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:
- November 2023 occupancy was 80.1%, 560 basis points below November 2019, and 20 basis points above October 2023.
- November 2023 Resident Fees and Services revenue was $94.7 million, $6.4 million, or 6.4%, below November 2019, and $0.7 million, or 0.7%, below October 2023.
- November 2023 net operating income, or NOI, was $6.1 million, $10.3 million, or 63.0%, below November 2019, and $0.8 million, or 11.1%, below October 2023.
- November 2023 NOI margin was 6.4%, 980 basis points below November 2019, and 80 basis points below October 2023.
Year to Date Unaudited Results in DHC’s Total SHOP Comparable Properties:
- Year to date occupancy through November 30, 2023, was 78.6%, 780 basis points below the same period in 2019.
- Year to date Resident Fees and Services revenue through November 30, 2023, was $1.0 billion, $100.3 million, or 8.9%, below the same period in 2019.
- Year to date NOI through November 30, 2023, was $72.0 million, $117.9 million, or 62.1%, below the same period in 2019.
- Year to date NOI margin through November 30, 2023, was 7.0%, 990 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) |
||||||||||||||||||||||||||
2023 |
||||||||||||||||||||||||||
COMPARABLE (2) |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
YTD |
||||||||||||||
ALR/Five Star Managed Communities |
||||||||||||||||||||||||||
Number of Properties |
|
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 |
||
Occupancy |
|
78.0% |
|
77.9% |
|
78.5% |
|
78.7% |
|
78.8% |
|
79.3% |
|
79.5% |
|
79.9% |
|
80.0% |
|
|
80.5% |
|
80.6% |
|
79.3% |
|
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 |
$ |
4,489 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
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 |
$ |
672,967 |
||
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) |
|
(596,168) |
|
NOI (3) |
$ |
6,089 |
$ |
8,880 |
$ |
5,657 |
$ |
9,877 |
$ |
6,678 |
$ |
6,985 |
$ |
5,992 |
$ |
6,305 |
$ |
7,007 |
$ |
6,905 |
$ |
6,424 |
$ |
76,799 |
||
NOI Margin |
|
10.4% |
|
14.6% |
|
9.4% |
|
16.3% |
|
10.9% |
|
11.4% |
|
9.7% |
|
10.2% |
|
11.3% |
|
|
11.1% |
|
10.4% |
|
11.4% |
|
Other Operator Managed Communities |
||||||||||||||||||||||||||
Number of Properties |
|
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 |
|
7,154 |
||
Occupancy |
|
74.2% |
|
75.9% |
|
76.2% |
|
76.6% |
|
76.3% |
|
77.2% |
|
77.6% |
|
77.8% |
|
77.9% |
|
|
78.5% |
|
78.8% |
|
77.0% |
|
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 |
$ |
5,756 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
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 |
$ |
350,971 |
||
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) |
|
(355,747) |
|
NOI (3) |
$ |
(2,237) |
$ |
(310) |
$ |
(1,086) |
$ |
(787) |
$ |
(793) |
$ |
192 |
$ |
(88) |
$ |
(1,013) |
$ |
1,800 |
$ |
(89) |
$ |
(365) |
$ |
(4,776) |
||
NOI Margin |
|
(7.3)% |
|
(1.0)% |
|
(3.4)% |
|
(2.5)% |
|
(2.5)% |
|
0.6% |
|
(0.3)% |
|
(3.1)% |
|
5.3% |
|
|
(0.3)% |
|
(1.1)% |
|
(1.4)% |
|
Total SHOP Comparable |
||||||||||||||||||||||||||
Number of Properties |
|
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 |
|
24,105 |
||
Occupancy |
|
76.9% |
|
77.3% |
|
77.8% |
|
78.1% |
|
78.1% |
|
78.7% |
|
79.0% |
|
79.3% |
|
79.4% |
|
|
79.9% |
|
80.1% |
|
78.6% |
|
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 |
$ |
4,856 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
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 |
$ |
1,023,938 |
||
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) |
|
(951,915) |
|
NOI (3) |
$ |
3,852 |
$ |
8,570 |
$ |
4,571 |
$ |
9,090 |
$ |
5,885 |
$ |
7,177 |
$ |
5,904 |
$ |
5,292 |
$ |
8,807 |
$ |
6,816 |
$ |
6,059 |
$ |
72,023 |
||
NOI Margin |
|
4.3% |
|
9.5% |
|
5.0% |
|
9.9% |
|
6.4% |
|
7.7% |
|
6.3% |
|
5.6% |
|
9.2% |
|
|
7.2% |
|
6.4% |
|
7.0% |
|
2019 Pro Forma (4) |
|||||||||||||||||||||||||
COMPARABLE (2) |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
YTD |
|||||||||||||
ALR/Five Star Managed Communities |
|||||||||||||||||||||||||
Number of Properties |
|
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 |
|
Occupancy |
|
88.0% |
|
88.0% |
|
88.0% |
|
88.0% |
|
87.9% |
|
88.0% |
|
87.9% |
|
87.9% |
|
87.3% |
|
87.1% |
|
86.9% |
|
87.7% |
|
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 |
$ |
4,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
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 |
$ |
794,348 |
|
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) |
|
(637,817) |
|
NOI (3) |
$ |
15,593 |
$ |
17,668 |
$ |
13,458 |
$ |
15,288 |
$ |
13,854 |
$ |
15,735 |
$ |
12,290 |
$ |
13,200 |
$ |
12,575 |
$ |
13,222 |
$ |
13,648 |
$ |
156,531 |
|
NOI Margin |
|
21.4% |
|
24.9% |
|
18.4% |
|
21.2% |
|
19.1% |
|
21.8% |
|
17.0% |
|
18.2% |
|
17.7% |
|
18.1% |
|
19.1% |
|
19.7% |
|
Other Operator Managed Communities |
|||||||||||||||||||||||||
Number of Properties |
|
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 |
|
7,154 |
|
Occupancy |
|
82.5% |
|
82.6% |
|
82.6% |
|
82.6% |
|
82.5% |
|
82.6% |
|
82.7% |
|
82.6% |
|
82.6% |
|
82.6% |
|
82.5% |
|
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 |
$ |
5,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
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 |
$ |
329,882 |
|
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) |
|
(296,475) |
|
NOI (3) |
$ |
3,506 |
$ |
4,874 |
$ |
2,754 |
$ |
3,771 |
$ |
3,052 |
$ |
3,696 |
$ |
2,502 |
$ |
2,619 |
$ |
2,111 |
$ |
1,812 |
$ |
2,710 |
$ |
33,407 |
|
NOI Margin |
|
11.6% |
|
16.5% |
|
9.0% |
|
12.5% |
|
10.1% |
|
12.3% |
|
8.2% |
|
8.7% |
|
7.2% |
|
6.1% |
|
9.2% |
|
10.1% |
|
Total SHOP Comparable |
|||||||||||||||||||||||||
Number of Properties |
|
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 |
|
24,105 |
|
Occupancy |
|
86.6% |
|
86.6% |
|
86.6% |
|
86.6% |
|
86.5% |
|
86.5% |
|
86.5% |
|
86.5% |
|
86.0% |
|
85.9% |
|
85.7% |
|
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 |
$ |
5,101 |
$ |
5,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
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 |
$ |
1,124,230 |
|
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) |
|
(934,292) |
|
NOI (3) |
$ |
19,099 |
$ |
22,542 |
$ |
16,212 |
$ |
19,059 |
$ |
16,906 |
$ |
19,431 |
$ |
14,792 |
$ |
15,819 |
$ |
14,686 |
$ |
15,034 |
$ |
16,358 |
$ |
189,938 |
|
NOI Margin |
|
18.5% |
|
22.4% |
|
15.7% |
|
18.6% |
|
16.4% |
|
19.0% |
|
14.4% |
|
15.4% |
|
14.7% |
|
14.6% |
|
16.2% |
|
16.9% |
|
(1) |
The information regarding DHC’s SHOP segment results for October and November 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 Eleven Months Ended |
|||||||||||
11/30/2019 |
11/30/2023 |
||||||||||
Calculation of NOI: |
SHOP |
|
Restructuring Transaction |
|
Pro Forma |
SHOP |
|||||
Rental income |
$ |
127,082 |
|
$ |
(127,082) |
|
$ |
- |
|
$ |
- |
Residents fees and services |
|
397,529 |
|
769,599 |
|
1,167,128 |
|
1,053,088 |
|||
Property operating expenses |
|
(324,749) |
|
|
(645,232) |
|
|
(969,981) |
|
|
(978,912) |
NOI |
|
199,862 |
|
(2,715) |
|
197,147 |
|
74,176 |
|||
|
|
|
|
|
|
|
|
||||
Reconciliation of NOI to Comparable Property NOI: |
|||||||||||
NOI |
$ |
199,862 |
|
$ |
(2,715) |
|
$ |
197,147 |
|
$ |
74,176 |
NOI of properties not included in comparable results |
|
(1,147) |
|
(6,062) |
|
(7,209) |
|
(2,153) |
|||
Comparable property NOI |
$ |
198,715 |
|
$ |
(8,777) |
|
$ |
189,938 |
|
$ |
72,023 |
For the Eleven Months Ended |
|||||||||||
11/30/2019 |
11/30/2023 |
||||||||||
SHOP |
|
Restructuring Transaction |
|
Pro Forma |
SHOP |
||||||
Revenues: |
|
|
|
|
|
|
|
||||
Rental income |
$ |
127,082 |
$ |
(127,082) |
$ |
- |
$ |
- |
|||
Residents fees and services |
|
397,529 |
|
|
769,599 |
|
|
1,167,128 |
|
|
1,053,088 |
Total revenues |
|
524,611 |
|
642,517 |
|
1,167,128 |
|
1,053,088 |
|||
|
|
|
|
|
|
|
|
||||
Expenses: |
|||||||||||
Property operating expenses |
|
324,749 |
|
|
645,232 |
|
|
969,981 |
|
|
978,912 |
Depreciation and amortization |
|
123,365 |
|
- |
|
123,365 |
|
159,974 |
|||
Impairment of assets |
|
9,041 |
|
|
- |
|
|
9,041 |
|
|
4,346 |
Total expenses |
|
457,155 |
|
645,232 |
|
1,102,387 |
|
1,143,232 |
|||
|
|
|
|
|
|
|
|
||||
Gain on sale of properties |
|
15,207 |
|
- |
|
15,207 |
|
2,805 |
|||
Interest and other income |
|
- |
|
|
- |
|
|
- |
|
|
1,581 |
Interest expense |
|
(2,698) |
|
- |
|
(2,698) |
|
(527) |
|||
Loss on early extinguishment of debt |
|
(17) |
|
|
- |
|
|
(17) |
|
|
- |
Net income (loss) |
|
79,948 |
|
(2,715) |
|
77,233 |
|
(86,285) |
|||
|
|
|
|
|
|
|
|
||||
Add (less): Interest expense |
|
2,698 |
|
527 |
|||||||
Interest and other income |
|
|
|
|
|
- |
|
|
(1,581) |
||
Depreciation and amortization |
|
123,365 |
|
159,974 |
|||||||
Impairment of assets |
|
|
|
|
|
9,041 |
|
|
4,346 |
||
Gain on sale of properties |
|
(15,207) |
|
(2,805) |
|||||||
Loss on early extinguishment of debt |
|
|
|
|
|
17 |
|
|
- |
||
NOI |
|
197,147 |
|
74,176 |
|||||||
NOI of properties not included in comparable results |
|
|
|
|
(7,209) |
|
|
(2,153) |
|||
Comparable property NOI |
$ |
189,938 |
$ |
72,023 |
|||||||
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.
