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 Properties:

March 2024 occupancy was 78.8%, a decrease of 10 basis points from February 2024, and 150 basis points higher than March 2023.
March 2024 Resident Fees and Services revenue was $103.1 million, an increase of $0.8 million, or 0.8%, from February 2024, and higher by $8.6 million, or 9.2%, compared to March 2023.
March 2024 net operating income, or NOI, was $7.3 million, a decrease of $2.8 million, or 27.3%, from February 2024, and higher by $3.0 million, or 68.6%, compared to March 2023.
March 2024 NOI margin was 7.1%, 280 basis points below February 2024, and 250 basis points above March 2023.

March 2024 total SHOP revenues increased slightly on a sequential month basis. On a year over year basis, total SHOP revenues increased 9.2%, primarily from higher rental rates and occupancy.

March 2024 total SHOP operating expenses increased 3.3% and 6.7% on a sequential month and year over year basis, respectively. The increase on a sequential month basis is primarily due to higher salaries and wages as a result of two additional days in March, partially offset by reduced contract labor. The year over year increase is primarily due to higher salaries and wages driven by inflation, wage adjustments and filling open positions, partially offset by reduced contract labor.

Diversified Healthcare Trust SHOP Segment - Monthly Results of Operations (dollars in thousands, except average monthly rate)

2024 (1)

$

%

2023

$

%

March

Feb

Change

March

Change

ALR/Five Star Managed Communities

Number of Properties

119

Number of Units

17,647

17,655

17,704

Occupancy

78.7%

78.8%

77.7%

Average Monthly Rate (2)

$

4,772

$

4,796

$

(24)

(0.5)%

$

4,514

$

258

5.7%

Residents Fees and Services

$

66,268

$

66,684

$

(416)

(0.6)%

$

61,307

$

4,961

8.1%

Property Operating Expenses

(60,657)

(57,849)

2,808

4.9%

(56,145)

4,512

8.0%

NOI (3)

$

5,611

$

8,835

$

(3,224)

(36.5)%

$

5,162

$

449

8.7%

NOI Margin

8.5%

13.2%

8.4%

Other Operator Managed Communities

Number of Properties

113

115

Number of Units

7,573

7,574

7,623

Occupancy

79.1%

76.5%

Average Monthly Rate (2)

$

6,149

$

5,945

$

204

3.4%

$

5,738

$

411

7.2%

Residents Fees and Services

$

36,828

$

35,618

$

1,210

3.4%

$

33,142

$

3,686

11.1%

Property Operating Expenses

(35,103)

(34,358)

745

2.2%

(33,952)

1,151

3.4%

NOI (3)

$

1,725

$

1,260

$

465

36.9%

$

(810)

$

2,535

313.0%

NOI Margin

4.7%

3.5%

(2.4)%

Total SHOP

Number of Properties

232

234

Number of Units

25,220

25,229

25,327

Occupancy

78.8%

78.9%

77.3%

Average Monthly Rate (2)

$

5,187

$

5,142

$

45

0.9%

$

4,879

$

308

6.3%

Residents Fees and Services

$

103,096

$

102,302

$

794

0.8%

$

94,449

$

8,647

9.2%

Property Operating Expenses

(95,760)

(92,207)

3,553

3.9%

(90,097)

5,663

6.3%

NOI (3)

$

7,336

$

10,095

$

(2,759)

(27.3)%

$

4,352

$

2,984

68.6%

NOI Margin

7.1%

9.9%

4.6%

2023

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

YTD

ALR/Five Star Managed Communities

Number of Properties

119

Number of Units

17,716

17,706

17,704

17,703

17,699

17,677

17,655

Occupancy

77.2%

77.7%

78.0%

78.1%

77.6%

78.0%

78.5%

78.7%

79.2%

79.3%

79.1%

78.2%

Average Monthly Rate (2)

$

4,409

$

4,566

$

4,514

$

4,527

$

4,551

$

4,532

$

4,530

$

4,534

$

4,556

$

4,542

$

4,510

$

4,548

$

4,526

Residents Fees and Services

$

59,539

$

61,616

$

61,307

$

61,673

$

62,076

$

62,268

$

62,570

$

62,923

$

63,276

$

63,482

$

63,154

$

63,558

$

747,442

Property Operating Expenses

(53,744)

(52,753)

(56,145)

(51,873)

(55,579)

(55,416)

(56,808)

(56,774)

(56,355)

(56,793)

(56,604)

(59,851)

(668,695)

NOI (3)

$

5,795

$

8,863

$

5,162

$

9,800

$

6,497

$

6,852

$

5,762

$

6,149

$

6,921

$

6,689

$

6,550

$

3,707

$

78,747

NOI Margin

9.7%

14.4%

8.4%

15.9%

10.5%

11.0%

9.2%

9.8%

10.9%

10.5%

10.4%

5.8%

10.5%

Other Operator Managed Communities

Number of Properties

118

115

114

113

Number of Units

7,623

7,647

7,572

7,571

7,554

Occupancy

74.8%

76.3%

76.5%

77.4%

77.1%

78.0%

78.3%

78.6%

79.2%

79.4%

79.6%

77.8%

Average Monthly Rate (2)

$

5,732

$

5,450

$

5,738

$

5,569

$

5,652

$

5,644

$

5,762

$

5,797

$

5,987

$

5,815

$

5,745

$

5,896

$

5,733

Residents Fees and Services

$

32,486

$

31,502

$

33,142

$

32,576

$

32,953

$

33,300

$

34,109

$

34,559

$

35,697

$

34,605

$

34,275

$

35,262

$

404,466

Property Operating Expenses

(34,312)

(31,423)

(33,952)

(32,932)

(33,428)

(32,731)

(33,688)

(35,301)

(33,519)

(34,361)

(34,421)

(36,328)

(406,396)

NOI (3)

$

(1,826)

$

79

$

(810)

$

(356)

$

(475)

$

569

$

421

$

(742)

$

2,178

$

244

$

(146)

$

(1,066)

$

(1,930)

NOI Margin

(5.6)%

0.3%

(2.4)%

(1.1)%

(1.4)%

1.7%

1.2%

(2.1)%

6.1%

0.7%

(0.4)%

(3.0)%

(0.5)%

Total SHOP

Number of Properties

237

234

233

232

Number of Units

25,339

25,329

25,327

25,326

25,322

25,324

25,302

25,227

25,226

25,209

Occupancy

76.5%

77.0%

77.3%

77.8%

77.7%

78.1%

78.5%

78.6%

79.2%

79.3%

78.1%

Average Monthly Rate (2)

$

4,800

$

4,831

$

4,879

$

4,840

$

4,880

$

4,866

$

4,900

$

4,914

$

4,986

$

4,922

$

4,879

$

4,952

$

4,888

Residents Fees and Services

$

92,025

$

93,118

$

94,449

$

94,249

$

95,029

$

95,568

$

96,679

$

97,482

$

98,973

$

98,087

$

97,429

$

98,820

$

1,151,908

Property Operating Expenses

(88,056)

(84,176)

(90,097)

(84,805)

(89,007)

(88,147)

(90,496)

(92,075)

(89,874)

(91,154)

(91,025)

(96,179)

(1,075,091)

NOI (3)

$

3,969

$

8,942

$

4,352

$

9,444

$

6,022

$

7,421

$

6,183

$

5,407

$

9,099

$

6,933

$

6,404

$

2,641

$

76,817

NOI Margin

4.3%

9.6%

4.6%

10.0%

6.3%

7.8%

6.4%

5.5%

9.2%

7.1%

6.6%

2.7%

6.7%

(1)

The information regarding DHC’s SHOP segment results for February and March 2024 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 these 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)

Previously, average monthly rate was calculated as average daily rate (revenue divided by occupied days) multiplied by 30 days. Retroactively to January 2023, we are now calculating the average monthly rate as the average daily rate multiplied by the exact number of days in the month. This change in methodology is now largely consistent with changes in revenue and occupancy as they are based on the same time period.

(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 uses NOI to evaluate individual and company-wide property level performance. Other real estate companies and real estate investment trusts, or REITs, may calculate NOI differently than DHC does.

Calculation and Reconciliation of NOI for SHOP Segment

(dollars in thousands)

For the Month Ended

March 31, 2023

March 31, 2024

Calculation of NOI:

SHOP

Residents fees and services

$

94,449

$

103,096

Property operating expenses

(90,097)

(95,760)

NOI

$

4,352

$

7,336

For the Month Ended

March 31, 2023

February 29, 2024

March 31, 2024

SHOP

Residents fees and services

$

94,449

$

102,302

$

103,096

Expenses:

Property operating expenses

90,097

92,207

95,760

Depreciation and amortization

14,280

15,644

15,683

Total expenses

104,377

107,851

111,443

Gain on sale of properties

2,723

-

Interest expense

-

(23)

(22)

Impairment

(3,617)

Net loss

(10,822)

(5,572)

(8,369)

Add (less): Interest expense

-

23

22

Interest and other income

-

Depreciation and amortization

14,280

15,644

15,683

Impairment of assets

3,617

-

Gain on sale of properties

(2,723)

-

NOI

$

4,352

$

10,095

$

7,336

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 December 31, 2023, DHC’s approximately $7.2 billion portfolio included 371 properties in 36 states and Washington, D.C., occupied by approximately 500 tenants, and totaling approximately 8.6 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 over $41 billion in assets under management as of December 31, 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/20240501921266/en/

Kevin Brady, Director, Investor Relations (617) 796-8234

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