Diversified Healthcare Trust · NASDAQ:DHC
Diversified Healthcare Trust — Investor Presentation (November 2022)
27 slides from Diversified Healthcare Trust's investor presentation, Nov 14, 2022
Slide 1: Investor Presentation November 2022
1 INVESTOR PRESENTATIONNovember2022
Slide 2: Warning Concerning Forward Looking Statements
2 WARNING CONCERNING FORWARD LOOKING STATEMENTSThis presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever we use words such as “believe”, “expect”, “anticipate”,
Slide 3: Reasons to Invest in DHC
3 REASONS TO INVEST IN DHC An institutional quality portfoliothat is diversified across the healthcare spectrum, and seeks long-term stable growth.Predominantly private pay assets with limited exposure to government reimbursement programs such as Medicare and Medicaid.Long-term, positive healthcare
Slide 4: A Well Positioned National Healthcare REIT
4 DHC seeks to capitalize on the healthcare demands of an aging U.S. population. A WELL POSITIONED NATIONAL HEALTHCARE REIT379Healthcare Related Properties(1)$7.0BInvestment Portfolio(1)8.8M sfMedical Office & Life Science Space(1)27,404Senior Living Community UnitsFocused growthWell-located medical
Slide 5: Portfolio Profile
5 PORTFOLIO PROFILEDHC’s historically opportunistic approach to investing in quality healthcare related properties has created a portfolio that is broadly diversified with national scale. Asset Class By NOI(1)(2)(based on Q32022same propertyNOI)379properties located in 36 states and Washington, D.C.
Slide 6: High Quality Medical Office and Life Science Portfolio
6 HIGH QUALITY MEDICAL OFFICE AND LIFE SCIENCE PORTFOLIOAlmost500 tenants with same property occupancy of 90.2%atSeptember30, 2022.(1)(2) Maryland Heights, MOTenant: Magellan HealthSquare feet: 232,5211.Excludes unconsolidated joint ventures.2.Occupancy data is as of September 30, 2022and includes s
Slide 7: Office Portfolio
7 OFFICE PORTFOLIO1.Excludes unconsolidated joint ventures.2.Includes both medical office and life science properties. Based on Q3 2022 NOI. See Appendix for the calculation of NOI and areconciliation of net income (loss) determined in accordance with GAAP to that amount.3.Annualized rental income i
Slide 8: Medical Office and Life Science Dynamics
8 02.557.51012.5 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 Billions ($)MEDICAL OFFICE AND LIFE SCIENCE DYNAMICSStrong demographic tailwinds driving healthcarereal
Slide 9: Office Portfolio - Third Quarter Update
9 OFFICE PORTFOLIO -THIRDQUARTER UPDATEFor the quarter endedSeptember30, 2022, our Office Portfolio segment represented67% of same property cash basis NOI.1.Represents estimated square footage upon project completion.2.Project costs include estimated construction costs and leasing capital up to stab
Slide 10: Investments in Unconsolidated Joint Ventures
10 SummaryWe own a 10% equity interest in the two-building life science complex located at 11 Fan Pier Blvd. and 50 Northern Ave. in Boston, MA.Size1.1 million sfOccupancy100%WALT6.3yearsDHC Ownership10%DHC Carrying Value$108.4 millionProperty Valuation$1.7billionDebt$620 millionINVESTMENTS IN UNCON
Slide 11: Senior Living Portfolio
11 SENIOR LIVING PORTFOLIO The Palms at Lake SpiveyOperator: Five Star Senior LivingJonesboro, GA200 UnitsFive Star Premier ResidencesOperator: Five Star Senior LivingPompano Beach, FL170 UnitsOaks at StockbridgeOperator: Oaks-CaravitaSenior CareStockbridge, GA61 UnitsAmber RidgeOperator: Cedarhurst
Slide 12: Restructured SHOP Segment
12 RESTRUCTURED SHOP SEGMENTDHC's SHOP segment contains 227communities with over 25,000 units with a diverse group of best-in-class operators.(1)Unit MixUnit Mix107OtherOperator Communities120 Five Star Managed Communities ManagerLocationNumber of CommunitiesNumber of UnitsCedarhurst Senior LivingIL
Slide 13: Senior Living Portfolio Overview
SENIOR LIVING PORTFOLIO OVERVIEW Current Portfolio (as of September30, 2022) Five Star Managed -SHOP IL, AL, MC 120 17,889 Various OtherOperators -SHOP IL, AL, MC, SNF, CCRC 107 7,189 SHOP Segment IL, AL, MC, SNF, CCRC 227 25,078 NNN Subtotal IL, AL, MC, SNF, CCRC 30 2,326 SHOP Occupancy is Beginnin
Slide 14: Current Environment & Future Demographics
14 CURRENT ENVIRONMENT & FUTURE DEMOGRAPHICSLong-Term IndustryDemographics Remain Compelling•Senior living demographic of 80+ population is projected to grow over 30% in the next five years.•National healthcare spending is projected to grow at an average rate of 5.7% per year and reach $6.0 trillion
Slide 15: Debt Maturity Schedule
1.Werepaid$10.3millionofthisdebtinOctober2022. Public Debt: Active public bond issuer with over $2.3 billion outstanding. Agency Market (Fannie Mae and Freddie Mac): Offers attractively priced capital for financing senior housing assets. Traditional mortgages opportunities through existing JV partne
Slide 16: Strong Management Platform Advantages
16 STRONG MANAGEMENT PLATFORM ADVANTAGES Financial Services:Real Estate Services:Business Services:AccountingAcquisitions/ DispositionsAdministrationCapital MarketsAsset ManagementHuman ResourcesCompliance/ AuditConstruction/DevelopmentInformation Technology (IT)Finance/ PlanningEngineeringInvestor
Slide 17: The RMR Group: A Winning Tradition
THE RMR GROUPA WINNING TRADITIONEPA’S ENERGY STARPartner of the Year 2019 -2022. 70 properties with EPAENERGY STAR certifications60 properties withBOMAdesignations. Ranked #1 for portfolio with most designations56 properties with LEEDdesignations SUSTAINABILITYBoston Globe’sTop Places to Work; 2020
Slide 18: DHC Benefits from Relationship with The RMR Group
18 (1) As of September30, 2022.DHC BENEFITS FROM RELATIONSHIP WITH THE RMR GROUPRMR provides DHC with scale and efficiencies.•DHC has no employees; RMR provides all services.•RMR’s acquisitions team sees a substantial number of properties marketed for sale in every market across the United States.•R
Slide 19: Supported by RMR's Personnel Investments
19 SUPPORTED BY RMR'S PERSONNEL INVESTMENTS •RMR continues to invest in personnel overseeing the asset management, development and project management functions. •Since 2016, RMR has added 25 positions to the Senior Living and Office & Industrial Asset Management teams, while it has also added 11 pos
Slide 20: Management Agreement Provides for Alignment of Interests
20 MANAGEMENT AGREEMENT PROVIDES FOR ALIGNMENT OF INTERESTSRMR base management fee tied to DHC share price performance•Consists of an annual fee based on 50 bps of the lower of: (1) DHC’s historical cost of real estate, or (2) DHC’s total market capitalization.•There is no incentive for RMR to compl
Slide 21: Appendix
APPENDIX Muse at Torrey PinesSan Diego, CA
Slide 22: Financial results summary
22 For the Three Months Ended September30, For the NineMonths Ended September30, (Dollars in thousands, except per share data) 2022 2021 2022 2021 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
Slide 23: Calculation and Reconciliation of NOI and Cash Basis NOI
CALCULATION AND RECONCILIATION OF NOI AND CASH BASIS NOI(1) (Dollars in thousands)For the Three Months Ended9/30/20226/30/20223/31/202212/31/20219/30/2021 Calculation of NOI and Cash Basis NOI: Revenues:Rental income$63,960$62,522$65,285$102,034 $ 101,403 Residents fees and services258,960250,506245
Slide 24: Calculation and Reconciliation of Same Property NOI
CALCULATION AND RECONCILIATION OFSAME PROPERTY NOI AND SAME PROPERTY CASH BASIS NOI AND CASH BASIS NOI(1)24 1.SeeDefinitionsofCertainNon-GAAPFinancialMeasuresinappendixforadefinitionofNOI,CashBasisNOI,SamePropertyNOIandSamePropertyCashBasisNOI,adescriptionofwhywebelievetheyareappropriatesupplemental
Slide 25: EBITDA and EBITDAre reconciliation
(Dollars in thousands)For the Three Months Ended9/30/20226/30/20223/31/202212/31/20219/30/2021Net (loss) income$(81,492)$(109,383)$240,423$366,758$(88,004)Interest expense46,93655,97557,13163,51864,493Income tax expense(benefit)13(640)1,472406595Depreciation and amortization60,40758,26157,25968,3886
Slide 26: Calculation and Reconciliation of FFO and Normalized FFO
1.SeeDefinitionsofCertainNon-GAAPFinancialMeasuresintheappendixforadefinitionofFFOattributabletocommonshareholdersandNormalizedFFOattributabletocommonshareholders,adescriptionofwhywebelievetheyareappropriatesupplementalmeasuresandadescriptionofhowweusethesemeasures.CALCULATION AND RECONCILIATION OF
Slide 27: Definitions of Certain Non-GAAP Financial Measures
DEFINITIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES Non-GAAP Financial Measures We present certain "non-GAAP financial measures" within the meaning of applicable rules of the SEC, including net operating income, or NOI, Cash Basis NOI, earnings before interest, income tax, depreciation and amortizati
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