Diversified Healthcare Trust · NASDAQ:DHC
Diversified Healthcare Trust — Q4 2019 Earnings Presentation
44 slides from Diversified Healthcare Trust's earnings presentation, Mar 2, 2020
Slide 1: Fourth Quarter 2019 Supplemental Operating and Financial Data
MMB DIVERSIFIED Exhibit 99.2 SMB HEALTHCARE DHC SMB TRUST Nasdaq Listed Rendering of Science Park Redevelopment Project, Torrey Pines, San Diego, CA Projected Square Feet: 197,500 FOURTH QUARTER 2019 SUPPLEMENTAL OPERATING AND FINANCIAL DATA All amounts in this report are unaudited
Slide 2: Table of Contents
TABLE OF CONTENTS PAGE CORPORATE INFORMATION 3 Company Profile .................................................................................................................................................................................................................... 4 Investor Information..
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Slide 4: Company Profile
COMPANY PROFILE The Company: Corporate Headquarters: Diversified Healthcare Trust (formerly known as Senior Housing Properties Trust), or DHC, we, our or us, is a real estate investment trust, or REIT, which owns healthcare related properties including medical office and Two Newton Place life scienc
Slide 5: Investor Information
INVESTOR INFORMATION Board of Trustees John L. Harrington Lisa Harris Jones Jeffrey P. Somers Independent Trustee Lead Independent Trustee Independent Trustee Jennifer B. Clark Adam D. Portnoy Managing Trustee Chair of the Board & Managing Trustee INVESTOR INFORMATION INVESTOR Senior Management Jenn
Slide 6: Research Coverage
RESEARCH COVERAGE Equity Research Coverage B. Riley FBR BofA Securities Morgan Stanley Bryan Maher Joshua Dennerlein Vikram Malhotra (646) 885-5423 (646) 855-1681 (212) 761-7064 bmaher@brileyfbr.com joshua.dennerlein@bofa.com vikram.malhotra@morganstanley.com Raymond James RBC Capital Markets Robert
Slide 7: Financials
FINANCIALS 2601 Patriot Boulevard, Glenview, iL Tenant: GN Hearing Care Corporation = Square Feet: 48,911
Slide 8: Key Financial Data
KEY FINANCIAL DATA (dollars in thousands, except per share data) As of and For the Three Months Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Selected Balance Sheet Data: Total gross assets $ 8,224,627 $ 8,572,131 $ 8,713,990 $ 8,706,590 $ 8,694,818 Total assets $ 6,653,826 $ 6,916,990 $
Slide 9: Condensed Consolidated Balance Sheets
CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share data) As of As of December 31, 2019 December 31, 2018 ASSETS Real estate properties: Land $ 793,123 $ 844,567 Buildings and improvements 6,668,463 7,031,733 Total real estate properties, gross 7,461,586 7,876,300 Accumulated d
Slide 10: Consolidated Statements of Income (Loss)
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (amounts in thousands, except per share data) For the Three Months Ended December 31, For the Year Ended December 31, 2019 2018 2019 2018 Revenues: Rental income $ 147,209 $ 178,680 $ 606,558 $ 700,641 Residents fees and services 108,830 106,542 433,597 416,5
Slide 11: Consolidated Statements of Income (Loss) (Additional Data)
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (ADDITIONAL DATA) (dollars in thousands) For the Three Months Ended December 31, For the Year Ended December 31, 2019 2018 2019 2018 Additional Data: General and administrative expenses / total assets (at end of period) (1) 0.1% 0.0% 0.6% 1.2% Business manage
Slide 12: Consolidated Statements of Cash Flows
CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) For the Year Ended December 31, 2019 2018 Cash flows from operating activities: Net (loss) income $ (82,878) $ 292,414 Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation and amortization 289,0
Slide 13: Consolidated Statements of Cash Flows (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (amounts in thousands) For the Year Ended December 31, 2019 2018 Cash flows from financing activities: Proceeds from issuance of senior unsecured notes, net — 491,560 Proceeds from borrowings on revolving credit facility 994,500 727,000 Repayments of
Slide 14: Debt Summary
DEBT SUMMARY (dollars in thousands) As of December 31, 2019 Coupon Interest Principal Maturity Due at Years to Rate Rate (1) Balance (2) Date Maturity Maturity Unsecured Floating Rate Debt: Unsecured revolving credit facility (LIBOR + 120 b.p.) (3) 2.803% 2.803% $ 537,500 1/15/2022 $ 537,500 2.0 Uns
Slide 15: Debt Maturity Schedule
DEBT MATURITY SCHEDULE (dollars in thousands) As of December 31, 2019 Unsecured Unsecured Secured Floating % of Fixed % of Fixed Rate % of % of Year Rate Debt Total Rate Debt Total Debt (1) (2) Total Total Total 2020 $ 250,000 $ 200,000 $ 3,799 $ 453,799 2021 — 300,000 4,097 304,097 2022 737,500 (3)
Slide 16: Leverage Ratios, Coverage Ratios and Public Debt Covenants
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS As of and For the Three Months Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Leverage Ratios: Net debt / total gross assets 42.5% 42.4% 42.9% 42.8% 41.7% Net debt / gross book value of real estate assets 41.5% 41.8% 42.9% 43.0% 4
Slide 17: Summary of Capital Expenditures
SUMMARY OF CAPITAL EXPENDITURES (dollars and sq. ft. in thousands, except per sq. ft. and unit data) For the Three Months Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Office Portfolio tenant improvements $ 5,328 $ 2,584 $ 2,008 $ 5,000 $ 4,283 Office Portfolio leasing costs 4,303 2,038
Slide 18: Property Acquisitions / Dispositions Information Since January 1, 2019
PROPERTY ACQUISITIONS / DISPOSITIONS INFORMATION SINCE JANUARY 1, 2019 (dollars in thousands) Acquisitions: (1) Gross Gross Purchase Date Number of Purchase Price per Initial Lease / Acquired Location Type of Property Buildings Units Price Unit Cap Rate (2) Tenant 12/20/2019 Plano, TX Active Adult R
Slide 19: Calculation and Reconciliation of NOI and Cash Basis NOI
CALCULATION AND RECONCILIATION OF NOI AND CASH BASIS NOI (amounts in thousands) For the Three Months Ended For the Year Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Calculation of NOI and Cash Basis NOI: Revenues: Rental income $ 147,209 $ 148,011 $ 153,097 $ 158,2
Slide 20: NOI and Cash Basis NOI
NOI AND CASH BASIS NOI (dollars in thousands) For the Three Months Ended For the Year Ended 12/31/2019 12/31/2018 % Change 12/31/2019 12/31/2018 % Change NOI: Life Science $ 33,285 $ 37,511 (11.3)% $ 144,525 $ 149,760 (3.5)% Medical Office 30,653 32,846 (6.7)% 128,143 135,321 (5.3)% Total Office Por
Slide 21: Same Property NOI and Cash Basis NOI
SAME PROPERTY NOI AND CASH BASIS NOI (dollars in thousands) For the Three Months Ended For the Year Ended 12/31/2019 12/31/2018 % Change 12/31/2019 12/31/2018 % Change NOI: Life Science $ 31,273 $ 32,495 (3.8)% $ 121,216 $ 123,279 (1.7)% Medical Office 28,601 29,210 (2.1)% 113,992 117,113 (2.7)% Tot
Slide 22: Reconciliation of NOI, Cash Basis NOI, Same Property NOI by Segment (Quarter)
CALCULATION AND RECONCILIATION OF NOI, CASH BASIS NOI, SAME PROPERTY NOI AND SAME PROPERTY CASH BASIS NOI BY SEGMENT 2018 (dollars in thousands) AND For the Three Months Ended December 31, 2019 For the Three Months Ended December 31, 2018 Calculation of NOI and Cash Basis NOI: Office Portfolio SHOP
Slide 23: Reconciliation of NOI, Cash Basis NOI, Same Property NOI by Segment (Year)
CALCULATION AND RECONCILIATION OF NOI, CASH BASIS NOI, SAME PROPERTY NOI AND SAME PROPERTY CASH BASIS NOI BY SEGMENT 2018 (dollars in thousands) AND For the Year Ended December 31, 2019 For the Year Ended December 31, 2018 Calculation of NOI and Cash Basis NOI: Office Portfolio SHOP Non-Segment Tota
Slide 24: Calculation and Reconciliation of EBITDA, EBITDAre and Adjusted EBITDAre
re CALCULATION AND RECONCILIATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre (amounts in thousands) For the Three Months Ended For the Year Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Net (loss) income $ (50,620) $ (27,946) $ (35,816) $ 31,504 $ (117,182) $ (82,878
Slide 25: Calculation and Reconciliation of FFO and Normalized FFO
CALCULATION AND RECONCILIATION OF FFO AND NORMALIZED FFO ATTRIBUTABLE TO COMMON SHAREHOLDERS (amounts in thousands, except per share data) For the Three Months Ended For the Year Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Net (loss) income attributable to common
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Slide 27: Portfolio Summary by Geographic Diversification and Property Type
PORTFOLIO SUMMARY BY GEOGRAPHIC DIVERSIFICATION AND PROPERTY TYPE Geographic Diversification Property Type(1) (2) (based on Gross Book Value of Real Estate Assets as of December 31, 2019) (based on Q4 2019 NOI) IL: 3% VA: 3% Wellness NC: 3% Centers: 4% WI: 4% MD: 4% Independent GA: 5% Living: 22% Me
Slide 28: Portfolio Summary
PORTFOLIO SUMMARY (dollars in thousands, except investment per unit or square foot) As of December 31, 2019 % of Total % of % of Square Feet Gross Book Gross Book Investment Per Q4 2019 Q4 2019 Number of or Number of Value of Real Value of Real Square Foot Q4 2019 Total Q4 2019 Total Properties Unit
Slide 29: Occupancy
OCCUPANCY As of and For the Twelve Months Ended (1) 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018 Life science 94.5% 97.9% 97.8% 99.0% 98.8% Medical office 90.9% 89.1% 91.7% 91.7% 93.6% OCCUPANCY Weighted average occupancy Office Portfolio (2) 92.3% 92.5% 94.0% 94.5% 95.6% SHOP (3) (4) 85.7% 86
Slide 30: Unit Count and Rent Coverage
UNIT COUNT AND RENT COVERAGE SHOP Unit Count as of December 31, 2019 (1): Independent Living and Active Adult units: 10,800: 37.2% Assisted SNF units: Living units: 3,491: 12.0% 11,441: 39.4% Memory Care units: 3,281: 11.4% UNIT COUNT AND RENT COVERAGE UNIT COUNT Rent Coverage (2): As of and For the
Slide 31: Office Portfolio Segment - Results of Operations (Quarter)
) OFFICE PORTFOLIO SEGMENT - RESULTS OF OPERATIONS (dollars and sq. ft. in thousands) 2018 As of and For the Three Months Ended December 31, 2019 As of and For the Three Months Ended December 31, 2018 Life Science Medical Office Total Office Portfolio Life Science Medical Office Total Office Portfol
Slide 32: Office Portfolio Segment - Results of Operations (Year)
) OFFICE PORTFOLIO SEGMENT - RESULTS OF OPERATIONS (dollars and sq. ft. in thousands) 2018 As of and For the Year Ended December 31, 2019 As of and For the Year Ended December 31, 2018 Life Science Medical Office Total Office Portfolio Life Science Medical Office Total Office Portfolio AND Number of
Slide 33: SHOP Segment - Results of Operations
SHOP SEGMENT - RESULTS OF OPERATIONS (dollars in thousands, except average monthly rate) As of and For the Three Months Ended December 31, As of and For the Year Ended December 31, 2019 2018 2019 2018 Number of Properties (1) 244 260 244 260 Number of Units (1) 29,013 29,745 29,013 29,745 Occupancy
Slide 34: Office Portfolio Leasing Summary
OFFICE PORTFOLIO LEASING SUMMARY (dollars and sq. ft. in thousands, except per sq. ft. data) As of and For the Three Months Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Buildings 138 140 145 153 155 Total sq. ft. (1) 11,878 12,179 12,372 12,547 12,600 Occupancy (2) 92.2% 92.3% 92.5% 94.
Slide 35: Tenants Representing 1% or More of Total Annualized Rental Income
TENANTS REPRESENTING 1% OR MORE OF TOTAL ANNUALIZED RENTAL INCOME (dollars in thousands) As of December 31, 2019 % of Annualized Annualized Rental Tenant Facility Type Rental Income Income Expiration 1 Five Star Senior Living Inc. (1) Senior living $ 129,785 20.9% 2019 2 Vertex Pharmaceuticals Inc.
Slide 36: Office Portfolio Lease Expiration Schedule
OFFICE PORTFOLIO LEASE EXPIRATION SCHEDULE (dollars in thousands) As of December 31, 2019 Office Portfolio Annualized Rental Income Expiring Cumulative Percentage of Annualized Rental Percent of Total Annualized Annualized Rental Income Year Income (1) Rental Income Expiring Expiring 2020 $ 29,387 7
Slide 37: Non-Segment Lease Expiration Schedule
NON-SEGMENT LEASE EXPIRATION SCHEDULE (dollars in thousands) As of December 31, 2019 Non-Segment Annualized Rental Income Expiring Cumulative Percentage of Number of Number of Units or Square Annualized Rental Percent of Total Annualized Annualized Rental Income Year Properties Feet Income Rental In
Slide 38: Transitional Pro Forma EBITDARM (Exhibit A)
TRANSITIONAL PRO FORMA EBITDARM EXHIBIT A See pages 39 - 40 for calculation and reconciliation of Pro Forma EBITDARM and Non-GAAP Financial Measures and Certain Definitions on page 41 for a definition of EBITDARM. SHOP SEGMENT - TRANSITIONAL PRO FORMA EBITDARM (dollars in thousands, except average m
Slide 39: SHOP Segment - Reconciliation of Pro Forma EBITDARM (Exhibit B)
SHOP SEGMENT - CALCULATION AND RECONCILIATION OF PRO FORMA EBITDARM EXHIBIT B (dollars in thousands) Three Months Ended December 31, 2019 Three Months Ended December 31, 2018 Restructuring Restructuring SHOP Transaction Pro Forma SHOP Transaction Pro Forma Revenues: Rental income $ 32,447 $ (32,447)
Slide 40: SHOP Segment - Reconciliation of Pro Forma EBITDARM (Exhibit C)
SHOP SEGMENT - CALCULATION AND RECONCILIATION OF PRO FORMA EBITDARM EXHIBIT C (dollars in thousands) Year Ended December 31, 2019 Year Ended December 31, 2018 Restructuring Restructuring SHOP Transaction Pro Forma SHOP Transaction Pro Forma Revenues: Rental income $ 137,898 $ (137,898) (1) $ — $ 212
Slide 41: Non-GAAP Financial Measures and Certain Definitions
NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Non-GAAP Financial Measures We present certain "non-GAAP financial measures" within the meaning of applicable SEC rules, including net operating income, or NOI, Cash Basis NOI, same property NOI, same property Cash Basis NOI, earnings before intere
Slide 42: Non-GAAP Financial Measures and Certain Definitions (Continued)
NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS (CONTINUED) 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 asse
Slide 43: Non-GAAP Financial Measures and Certain Definitions (Continued)
NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS (CONTINUED) NOI margin % NOI margin % is defined as NOI as a percentage of rental income. Non-Segment Non-Segment properties consists of triple net leased senior living communities that are leased to third party operators other than Five Star and w
Slide 44: Warning Concerning Forward-Looking Statements
WARNING CONCERNING FORWARD-LOOKING STATEMENTS This presentation of supplemental operating and financial data may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever we use words such as “believe”, “expect”,
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