Diversified Healthcare Trust, Inc. (NASDAQ:DHC) Q4 2024 Earnings Conference Call February 26, 2025 10:00 AM ET Company Participants Matt Murphy - Manager, IR Chris Bilotto - President, CEO & Managing Trustee Anthony Paula - VP Matt Brown - CFO & Treasurer Conference Call Participants Justin Haasbeek - RBC Capital Markets John Massocca - B. Riley Operator Good morning, and welcome to the Diversified Healthcare Trust Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. S ...

Revenue Sources and Financial Performance - For the year ended December 31, 2024, the majority of net operating income (NOI) from senior living communities was generated from properties where revenues are primarily derived from tenants' and residents' private resources[67]. - A small portion of NOI was generated from senior living communities dependent on Medicare and Medicaid programs[67]. - Future adjustments in Medicare rates may not compensate for increased costs incurred by tenants for services provided to residents[70]. - Healthcare providers face increasing scrutiny and cost control pressures, impacting their ability to cover rising costs, including rent[78]. Regulatory and Compliance Risks - The company faces potential adverse effects from recent legislative and regulatory actions regarding federal Medicare rates and state Medicaid rates, which could impact tenants' ability to pay rent[69]. - Increased enforcement efforts targeting false claims and fraud in healthcare have led to higher civil monetary penalties and criminal sanctions for noncompliance, affecting the company's operations[71]. - The company is subject to extensive federal and state laws regarding data privacy and security, including HIPAA and state-specific regulations like the California Consumer Privacy Act (CCPA)[74]. - Noncompliance with privacy laws such as the CCPA could result in penalties of up to $7,500 per violation[75]. - The company and its tenants are required to comply with various state and local regulations that may impact their ability to expand into new markets[63]. - Regulatory changes could adversely affect the profitability of managed senior living communities and the values of properties owned by the company[62]. - The company has been subject to increasing inspections and audits, which may lead to sanctions if deficiencies are found[64]. - Compliance with federal, state, and local laws is essential for tenants and managers, with potential adverse effects on profitability and rent payments if violations occur[76]. Environmental and Sustainability Initiatives - As of December 31, 2024, 25 properties received LEED® designations, representing 18.7% of the Medical Office and Life Science Portfolio[89]. - 21 properties achieved ENERGY STAR certification, accounting for 22.1% of eligible properties and 25.8% of rentable square feet[90]. - The company has captured data through real-time energy monitoring, generating $3.7 million in cumulative savings, with $0.9 million generated in 2024[88]. - The company is subject to environmental risks and liabilities, which may require significant costs for compliance and remediation[93]. Corporate Governance and Diversity - The Board of Trustees consists of 43% women and approximately 29% members of underrepresented minorities, reflecting diversity and inclusion efforts[100]. - The company relies on its manager, RMR, for workforce development and community engagement initiatives[98][99]. Taxation and REIT Compliance - The company has been organized and operated as a REIT since its 1999 taxable year, and it believes it will continue to qualify for REIT taxation[113]. - The company is generally not subject to federal income tax on net income distributed as dividends to shareholders, provided it meets REIT qualification tests[114]. - The company’s counsel has opined that it has qualified for taxation as a REIT for the years 1999 through 2024[115]. - If the company fails to qualify as a REIT, it could face significant tax liabilities, reducing cash available for distribution to shareholders[116]. - The company may be subject to federal tax on undistributed REIT taxable income, including ordinary income and net capital gains[117]. - The company will be taxed at regular corporate income tax rates on any undistributed "real estate investment trust taxable income"[117]. - The company has protective TRS elections in place to mitigate risks associated with subsidiary REITs not qualifying for taxation as REITs[128]. - The company is permitted to own up to 20% of its total assets in TRS investments, which are taxed as regular C corporations[129]. - The company must distribute all inherited C corporation earnings and profits from acquisitions to maintain its REIT status[119]. - A penalty of $50,000 may be imposed for each failure to meet REIT qualification conditions due to reasonable cause[123]. - The company’s subsidiaries that are C corporations will be subject to federal corporate income tax on their earnings[119]. - The company expects to make appropriate provisions for tax liabilities associated with built-in gains when selling assets that may incur such taxes[119]. - At least 75% of gross income must be derived from real property investments, while at least 95% must consist of qualifying income[133]. - The company believes that all or substantially all rents and related service charges qualify as "rents from real property" under Section 856 of the IRC[136]. - The company aims to avoid transactions that could be classified as prohibited transactions, which are subject to a 100% penalty tax[139]. - The company believes that gains from asset dispositions will generally qualify as income satisfying the 75% and 95% gross income tests[140]. - If the company fails to meet the gross income tests, it may still qualify for taxation as a REIT under certain conditions[141]. - The company is confident in its ability to satisfy the 75% and 95% gross income tests on a continuing basis[144]. - The asset tests must be satisfied at the close of each calendar quarter, and fluctuations in asset values do not affect REIT qualification[145]. - The company maintains records to document compliance with REIT asset tests and intends to cure any failures within thirty days after the close of any quarter[148]. Debt and Financing - As of December 31, 2024, the total outstanding fixed rate debt amounts to $3,047.998 million, with an annual interest expense of $126.706 million[450]. - The company has senior unsecured notes totaling $380 million at an interest rate of 9.750%, maturing in 2025, and $940.534 million in senior secured notes with a 0.000% interest rate, maturing in 2026[450]. - If the fixed rate debts were refinanced at interest rates one percentage point higher, the annual interest cost would increase by approximately $21.1 million, excluding the $940.5 million senior secured notes[451]. - The company does not have any floating rate debt obligations as of December 31, 2024, and February 21, 2025[454]. - The company’s mortgage note due 2034 is a fixed rate, interest-only loan of $120 million, while the mortgage note due 2043 requires principal and interest payments[451]. - The company’s debt agreements allow for early repayments, which may help mitigate refinancing risks at maturity[453]. - The company’s fixed rate debt obligations are affected by market interest rate changes, with increases decreasing their fair value[452]. Shareholder Distributions and Tax Implications - The company is required to make annual distributions equal to at least 90% of its REIT taxable income to maintain its REIT status[157]. - The company may face a 4% nondeductible excise tax if it fails to distribute 85% of ordinary income and 95% of capital gain net income within a calendar year[159]. - The company may need to arrange new debt or equity financing to meet distribution requirements if it lacks sufficient cash or liquid assets[160]. - The company can rectify a failure to pay sufficient dividends by issuing deficiency dividends in a later year[161]. - The company may elect to retain some net capital gain and pay income tax on retained amounts, allowing shareholders to include undistributed capital gain in their taxable income[163]. - Distributions to shareholders may include cash, property, and deemed distributions, with tax treatment varying based on shareholder status[169]. - Noncorporate U.S. shareholders face a maximum federal income tax rate of 15% for long-term capital gains and most corporate dividends, increasing to 20% for those exceeding income thresholds[170]. - Distributions designated as capital gain dividends will be taxed as long-term capital gains, provided they do not exceed the actual net capital gain for the taxable year[172]. - Non-U.S. shareholders receiving distributions will not be subject to higher federal tax rates if the shares are listed on a U.S. national securities exchange[184]. - Distributions to non-U.S. shareholders not designated as capital gain dividends will be treated as ordinary income dividends to the extent made from current or accumulated earnings and profits[185]. - Non-U.S. shareholders may be subject to a 30% federal income tax withholding on distributions unless they qualify for a lower rate under a tax treaty[186]. - Capital gain dividends paid to non-U.S. shareholders on shares listed on a U.S. national securities exchange are not subject to withholding[187]. - Non-U.S. shareholders can seek a refund from the IRS for any excess tax withheld on distributions exceeding their allocable share of earnings and profits[188]. - If shares are not listed on a U.S. national securities exchange, distributions may be taxed as effectively connected with a U.S. trade or business, with up to 21% withholding required[189]. - Non-U.S. shareholders may treat undistributed capital gains as actual distributions, allowing them to offset U.S. federal income tax liabilities[190]. - The company expects its shares to not be classified as U.S. real property interests (USRPI), thus non-U.S. shareholders' gains on sales will generally not be subject to U.S. federal income taxation[191]. - The company believes it qualifies as a "domestically controlled" REIT, meaning less than 50% of its shares are held by non-U.S. shareholders[193]. - If the company fails to meet the "domestically controlled" REIT status, non-U.S. shareholders may face U.S. federal income tax on gains from the sale of shares[194]. - Non-U.S. financial institutions must comply with diligence and reporting requirements to avoid a 30% withholding tax on applicable payments[200]. - Changes in tax laws may affect the company's ability to qualify as a REIT and the tax consequences for shareholders[201].

CARE Diversified Healthcare Trust Fourth Quarter 2024 Financial Results and Supplemental Information February 25, 2025 Table of Contents | FINANCIAL RESULTS Diversified Healthcare Trust Announces Fourth Quarter 2024 Financial Results . | | | --- | --- | | Fourth Quarter 2024 Highlights | | | Fourth Quarter 2024 Results and and the many of the many of the many of the many of the states of the states | | | FINANCIALS Key Financial Data | | | Condensed Consolidated Balance Sheets 7 | | | Consolidated Statement ...

Diversified Healthcare Trust (NASDAQ: DHC ) is a real estate investment trust that specializes in owning senior living and medical office properties. Going into 2024, the company’s stock had severely underperformed as management navigated liquidity and cash flow issues. While I’ve never beenAbout My Writing: I am currently focused on income investing through either common shares, preferred shares, or bonds. I will occasionally break away and write about the economy at large or a special situation involving ...

Diversified Healthcare Trust (NASDAQ:DHC) Q3 2024 Earnings Conference Call November 5, 2024 10:00 AM ET Company Participants Melissa McCarthy - Manager, IR Chris Bilotto - President & CEO Matthew Brown - CFO Conference Call Participants Bryan Maher - B. Riley FBR Justin Haasbeek - RBC Capital Markets Operator Good morning, and welcome to the Diversified Healthcare Trust Third Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentati ...

Conservative Income Portfolio targets the best value stocks with the highest margins of safety. The volatility of these investments is further lowered using the best priced options. Our Enhanced Equity Income Solutions Portfolio is designed to reduce volatility while generating 7-9% yields. On our previous coverage of Diversified Healthcare Trust (NASDAQ: DHC ) we examined the underlying value of the assets, relative to the debt. While there appeared to be some margin of safety at first glance, the poor man ...

Diversified Healthcare (DHC) came out with quarterly funds from operations (FFO) of $0.02 per share, missing the Zacks Consensus Estimate of $0.05 per share. This compares to FFO of $0.03 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of -60%. A quarter ago, it was expected that this residential care real estate investment trust would post FFO of $0.03 per share when it actually produced FFO of $0.03, delivering no surprise. Over th ...

Table of Contents Securities registered pursuant to Section 12(b) of the Act: Title Of Each Class Trading Symbol(s) Name Of Each Exchange On Which Registered Common Shares of Beneficial Interest DHC The Nasdaq Stock Market LLC 5.625% Senior Notes due 2042 DHCNI The Nasdaq Stock Market LLC 6.25% Senior Notes due 2046 DHCNL The Nasdaq Stock Market LLC Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ UNITED STATES SECURITIES AND EXCHANG ...

DIVERSIFIED HEALTHCARE TRUST Diversified Healthcare Trust Third Quarter 2024 Financial Results and Supplemental Information November 4, 2024 Table of Contents | --- | --- | --- | --- | |-------------------|----------------------------------------------------------------------------------------------------------------------|-------|-------| | FINANCIAL RESULTS | Diversified Healthcare Trust Announces Third Quarter 2024 Financial Results | 3 | | | | Third Quarter 2024 Highlights | 4 | | | | Third Quarter 2024 ...

RiverNorthPhotography/E+ via Getty Images Introduction Diversified Healthcare Trust (NASDAQ:DHC) is a senior living and medical office REIT whose share price has been deeply distressed since the start of the pandemic. I've covered Diversified Healthcare in the past, with a focus on the possibility of earning income from the company's baby bonds (NASDAQ:DHCNI) (NASDAQ:DHCNL). In May, I started feeling a little bit better about the company. After the second quarter earnings, I'm still on the sidelines, but do ...