Diversified Healthcare Trust (Nasdaq: DHC) today provided an update regarding the recent performance of its Senior Housing Operating Portfolio, or SHOP, segment.
Jennifer Francis, DHC’s President and Chief Executive Officer made the following statement:
“DHC’s SHOP NOI has flattened over the past two months and, after extensive consultation with our operating partners, we expect there will be higher operating expenses in the second half of 2023. Specifically, insurance and labor costs are expected to be materially higher in the second half of 2023 and will likely offset any revenue gains during that period. As a result, it is our current expectation that second half of 2023 SHOP NOI will be approximately equal to the first half of 2023, with no real growth during the second half of the year. Because of this, we continue to expect that the earliest DHC will be in compliance with its debt incurrence covenants is mid-year 2024, and there is substantial risk that it may take longer than mid-year 2024 to be in compliance. We continue to believe that the previously announced merger with Office Properties Income Trust is the best path for long term value preservation and creation for DHC shareholders.”
Monthly Unaudited Results in DHC’s Total SHOP Comparable Properties:
- June 2023 occupancy was 78.7%, 780 basis points below June 2019, and 60 basis points above May 2023.
- June 2023 Resident Fees and Services revenue was $93.0 million, $9.2 million, or 9.0%, below June 2019, and $0.5 million, or 0.5%, above May 2023.
- June 2023 net operating income, or NOI, was $7.2 million, $12.3 million, or 63.1%, below June 2019, and $1.3 million, or 22.0%, above May 2023.
- June 2023 NOI margin was 7.7%, 1,130 basis points below June 2019, and 130 basis points above May 2023.
Year to Date Unaudited Results in DHC’s Total SHOP Comparable Properties:
- Year to date occupancy through June 30, 2023, was 77.8%, 870 basis points below the same period in 2019.
- Year to date Resident Fees and Services revenue through June 30, 2023, was $549.1 million, $65.6 million, or 10.7%, below the same period in 2019.
- Year to date NOI through June 30, 2023, was $39.1 million, $74.1 million, or 65.4%, below the same period in 2019.
- Year to date NOI margin through June 30, 2023, was 7.1%, 1,130 basis points below the same period in 2019.
Diversified Healthcare Trust(1)
(dollars in thousands, except average monthly rate)
2019 Pro Forma (2) | 2023 | ||||||||||||||||||||||||||||||||||||||||||||
COMPARABLE (3) | Jan | Feb | Mar | Apr | May | Jun | YTD | Jan | Feb | Mar | Apr | May | Jun | YTD | |||||||||||||||||||||||||||||||
ALR/Five Star Managed Communities | |||||||||||||||||||||||||||||||||||||||||||||
Number of Properties | 117 | 117 | 117 | 117 | 117 | 117 | 117 | 117 | 117 | 117 | 117 | 117 | 117 | 117 | |||||||||||||||||||||||||||||||
Number of Units | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | 16,995 | |||||||||||||||||||||||||||||||
Occupancy | 88.0 | % | 88.0 | % | 88.0 | % | 88.0 | % | 87.9 | % | 88.0 | % | 88.0 | % | 78.0 | % | 77.9 | % | 78.5 | % | 78.7 | % | 78.8 | % | 79.3 | % | 78.5 | % | |||||||||||||||||
Average Monthly Rate | $ | 4,709 | $ | 5,099 | $ | 4,723 | $ | 4,833 | $ | 4,703 | $ | 4,834 | $ | 4,812 | $ | 4,278 | $ | 4,907 | $ | 4,384 | $ | 4,541 | $ | 4,417 | $ | 4,549 | $ | 4,505 | |||||||||||||||||
Residents Fees and Services | $ | 72,761 | $ | 71,079 | $ | 72,954 | $ | 72,277 | $ | 72,562 | $ | 72,250 | $ | 433,883 | $ | 58,695 | $ | 60,666 | $ | 60,434 | $ | 60,769 | $ | 61,178 | $ | 61,309 | $ | 363,051 | |||||||||||||||||
Property Operating Expenses | (57,168 | ) | (53,411 | ) | (59,496 | ) | (56,989 | ) | (58,708 | ) | (56,515 | ) | (342,287 | ) | (52,606 | ) | (51,786 | ) | (54,777 | ) | (50,892 | ) | (54,500 | ) | (54,324 | ) | (318,885 | ) | |||||||||||||||||
NOI (4) | $ | 15,593 | $ | 17,668 | $ | 13,458 | $ | 15,288 | $ | 13,854 | $ | 15,735 | $ | 91,596 | $ | 6,089 | $ | 8,880 | $ | 5,657 | $ | 9,877 | $ | 6,678 | $ | 6,985 | $ | 44,166 | |||||||||||||||||
NOI Margin | 21.4 | % | 24.9 | % | 18.4 | % | 21.2 | % | 19.1 | % | 21.8 | % | 21.1 | % | 10.4 | % | 14.6 | % | 9.4 | % | 16.3 | % | 10.9 | % | 11.4 | % | 12.2 | % | |||||||||||||||||
Other Operator Managed Communities | |||||||||||||||||||||||||||||||||||||||||||||
Number of Properties | 106 | 106 | 106 | 106 | 106 | 106 | 106 | 106 | 106 | 106 | 106 | 106 | 106 | 106 | |||||||||||||||||||||||||||||||
Number of Units | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | 7,130 | |||||||||||||||||||||||||||||||
Occupancy | 82.5 | % | 82.6 | % | 82.6 | % | 82.6 | % | 82.5 | % | 82.6 | % | 82.6 | % | 74.2 | % | 75.9 | % | 76.2 | % | 76.6 | % | 76.3 | % | 77.2 | % | 76.1 | % | |||||||||||||||||
Average Monthly Rate | $ | 5,889 | $ | 6,344 | $ | 5,929 | $ | 6,041 | $ | 5,896 | $ | 6,011 | $ | 6,013 | $ | 5,665 | $ | 5,944 | $ | 5,662 | $ | 5,668 | $ | 5,566 | $ | 5,749 | $ | 5,705 | |||||||||||||||||
Residents Fees and Services | $ | 30,304 | $ | 29,501 | $ | 30,539 | $ | 30,100 | $ | 30,336 | $ | 29,956 | $ | 180,736 | $ | 30,788 | $ | 29,808 | $ | 31,504 | $ | 30,938 | $ | 31,303 | $ | 31,664 | $ | 186,005 | |||||||||||||||||
Property Operating Expenses | (26,798 | ) | |||||||||||||||||||||||||||||||||||||||||||
