Diversified Healthcare Trust · NASDAQ:DHC
Diversified Healthcare Trust — Q3 2024 Earnings Presentation
30 slides from Diversified Healthcare Trust's earnings presentation, Nov 18, 2024
Slide 1: Investor Presentation November 2024
Investor Presentation Five Star Senior Living Tiffany Court Walnut Creek 1866 San Miguel Drive Walnut Creek, CA Five Star Senior Living The Horizon Club 1208 South Military Trail Deerfield Beach, FL November 2024
Slide 2: Forward-looking statements
2 2 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws that are subject to risks and uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”,
Slide 3: Table of Contents
3 3 Table of Contents Page COMPANY HIGHLIGHTS AND OUTLOOK 4 SHOP INITIATIVES 7 CAPITAL RECYCLING 10 CAPITAL AND LIQUIDITY OUTLOOK 11 SHOP OVERVIEW 12 MEDICAL OFFICE & LIFE SCIENCE PORTFOLIO OVERVIEW 15 TRIPLE NET LEASED SENIOR LIVING & WELLNESS CENTERS SEGMENT OVERVIEW 18 APPENDIX 20
Slide 4: Company Highlights
4 4 Company Highlights Five Star Senior Living Heritage Place at Boerne 120 Crosspoint Drive Boerne, TX
Slide 5: DHC Today - National Healthcare REIT
5 5 DHC Today - National Healthcare REIT 368 Healthcare Related Properties 8.2M sf Medical Office Life Science Space More than 27,000 Senior Living Units $7.2B Investment Portfolio 27 Triple Net Senior Living Communities and 10 Wellness Centers DHC is supported by a favorable industry backdrop. Long
Slide 6: Third Quarter Results and Outlook
6 6 Third Quarter Results and Outlook +170 bps year over year SHOP margin improvement1 +100 bps SHOP occupancy increased year over year to 79.4%1 87.8% Medical Office and Life Science same store occupancy Third Quarter 2024 Financial Results1 1. Comparisons reflect change from Q3 2023. Category 2024
Slide 7: SHOP Performance Initiatives
7 7 SHOP Performance Initiatives $27.4 $6.3 $2.3 $36.0 Q3 2024 SHOP NOI Transitions Dispositions Q3 2024 Adjusted SHOP NOI Category NOI ($M) Q3 2024 SHOP NOI $27.4 Pro forma for stabilized transitioned communities 1 6.3 Pro forma for reduction of NOI loss from planned SHOP dispositions 2 2.3 Adjuste
Slide 8: SHOP Margin Expansion is Expected to Continue
8 8 (4.2%) 3.8% 7.0% 5.7% 4.0% 3.3% 0.7% 2.0% 71.1% 74.4% 78.1% 79.4% 50% 55% 60% 65% 70% 75% 80% 85% -5% 0% 5% 10% 15% 2021 2022 2023 Q3 2024 Occupancy RevPOR / ExpPOR Growth RevPOR Y/Y ∆% ExpPOR Y/Y ∆% Occupancy % SHOP Margin Expansion is Expected to Continue A focus on driving revenue growth and
Slide 9: Operator Transitions To Drive Growth
9 9 Operator Transitions To Drive Growth 2024 Transitioned Communities Transition Date April/May 2024 Stabilization 24 - 30 Months Communities / Units 13 / 783 Current Occupancy / NOI 1 60% / ($5.5)M Stabilized Occupancy Stabilized NOI 85% - 88% $4M - $5M Acuity Mix (units) 691 AL, 92 MC Current Rat
Slide 10: Capital Recycling Update
1100 Capital Recycling Update Estimated proceeds of approximately $302 million from sales of collateral properties within the Medical Office and Life Science Portfolio and Triple Net Leased Senior Living Wellness Centers segments to pay down 2026 zero coupon secured notes. Sales of non-core SHOP com
Slide 11: Focused Strategy to Strengthen Balance Sheet
1111 $0.5 $442.0 $941.4 $0.3 $500.3 $0.3 $0.3 $1,226.2 2024 2025 2026 2027 2028 2029 2030 2031 & After Cash Disposition Proceeds Financing Unsecured Fixed Rate Debt Secured Fixed Rate Debt Focused Strategy to Strengthen Balance Sheet Debt Maturity Schedule (As of September 30, 2024) (dollars in mill
Slide 12: SHOP Segment
1212 SHOP Segment Five Star Senior Living Heritage Place at Boerne 120 Crosspoint Drive Boerne, TX
Slide 13: SHOP Overview
1313 SHOP Overview 232 SHOP communities span across 31 states. Portfolio largely located in areas where the growth rate of 75+ population is higher than NIC designated metro population growth rate. Good mix of properties strategically located in areas where home values are outpacing the national med
Slide 14: Expect Favorable Industry Trends to Support Operational Momentum
1414 Expect Favorable Industry Trends to Support Operational Momentum • Senior living demographic of 80+ population is projected to grow at a 4.2% CAGR over the next 10 years while inventory growth is expected to remain depressed at 1.0%.1,2 • Rent growth remains elevated with top primary / secondar
Slide 15: Medical Office & Life Science Segment
1515 Medical Office & Life Science Segment Torrey Pines 3030 Science Park San Diego, CA
Slide 16: Medical Office & Life Science Portfolio Overview
1616 High quality Medical Office and Life Science Portfolio. • Approximately 500 individual tenants including industry-leading institutions. • Diverse tenant industry mix including healthcare systems, medical and dental offices, pharmaceutical and biotech research, health insurance and other related
Slide 17: Positive Pharmaceutical and Medical Research Industry Fundamentals
1717 $461.6B $715.5B 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Conventional Drugs Biologics & Biosmilars Positive Pharmaceutical and Medical Research Industry Fundamentals • Industry tailwinds driving continued demand. • Increasing demand for healthcare services, driven by an aging popu
Slide 18: Triple Net Leased Senior Living & Wellness Centers Segment
1818 Triple Net Leased Senior Living & Wellness Centers Segment The Stratford 2460 Glebe Street Carmel, IN
Slide 19: Triple Net Leased Senior Living & Wellness Centers Portfolio Overview
1919 Triple Net Leased Senior Living & Wellness Centers Portfolio Overview Stable performance outlook with embedded growth through a mix of contracted rental increases and percent rent. 2,062 Units 100% Occupancy 6.9 year WALT 1.79x Rent Coverage 812,000 SF 100% Occupancy 15.4 year WALT 2.50x Rent C
Slide 20: Appendix
The picture can't be displayed. 20 Appendix
Slide 21: Impact Through Action
2121 1. Certifications as of December 31, 2023. Our business strategy for our Medical Office and Life Science Portfolio incorporates a focus on sustainable approaches to operating these properties in a manner that benefits our shareholders, tenants and the communities in which we are located. We see
Slide 22: RMR Private Clients and Platform
2222 Private Clients DHC is managed by The RMR Group LLC, an alternative asset manager Nearly $41 Billion in AUM RMR Platform More than $5 Billion in Annual Revenues Over 18,000 Employees Over 2,000 Properties National Multi-Sector Investment Platform Industrial Residential Senior Living Medical Off
Slide 23: National Vertically Integrated Real Estate Operating Platform
National Vertically Integrated Real Estate Operating Platform is a Differentiator and Competitive Advantage RMR Shared Services Accounting Marketing Human Resources Investor Relations Property Management Development Finance Legal Information Technology Project Management Tax Portfolio Management Tra
Slide 24: Management aligned with shareholder interests
2424 Management aligned with shareholder interests RMR 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 complete
Slide 25: RMR's Demonstrated Commitment to Sustainability
RMR’s Demonstrated Commitment to Sustainability with Measurable Progress 1. Certifications as of December 31, 2023. • Zero Emissions Promise by 2050 for all RMR managed properties. – Reduce GHG emissions 50% by 2029 from 2019 baseline. – Achieve net zero emissions from operations by 2050. • Water an
Slide 26: Calculation and Reconciliation of NOI and Cash Basis NOI
2626 (dollars in thousands) Calculation and Reconciliation of NOI and Cash Basis NOI For the Three Months Ended 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Calculation of NOI and Cash Basis NOI: Revenues: Rental income $ 61,635 $ 62,870 $ 62,650 $ 67,199 $ 63,390 Residents fees and services 3
Slide 27: Reconciliation of NOI by Segment
2727 (dollars in thousands) Calculation and Reconciliation of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI by Segment For the Three Months Ended September 30, 2024 For the Three Months Ended June 30, 2024 For the Three Months Ended September 30, 2023 Calculation of NOI and
Slide 28: Calculation and Reconciliation of FFO and Normalized FFO
2828 (amounts in thousands, except per share data) 1. For the three months ended March 31, 2024, represents DHC's 34% pro rata share of AlerisLife's FFO and Normalized FFO for DHC's period of ownership from February 16, 2024 to March 31, 2024. Calculation and Reconciliation of FFO and Normalized FFO
Slide 29: NOI, Cash Basis NOI, Same Property NOI definitions
2929 NOI, Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI The calculations of NOI, Cash Basis NOI, same property NOI and same property cash basis NOI exclude certain components of net income (loss) in order to provide results that are more closely related to our property level res
Slide 30: Certain Definitions
3300 Certain Definitions: AL: Assisted Living senior living communities. ExpPOR: The average expenses generated per occupied room per month at Seniors Housing Operating properties. IL: Independent Living senior living communities. MC: Memory Care senior living communities. RevPOR: The average revenu
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