(88,014)
(86,786)
(85,449)
(761,619)
NOI (3)
$
19,099
$
22,542
$
16,212
$
19,059
$
16,906
$
19,431
$
14,792
$
15,819
$
14,686
$
158,546
NOI Margin
18.5%
22.4%
15.7%
18.6%
16.4%
19.0%
14.4%
15.4%
14.7%
17.2%
(1)
The information regarding DHC’s SHOP
segment results for July, August and September 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 Nine Months
Ended
9/30/2019
9/30/2023
Calculation of NOI:
SHOP
Restructuring
Transaction
Pro Forma
SHOP
Rental income
$
105,451
$
(105,451)
$
-
$
-
Residents fees and services
324,767
630,181
954,948
857,572
Property operating expenses
(263,612)
(526,767)
(790,379)
(796,733)
NOI
166,606
(2,037)
164,569
60,839
Reconciliation of NOI to Comparable
Property NOI:
NOI
$
166,606
$
(2,037)
$
164,569
$
60,839
NOI of properties not included in
comparable results
(1,007)
(5,016)
(6,023)
(1,691)
Comparable property NOI
$
165,599
$
(7,053)
$
158,546
$
59,148
For the Nine Months
Ended
9/30/2019
9/30/2023
SHOP
Restructuring
Transaction
Pro Forma
SHOP
Revenues:
Rental income
$
105,451
$
(105,451)
$
-
$
-
Residents fees and services
324,767
630,181
954,948
857,572
Total revenues
430,218
524,730
954,948
857,572
Expenses:
Property operating expenses
263,612
526,767
790,379
796,733
Depreciation and amortization
100,080
-
100,080
129,891
Impairment of assets
9,041
-
9,041
4,346
Total expenses
372,733
526,767
899,500
930,970
Gain on sale of properties
15,207
-
15,207
1,233
Interest and other income
-
-
-
1,581
Interest expense
(2,481)
-
(2,481)
(502)
Loss on early extinguishment of debt
(17)
-
(17)
-
Net income (loss)
70,194
(2,037)
68,157
(71,086)
Add (less): Interest expense
2,481
502
Interest and other income
-
(1,581)
Depreciation and amortization
100,080
129,891
Impairment of assets
9,041
4,346
Gain on sale of properties
(15,207)
(1,233)
Loss on early extinguishment of debt
17
-
NOI
164,569
60,839
NOI of properties not included in
comparable results
(6,023)
(1,691)
Comparable property NOI
$
158,546
$
59,148
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 June 30, 2023,
DHC’s approximately $7.1 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 June 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023031793/en/
Melissa McCarthy, Manager, Investor Relations (617) 796-8234
Diversified Healthcare (NASDAQ:DHC)
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