Diversified Healthcare Trust Provides Monthly SHOP Performance Update

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:

October 2023 occupancy was 79.9%, 600 basis points below October 2019, and 50 basis points above September 2023.
October 2023 Resident Fees and Services revenue was $95.4 million, $7.6 million, or 7.4%, below October 2019, and $0.8 million, or 0.8%, below September 2023.
October 2023 net operating income, or NOI, was $6.8 million, $8.2 million, or 54.7%, below October 2019, and $2.0 million, or 22.7%, below September 2023.
October 2023 NOI margin was 7.1%, 750 basis points below October 2019, and 210 basis points below September 2023.

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

Year to date occupancy through October 31, 2023, was 78.5%, 790 basis points below the same period in 2019.
Year to date Resident Fees and Services revenue through October 31, 2023, was $929.3 million, $93.8 million, or 9.2%, below the same period in 2019.
Year to date NOI through October 31, 2023, was $66.0 million, $107.6 million, or 62.0%, below the same period in 2019.
Year to date NOI margin through September 30, 2023, was 7.1%, 990 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

Oct

YTD

ALR/Five Star Managed Communities

Number of Properties

117

Number of Units

16,995

16,951

Occupancy

78.0%

77.9%

78.5%

78.7%

78.8%

79.3%

79.5%

79.9%

80.0%

80.5%

79.1%

Average Monthly Rate

$

4,278

$

4,907

$

4,384

$

4,541

$

4,417

$

4,549

$

4,405

$

4,411

$

4,582

$

4,423

$

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

$

610,941

Property Operating Expenses

(52,606)

(51,786)

(54,777)

(50,892)

(54,500)

(54,324)

(55,532)

(55,526)

(55,153)

(55,470)

(540,566)

NOI (3)

$

6,089

$

8,880

$

5,657

$

9,877

$

6,678

$

6,985

$

5,992

$

6,305

$

7,007

$

6,905

$

70,375

NOI Margin

10.4%

14.6%

9.4%

16.3%

10.9%

11.4%

9.7%

10.2%

11.3%

11.1%

11.5%

Other Operator Managed Communities

Number of Properties

106

Number of Units

7,130

7,154

Occupancy

74.2%

75.9%

76.2%

76.6%

76.3%

77.2%

77.6%

77.8%

77.9%

78.5%

76.8%

Average Monthly Rate

$

5,665

$

5,944

$

5,662

$

5,668

$

5,566

$

5,749

$

5,675

$

5,723

$

6,095

$

5,750

$

5,748

Residents Fees and Services

$

30,788

$

29,808

$

31,504

$

30,938

$

31,303

$

31,664

$

32,461

$

32,933

$

33,981

$

33,015

$

318,395

Property Operating Expenses

(33,025)

(30,118)

(32,590)

(31,725)

(32,096)

(31,472)

(32,549)

(33,946)

(32,181)

(33,112)

(322,814)

NOI (3)

$

(2,237)

$

(310)

$

(1,086)

$

(787)

$

(793)

$

192

$

(88)

$

(1,013)

$

1,800

$

(97)

$

(4,419)

NOI Margin

(7.3)%

(1.0)%

(3.4)%

(2.5)%

0.6%

(0.3)%

(3.1)%

5.3%

(0.3)%

(1.4)%

Total SHOP Comparable

Number of Properties

223

Number of Units

24,125

24,105

Occupancy

76.9%

77.3%

77.8%

78.1%

78.7%

79.0%

79.3%

79.4%

79.9%

78.5%

Average Monthly Rate

$

4,671

$

5,206

$

4,751

$

4,868

$

4,749

$

4,897

$

4,774

$

4,793

$

5,023

$

4,807

$

4,850

Residents Fees and Services

$

89,483

$

90,474

$

91,938

$

91,707

$

92,481

$

92,973

$

93,985

$

94,764

$

96,141

$

95,390

$

929,336

Property Operating Expenses

(85,631)

(81,904)

(87,367)

(82,617)

(86,596)

(85,796)

(88,081)

(89,472)

(87,334)

(88,582)

(863,380)

NOI (3)

$

3,852

$

8,570

$

4,571

$

9,090

$

5,885

$

7,177

$

5,904

$

5,292

$

8,807

$

6,808

$

65,956

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

Oct

YTD

ALR/Five Star Managed Communities

Number of Properties

117

Number of Units

16,995

16,951

Occupancy

88.0%

87.9%

88.0%

87.9%

87.3%

87.1%

87.8%

Average Monthly Rate

$

4,709

$

5,099

$

4,723

$

4,833

$

4,703

$

4,834

$

4,695

$

4,695

$

4,756

$

4,755

$

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

$

722,762

Property Operating Expenses

(57,168)

(53,411)

(59,496)

(56,989)

(58,708)

(56,515)

(60,161)

(59,247)

(58,304)

(59,880)

(579,879)

NOI (3)

$

15,593

$

17,668

$

13,458

$

15,288

$

13,854

$

15,735

$

12,290

$

13,200

$

12,575

$

13,222

$

142,883

NOI Margin

21.4%

24.9%

18.4%

21.2%

19.1%

21.8%

17.0%

18.2%

17.7%

18.1%

19.8%

Other Operator Managed Communities

Number of Properties

106

Number of Units

7,130

7,154

Occupancy

82.5%

82.6%

82.5%

82.6%

82.7%

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

$

5,948

Residents Fees and Services

$

30,304

$

29,501

$

30,539

$

30,100

$

30,336

$

29,956

$

30,355

$

30,158

$

29,256

$

29,865

$

300,370

Property Operating Expenses

(26,798)

(24,627)

(27,785)

(26,329)

(27,284)

(26,260)

(27,853)

(27,539)

(27,145)

(28,053)

(269,673)

NOI (3)

$

3,506

$

4,874

$

2,754

$

3,771

$

3,052

$

3,696

$

2,502

$

2,619

$

2,111

$

1,812

$

30,697

NOI Margin

11.6%

16.5%

9.0%

12.5%

10.1%

12.3%

8.2%

8.7%

7.2%

6.1%

10.2%

Total SHOP Comparable

Number of Properties

223

Number of Units

24,125

24,105

Occupancy

86.6%

86.5%

86.0%

85.9%

86.4%

Average Monthly Rate

$

5,004

$

5,410

$

5,024

$

5,135

$

5,001

$

5,128

$

4,994

$

4,985

$

5,035

$

5,017

$

5,070

Residents Fees and Services

$

103,065

$

100,580

$

103,493

$

102,377

$

102,898

$

102,206

$

102,806

$

102,605

$

100,135

$

102,967

$

1,023,132

Property Operating Expenses

(83,966)

(78,038)

(87,281)

(83,318)

(85,992)

(82,775)

(88,014)

(86,786)

(85,449)

(87,933)

(849,552)

NOI (3)

$

19,099

$

22,542

$

16,212

$

19,059

$

16,906

$

19,431

$

14,792

$

15,819

$

14,686

$

15,034

$

173,580

NOI Margin

18.5%

22.4%

15.7%

18.6%

16.4%

19.0%

14.4%

15.4%

14.7%

14.6%

17.0%

(1)

The information regarding DHC’s SHOP segment results for October 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 Ten Months Ended

10/31/2019

10/31/2023

Calculation of NOI:

SHOP

Restructuring

Transaction

Pro Forma

SHOP

Rental income

$

116,267

$

(116,267

)

$

-

$

-

Residents fees and services

361,516

700,482

1,061,998

955,721

Property operating expenses

(294,808

)

(587,097

)

(881,905

)

(887,958

)

NOI

182,975

(2,882

)

180,093

67,763

Reconciliation of NOI to Comparable Property NOI:

NOI

$

182,975

$

(2,882

)

$

180,093

$

67,763

NOI of properties not included in comparable results

(986

)

(5,527

)

(6,513

)

(1,807

)

Comparable property NOI

$

181,989

$

(8,409

)

$

173,580

$

65,956

For the Ten Months Ended

10/31/2019

10/31/2023

SHOP

Restructuring

Transaction

Pro Forma

SHOP

Revenues:

Rental income

$

116,267

$

(116,267

)

$

-

$

-

Residents fees and services

361,516

700,482

1,061,998

955,721

Total revenues

477,783

584,215

1,061,998

955,721

Expenses: Property operating expenses

294,808

587,097

881,905

887,958

Depreciation and amortization

111,695

-

111,695

144,694

Impairment of assets

9,041

-

9,041

4,346

Total expenses

415,544

587,097

1,002,641

1,036,998

Gain on sale of properties

15,207

-

15,207

1,860

Interest and other income

-

1,581

Interest expense

(2,503

)

-

(2,503

)

(502

)

Loss on early extinguishment of debt

(17

)

-

(17

)

-

Net income (loss)

74,926

(2,882

)

72,044

(78,338

)

Add (less):

Interest expense

2,503

502

Interest and other income

-

(1,581

)

Depreciation and amortization

111,695

144,694

Impairment of assets

9,041

4,346

Gain on sale of properties

(15,207

)

(1,860

)

Loss on early extinguishment of debt

17

-

NOI

180,093

67,763

NOI of properties not included in comparable results

(6,513

)

(1,807

)

Comparable property NOI

$

173,580

$

65,956

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231128922749/en/

Melissa McCarthy, Manager, Investor Relations (617) 796-8234

Diversified Healthcare (NASDAQ:DHC)
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