Diversified Healthcare Trust Provides Monthly SHOP Performance Update

About this update from Diversified Healthcare Trust

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 Properties : March 2024 occupancy was 78.8%, a decrease of 10 basis points from February 2024 , and 150 basis points higher than March 2023 . March 2024 Resident Fees and Services revenue was $103.1 million , an increase of $0.8 million , or 0.8%, from February 2024 , and higher by $8.6 million , or 9.2%, compared to March 2023 . March 2024 net operating income, or NOI, was $7.3 million , a decrease of $2.8 million , or 27.3%, from February 2024 , and higher by $3.0 million , or 68.6%, compared to March 2023 . March 2024 NOI margin was 7.1%, 280 basis points below February 2024 , and 250 basis points above March 2023 . March 2024 total SHOP revenues increased slightly on a sequential month basis. On a year over year basis, total SHOP revenues increased 9.2%, primarily from higher rental rates and occupancy. March 2024 total SHOP operating expenses increased 3.3% and 6.7% on a sequential month and year over year basis, respectively. The increase on a sequential month basis is primarily due to higher salaries and wages as a result of two additional days in March, partially offset by reduced contract labor. The year over year increase is primarily due to higher salaries and wages driven by inflation, wage adjustments and filling open positions, partially offset by reduced contract labor. Diversified Healthcare Trust SHOP Segment - Monthly Results of Operations (dollars in thousands, except average monthly rate) 2024 (1) 2024 (1) $ % 2023 $ % March Feb Change Change March Change Change ALR/Five Star Managed Communities Number of Properties 119 119 119 Number of Units 17,647 17,655 17,704 Occupancy 78.7% 78.8% 77.7% Average Monthly Rate (2) $ 4,772 $ 4,796 $ (24) (0.5)% $ 4,514 $ 258 5.7% Residents Fees and Services $ 66,268 $ 66,684 $ (416) (0.6)% $ 61,307 $ 4,961 8.1% Property Operating Expenses (60,657) (57,849) 2,808 4.9% (56,145) 4,512 8.0% NOI (3) $ 5,611 $ 8,835 $ (3,224) (36.5)% $ 5,162 $ 449 8.7% NOI Margin 8.5% 13.2% 8.4% Other Operator Managed Communities Number of Properties 113 113 115 Number of Units 7,573 7,574 7,623 Occupancy 79.1% 79.1% 76.5% Average Monthly Rate (2) $ 6,149 $ 5,945 $ 204 3.4% $ 5,738 $ 411 7.2% Residents Fees and Services $ 36,828 $ 35,618 $ 1,210 3.4% $ 33,142 $ 3,686 11.1% Property Operating Expenses (35,103) (34,358) 745 2.2% (33,952) 1,151 3.4% NOI (3) $ 1,725 $ 1,260 $ 465 36.9% $ (810) $ 2,535 313.0% NOI Margin 4.7% 3.5% (2.4)% Total SHOP Number of Properties 232 232 234 Number of Units 25,220 25,229 25,327 Occupancy 78.8% 78.9% 77.3% Average Monthly Rate (2) $ 5,187 $ 5,142 $ 45 0.9% $ 4,879 $ 308 6.3% Residents Fees and Services $ 103,096 $ 102,302 $ 794 0.8% $ 94,449 $ 8,647 9.2% Property Operating Expenses (95,760) (92,207) 3,553 3.9% (90,097) 5,663 6.3% NOI (3) $ 7,336 $ 10,095 $ (2,759) (27.3)% $ 4,352 $ 2,984 68.6% NOI Margin 7.1% 9.9% 4.6% 2023 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD ALR/Five Star Managed Communities Number of Properties 119 119 119 119 119 119 119 119 119 119 119 119 119 Number of Units 17,716 17,706 17,704 17,704 17,703 17,699 17,699 17,677 17,655 17,655 17,655 17,655 17,655 Occupancy 77.2% 77.2% 77.7% 78.0% 78.1% 77.6% 78.0% 78.5% 78.7% 79.2% 79.3% 79.1% 78.2% Average Monthly Rate (2) $ 4,409 $ 4,566 $ 4,514 $ 4,527 $ 4,551 $ 4,532 $ 4,530 $ 4,534 $ 4,556 $ 4,542 $ 4,510 $ 4,548 $ 4,526 Residents Fees and Services $ 59,539 $ 61,616 $ 61,307 $ 61,673 $ 62,076 $ 62,268 $ 62,570 $ 62,923 $ 63,276 $ 63,482 $ 63,154 $ 63,558 $ 747,442 Property Operating Expenses (53,744) (52,753) (56,145) (51,873) (55,579) (55,416) (56,808) (56,774) (56,355) (56,793) (56,604) (59,851) (668,695) NOI (3) $ 5,795 $ 8,863 $ 5,162 $ 9,800 $ 6,497 $ 6,852 $ 5,762 $ 6,149 $ 6,921 $ 6,689 $ 6,550 $ 3,707 $ 78,747 NOI Margin 9.7% 14.4% 8.4% 15.9% 10.5% 11.0% 9.2% 9.8% 10.9% 10.5% 10.4% 5.8% 10.5% Other Operator Managed Communities Number of Properties 118 115 115 115 115 115 115 115 115 114 113 113 113 Number of Units 7,623 7,623 7,623 7,623 7,623 7,623 7,623 7,647 7,647 7,572 7,571 7,554 7,554 Occupancy 74.8% 76.3% 76.5% 77.4% 77.1% 78.0% 78.3% 78.6% 78.6% 79.2% 79.4% 79.6% 77.8% Average Monthly Rate (2) $ 5,732 $ 5,450 $ 5,738 $ 5,569 $ 5,652 $ 5,644 $ 5,762 $ 5,797 $ 5,987 $ 5,815 $ 5,745 $ 5,896 $ 5,733 Residents Fees and Services $ 32,486 $ 31,502 $ 33,142 $ 32,576 $ 32,953 $ 33,300 $ 34,109 $ 34,559 $ 35,697 $ 34,605 $ 34,275 $ 35,262 $ 404,466 Property Operating Expenses (34,312) (31,423) (33,952) (32,932) (33,428) (32,731) (33,688) (35,301) (33,519) (34,361) (34,421) (36,328) (406,396) NOI (3) $ (1,826) $ 79 $ (810) $ (356) $ (475) $ 569 $ 421 $ (742) $ 2,178 $ 244 $ (146) $ (1,066) $ (1,930) NOI Margin (5.6)% 0.3% (2.4)% (1.1)% (1.4)% 1.7% 1.2% (2.1)% 6.1% 0.7% (0.4)% (3.0)% (0.5)% Total SHOP Number of Properties 237 234 234 234 234 234 234 234 234 233 232 232 232 Number of Units 25,339 25,329 25,327 25,327 25,326 25,322 25,322 25,324 25,302 25,227 25,226 25,209 25,209 Occupancy 76.5% 77.0% 77.3% 77.8% 77.8% 77.7% 78.1% 78.5% 78.6% 79.2% 79.3% 79.3% 78.1% Average Monthly Rate (2) $ 4,800 $ 4,831 $ 4,879 $ 4,840 $ 4,880 $ 4,866 $ 4,900 $ 4,914 $ 4,986 $ 4,922 $ 4,879 $ 4,952 $ 4,888 Residents Fees and Services $ 92,025 $ 93,118 $ 94,449 $ 94,249 $ 95,029 $ 95,568 $ 96,679 $ 97,482 $ 98,973 $ 98,087 $ 97,429 $ 98,820 $ 1,151,908 Property Operating Expenses (88,056) (84,176) (90,097) (84,805) (89,007) (88,147) (90,496) (92,075) (89,874) (91,154) (91,025) (96,179) (1,075,091) NOI (3) $ 3,969 $ 8,942 $ 4,352 $ 9,444 $ 6,022 $ 7,421 $ 6,183 $ 5,407 $ 9,099 $ 6,933 $ 6,404 $ 2,641 $ 76,817 NOI Margin 4.3% 9.6% 4.6% 10.0% 6.3% 7.8% 6.4% 5.5% 9.2% 7.1% 6.6% 2.7% 6.7% (1) The information regarding DHC’s SHOP segment results for February and March 2024 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 these 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) Previously, average monthly rate was calculated as average daily rate (revenue divided by occupied days) multiplied by 30 days. Retroactively to January 2023 , we are now calculating the average monthly rate as the average daily rate multiplied by the exact number of days in the month. This change in methodology is now largely consistent with changes in revenue and occupancy as they are based on the same time period. (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 uses NOI to evaluate individual and company-wide property level performance. Other real estate companies and real estate investment trusts, or REITs, may calculate NOI differently than DHC does. Calculation and Reconciliation of NOI for SHOP Segment (dollars in thousands) For the Month Ended March 31, 2023 March 31, 2024 Calculation of NOI: SHOP SHOP Residents fees and services $ 94,449 $ 103,096 Property operating expenses (90,097) (95,760) NOI $ 4,352 $ 7,336 For the Month Ended March 31, 2023 February 29, 2024 March 31, 2024 SHOP SHOP SHOP Residents fees and services $ 94,449 $ 102,302 $ 103,096 Expenses: Property operating expenses 90,097 92,207 95,760 Depreciation and amortization 14,280 15,644 15,683 Total expenses 104,377 107,851 111,443 Gain on sale of properties 2,723 - - Interest expense - (23) (22) Impairment (3,617) Net loss (10,822) (5,572) (8,369) Add (less): Interest expense - 23 22 Interest and other income - - - Depreciation and amortization 14,280 15,644 15,683 Impairment of assets 3,617 - - Gain on sale of properties (2,723) - - NOI $ 4,352 $ 10,095 $ 7,336 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 December 31, 2023 , DHC’s approximately $7.2 billion portfolio included 371 properties in 36 states and Washington, D.C. , occupied by approximately 500 tenants, and totaling approximately 8.6 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 over $41 billion in assets under management as of December 31, 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. A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq. No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust. View source version on businesswire.com : https://www.businesswire.com/news/home/20240501921266/en/ Kevin Brady , Director, Investor Relations (617) 796-8234 Source: Diversified Healthcare Trust

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