Diversified Healthcare Trust · NASDAQ:DHC
Diversified Healthcare Trust — Q3 2023 Earnings Presentation
47 slides from Diversified Healthcare Trust's earnings presentation, Nov 1, 2023
Slide 1: Third Quarter 2023 Financial Results and Supplemental Information
Diversified Healthcare Trust Third Quarter 2023 Financial Results and Supplemental Information Exhibit 99.2 November 1, 2023 Calusa Harbour 2525 First Street Fort Myers, FL
Slide 2: Table of Contents
Q3 2023 2 FINANCIAL RESULTS Diversified Healthcare Trust Announces Third Quarter 2023 Financial Results ............................................................................................ 3 Third Quarter 2023 Highlights .......................................................................
Slide 3: Diversified Healthcare Trust Announces Third Quarter 2023 Financial Results
Q3 2023 3 "During the third quarter, our normalized FFO increased by $22.5 million over the prior year, driven by improved SHOP operations, including a 13.2% revenue increase, a 370 basis-point occupancy increase to 78.4%, and a 7.0% increase in average monthly rate. While the SHOP recovery remains
Slide 4: Third Quarter 2023 Highlights
Q3 2023 4 Financial Results Third Quarter 2023 Highlights RETURN TO TABLE OF CONTENTS Operating Update Financing Activities and Liquidity • Net loss of $65.8 million, or $0.28 per share. • Normalized FFO of $8.3 million, or $0.03 per share. • Leased 289,124 square feet in DHC's Office Portfolio at w
Slide 5: Strategic Business and Financial Plan Update
Q3 2023 5 Engagement of B. Riley Securities Strategic Business and Financial Plan Update RETURN TO TABLE OF CONTENTS Credit Facility Asset Sales • Engaged as financial advisor to help evaluate DHC's options to address its near term capital needs, including upcoming debt maturities. • Currently asses
Slide 6: Third Quarter 2023 Results
Q3 2023 6 Third Quarter 2023 Results RETURN TO TABLE OF CONTENTS For the Three Months Ended Financial Results September 30, 2023 June 30, 2023 Change September 30, 2022 Change Net loss $ (65,779) $ (72,571) 9.4 % $ (81,492) 19.3 % Net loss per common share $ (0.28) $ (0.30) 6.7 % $ (0.34) 17.6 % Nor
Slide 7: Key Financial Data
Q3 2023 7 Key Financial Data RETURN TO TABLE OF CONTENTS As of and For the Three Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Selected Balance Sheet Data: Total gross assets $ 7,496,204 $ 7,493,885 $ 7,545,727 $ 7,830,445 $ 7,857,421 Total assets $ 5,530,256 $ 5,585,475 $ 5,666,73
Slide 8: Condensed Consolidated Balance Sheets
Q3 2023 8 September 30, 2023 December 31, 2022 Assets Real estate properties: Land $ 652,707 $ 668,918 Buildings and improvements 6,114,398 6,023,625 Total real estate properties, gross 6,767,105 6,692,543 Accumulated depreciation (1,965,948) (1,828,352) Total real estate properties, net 4,801,157 4
Slide 9: Condensed Consolidated Statements of Income (Loss)
Q3 2023 9 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Revenues: Rental income $ 63,390 $ 63,960 $ 191,201 $ 191,767 Residents fees and services 293,134 258,960 857,572 754,914 Total revenues 356,524 322,920 1,048,773 946,681 Expenses: Property
Slide 10: Condensed Consolidated Statements of Income (Loss) (Additional Data)
Q3 2023 10 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Additional Data: General and administrative expenses / total assets (at end of period) 0.1 % 0.1 % 0.4 % 0.3 % Non-cash straight line rent adjustments included in rental income $ 676 $ 2,7
Slide 11: Debt Summary
Q3 2023 11 Coupon Interest Principal Maturity Due at Years to Rate Rate Balance Date Maturity Maturity Secured Floating Rate Debt: Secured credit facility (1) 8.331% 8.331% $ 450,000 1/15/2024 $ 450,000 0.3 Weighted average rate / total secured floating rate debt 8.331% 8.331% $ 450,000 $ 450,000 0.
Slide 12: Debt Maturity Schedule
Q3 2023 12 $450,000 $250,000 $500,000 $500,000 $500,000 $600,000 $305 $1,820 $1,990 $898 $302 $322 $343 $366 $390 $6,924 Secured Floating Rate Debt Unsecured Fixed Rate Debt Secured Fixed Rate Debt 2023 2024 2025 2026 2027 2028 2029 2030 2031 Thereafter $0 $100,000 $200,000 $300,000 $400,000 $500,00
Slide 13: Leverage Ratios, Coverage Ratios and Public Debt Covenants
Q3 2023 13 Leverage Ratios, Coverage Ratios and Public Debt Covenants RETURN TO TABLE OF CONTENTS As of and For the Three Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Leverage Ratios: Net debt / total gross assets 33.8% 32.8% 32.4% 30.6% 29.2% Net debt / gross book value of real e
Slide 14: Summary of Capital Expenditures
Q3 2023 14 (dollars and sq. ft. in thousands, except per sq. ft. and unit data) Summary of Capital Expenditures RETURN TO TABLE OF CONTENTS For the Three Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Office Portfolio: Lease related costs $ 8,689 $ 9,284 $ 6,748 $ 9,558 $ 4,277 Buil
Slide 15: Redevelopment Information
Q3 2023 15 Project Location Type of Property Square Feet (1) Estimated Project Costs Total Costs Incurred as of September 30, 2023 Estimated Completion Date 100 Hampshire Street Mansfield, MA Life Science 124,803 $ 7.8 $ 2.5 Q1 2024 (1) Represents estimated square footage upon project completion. Re
Slide 16: Property Acquisitions / Dispositions Information
Q3 2023 16 Property Acquisitions / Dispositions Information Since January 1, 2023 Acquisitions: DHC has not acquired any properties since January 1, 2023. Dispositions: Date Sold Location Type of Property Number of Properties Gross Sales Price 2/3/2023 Columbia, SC Senior Living (1) 1 $ 1,100 2/28/2
Slide 17: Investments in Unconsolidated Joint Ventures
Q3 2023 17 Investments in Unconsolidated Joint Ventures (1) (dollars in thousands) RETURN TO TABLE OF CONTENTS As of September 30, 2023 Nine Months Ended September 30, 2023 Joint Venture Location Type of Property Number of Properties Square Feet Occupancy at September 30, 2023 Weighted Average Lease
Slide 18: Investments in Unconsolidated Joint Ventures (continued)
Q3 2023 18 Investments in Unconsolidated Joint Ventures (continued) (1) (dollars in thousands) RETURN TO TABLE OF CONTENTS As of September 30, 2023 (1) DHC's property list, including properties owned by these unconsolidated joint ventures, is available on DHC's website. (2) Based on the aggregate an
Slide 19: Portfolio Summary by Geographic Diversification and Property Type
Q3 2023 19 FL: 10% CA: 9% TX: 9% GA: 6% MD: 4% NC: 4% WI: 4% VA: 4% IL: 4% IN: 4% 26 Other States + D.C.: 42% (based on Gross Book Value of Real Estate Assets as of September 30, 2023) (1) Senior living communities are categorized by the type of living units which constitute a majority of the living
Slide 20: Portfolio Summary
Q3 2023 20 Portfolio Summary RETURN TO TABLE OF CONTENTS (dollars in thousands, except investment per square foot or unit) As of September 30, 2023 Number of Properties Square Feet or Number of Units Gross Book Value of Real Estate Assets % of Total Gross Book Value of Real Estate Assets Investment
Slide 21: SHOP Units by Operator
Q3 2023 21 SHOP Units by Operator RETURN TO TABLE OF CONTENTS Unit Count as of September 30, 2023 Manager Location Number of Properties (1) Assisted Living Independent Living and Active Adult Memory Care Skilled Nursing Total Five Star Senior Living Various (28 States) 119 6,470 9,646 1,539 — 17,655
Slide 22: Office Portfolio - Results of Operations
Q3 2023 22 (1) Same property includes those properties classified as same property for the three months ended September 30, 2023 for all periods presented. RETURN TO TABLE OF CONTENTS OFFICE PORTFOLIO - RESULTS OF OPERATIONS (dollars and sq. ft. in thousands) As of and For the Three Months Ended 9/3
Slide 23: Office Portfolio - Results of Operations
Q3 2023 23RETURN TO TABLE OF CONTENTS OFFICE PORTFOLIO - RESULTS OF OPERATIONS (dollars and sq. ft. in thousands) As of and For the Three Months Ended September 30, 2023 As of and For the Three Months Ended September 30, 2022 Life Science Medical Office Total Office Portfolio Life Science Medical Of
Slide 24: Office Portfolio and Same Property - Results of Operations (continued)
Q3 2023 24 Office Portfolio and Same Property - Results of Operations (continued) RETURN TO TABLE OF CONTENTS OFFICE PORTFOLIO - RESULTS OF OPERATIONS (dollars and sq. ft. in thousands) As of and For the Nine Months Ended September 30, 2023 As of and For the Nine Months Ended September 30, 2022 Life
Slide 25: SHOP Segment and Same Property - Results of Operations
Q3 2023 25 SHOP Segment and Same Property - Results of Operations RETURN TO TABLE OF CONTENTS SHOP SEGMENT - RESULTS OF OPERATIONS As of and For the Three Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Number of Properties 234 234 234 237 234 Number of Units 25,302 25,322 25,327 25,
Slide 26: SHOP Segment - Five Star and Other Operator Managed Communities
Q3 2023 26RETURN TO TABLE OF CONTENTS As of and For the Three Months Ended September 30, 2023 As of and For the Three Months Ended September 30, 2022 Five Star Managed Communities Other Operator Managed Communities Total SHOP Segment Five Star Managed Communities Other Operator Managed Communities T
Slide 27: Portfolio Leasing Summary
Q3 2023 27 Portfolio Leasing Summary (1) (1) The leasing summary on this page is based on leases entered into during the periods indicated. (2) Percent difference in prior rents charged for same space or, in the case of vacant space acquired, market rental rates for similar space in the building at
Slide 28: Tenants Representing 1% Or More of Total Annualized Rental Income
Q3 2023 28 As of September 30, 2023 Tenants Representing 1% Or More of Total Annualized Rental Income RETURN TO TABLE OF CONTENTS (dollars in thousands) Tenant Type of Property Annualized Rental Income % of Annualized Rental Income Expiration 1 Advocate Aurora Health Medical office $ 16,939 6.5% 202
Slide 29: Office Portfolio Lease Expiration Schedule
Q3 2023 29 Office Portfolio Lease Expiration Schedule RETURN TO TABLE OF CONTENTS (dollars in thousands) As of September 30, 2023 Office Portfolio Annualized Rental Income Expiring Year Annualized Rental Income Expiring % of Total Annualized Rental Income Expiring Cumulative % of Total Annualized Re
Slide 30: Non-Segment Lease Expiration Schedule
Q3 2023 30 Non-Segment Annualized Rental Income Expiring Year Number of Properties Number of Units or Square Feet Annualized Rental Income Expiring % of Total Annualized Rental Income Expiring Cumulative % of Total Annualized Rental Income Expiring 2023 — — $ — —% —% 2024 — — — —% —% 2025 3 129,500
Slide 31: The Company
Q3 2023 31 The Company: DHC is a REIT 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
Slide 32: Board of Trustees and Executive Officers
Q3 2023 32 Board of Trustees John L. Harrington Phyllis M. Hollis Independent Trustee Independent Trustee Lisa Harris Jones Jeffrey P. Somers Lead Independent Trustee Independent Trustee Jennifer F. Francis Adam D. Portnoy Managing Trustee Chair of the Board & Managing Trustee Executive Officers Jen
Slide 33: Non-GAAP Financial Measures
Q3 2023 33 Non-GAAP Financial Measures DHC presents certain "non-GAAP financial measures" within the meaning of applicable rules of the SEC, including net operating income, or NOI, Cash Basis NOI, same property NOI, same property Cash Basis NOI, earnings before interest, income tax, depreciation and
Slide 34: Definitions
Q3 2023 34 Adjusted total assets Adjusted total assets is the original cost of real estate assets calculated in accordance with GAAP before depreciation and after impairment write downs, if any, and excludes accounts receivable and intangible assets. AlerisLife AlerisLife means AlerisLife Inc. Annua
Slide 35: Definitions (continued)
Q3 2023 35 GAAP GAAP is U.S. generally accepted accounting principles. Gross book value of real estate assets Gross book value of real estate assets is real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations, less impairment writedowns, if any. G
Slide 36: Definitions (continued)
Q3 2023 36 Office Portfolio Office Portfolio consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties leased to biotech laboratories and other similar tenants. DHC's medical office and life science property leases incl
Slide 37: Calculation and Reconciliation of NOI and Cash Basis NOI
Q3 2023 37 Calculation and Reconciliation of NOI and Cash Basis NOI (dollars in thousands) RETURN TO TABLE OF CONTENTS For the Three Months Ended For the Nine Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 Calculation of NOI and Cash Basis NOI: Revenues: Rental i
Slide 38: NOI and Cash Basis NOI
Q3 2023 38 For the Three Months Ended 9/30/2023 9/30/2022 $ Change % Change 6/30/2023 $ Change % Change NOI: Life Science $ 9,846 $ 10,115 $ (269) (2.7) % $ 8,442 $ 1,404 16.6 % Medical Office 19,428 20,960 (1,532) (7.3) % 20,988 (1,560) (7.4) % Total Office Portfolio 29,274 31,075 (1,801) (5.8) % 2
Slide 39: Same Property NOI and Cash Basis NOI
Q3 2023 39 Same Property NOI and Cash Basis NOI (dollars in thousands) RETURN TO TABLE OF CONTENTS For the Three Months Ended 9/30/2023 9/30/2022 $ Change % Change 6/30/2023 $ Change % Change NOI: Life Science $ 7,118 $ 7,092 $ 26 0.4 % $ 7,758 $ (640) (8.2) % Medical Office 20,402 21,947 (1,545) (7
Slide 40: Reconciliation of NOI by Segment: Office Portfolio
Q3 2023 40 Calculation and Reconciliation of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI by Segment RETURN TO TABLE OF CONTENTS (dollars in thousands) Office Portfolio For the Three Months Ended Calculation of NOI and Cash Basis NOI: 9/30/2023 6/30/2023 3/31/2023 12/31/20
Slide 41: Reconciliation of NOI by Segment: SHOP
Q3 2023 41 Calculation and Reconciliation of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI by Segment (continued) RETURN TO TABLE OF CONTENTS (dollars in thousands) SHOP For the Three Months Ended Calculation of NOI and Cash Basis NOI: 9/30/2023 6/30/2023 3/31/2023 12/31/20
Slide 42: Reconciliation of NOI by Segment: Non-Segment
Q3 2023 42 Calculation and Reconciliation of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI by Segment (continued) RETURN TO TABLE OF CONTENTS (dollars in thousands) Non-Segment For the Three Months Ended Calculation of NOI and Cash Basis NOI: 9/30/2023 6/30/2023 3/31/2023 1
Slide 43: Reconciliation of NOI by Segment: Consolidated
Q3 2023 43 Calculation and Reconciliation of NOI, Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI by Segment (continued) RETURN TO TABLE OF CONTENTS (dollars in thousands) Consolidated For the Three Months Ended Calculation of NOI and Cash Basis NOI: 9/30/2023 6/30/2023 3/31/2023
Slide 44: Calculation and Reconciliation of EBITDA, EBITDAre and Adjusted EBITDAre
Q3 2023 44 Calculation and Reconciliation of EBITDA, EBITDAre and Adjusted EBITDAre (dollars in thousands) For the Three Months Ended For the Nine Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 Net (loss) income $ (65,779) $ (72,571) $ (52,658) $ (65,322) $ (81,4
Slide 45: Calculation and Reconciliation of FFO and Normalized FFO
Q3 2023 45 Calculation and Reconciliation of FFO and Normalized FFO (amounts in thousands, except per share data) RETURN TO TABLE OF CONTENTS For the Three Months Ended For the Nine Months Ended 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 Net (loss) income $ (65,779) $ (72
Slide 46: Warning Concerning Forward-Looking Statements
Q3 2023 46 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”, “
Slide 47: Warning Concerning Forward-Looking Statements (continued)
Q3 2023 47 These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in DHC's periodic filings. The information contained in DHC's filings with the SEC, including under the caption “Risk Factors” in its period
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