Group 1 - Two stocks in the real estate sector are signaling potential warnings for momentum-focused investors as of September 24, 2025 [1] - The Relative Strength Index (RSI) is a key momentum indicator, with values above 70 indicating that a stock may be overbought [2] - Anywhere Real Estate Inc has seen a significant stock price increase of approximately 72% over the past month, with an RSI value of 84.1 [6] Group 2 - Diversified Healthcare Trust has experienced a stock price increase of around 24% over the past month, with an RSI value of 75.2 [6] - A $10 billion all-stock merger between Compass and Anywhere Real Estate was announced on September 22, 2025 [6] - The stock price of Anywhere Real Estate closed at $10.46, while Diversified Healthcare Trust closed at $4.60 on the same day [6]

Group 1 - The focus is on income investing through common shares, preferred shares, or bonds, with occasional insights on the broader economy or specific company situations [1] - The author has a background in history, political science, and an MBA with a specialization in Finance and Economics, indicating a strong analytical foundation [1] - The author has been investing since 2000 and currently serves as the CEO of an independent living retirement community in Illinois, suggesting practical experience in both investment and management [1] Group 2 - There are no disclosed stock, option, or derivative positions in any mentioned companies, indicating an unbiased perspective [2] - The article expresses personal opinions and is not influenced by compensation from companies mentioned, ensuring independence in analysis [2] - Seeking Alpha emphasizes that past performance does not guarantee future results, highlighting the importance of careful consideration in investment decisions [3]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Diversified Healthcare Trust (DHC) as a potentially undervalued stock based on various financial metrics [2][4][6]. Group 1: Value Investing - Value investing is a popular strategy that relies on traditional analysis of key valuation metrics to identify undervalued stocks [2]. - The Zacks Rank and Style Scores system can help investors find stocks with specific traits, particularly in the "Value" category [3]. Group 2: Diversified Healthcare Trust (DHC) - DHC has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating it is a high-quality value stock [4]. - The stock's Forward P/E ratio is 7.26, significantly lower than the industry average of 15.58, suggesting it may be undervalued [4]. - DHC's Forward P/E has fluctuated between 5.77 and 45.38 over the past year, with a median of 8.00 [4]. - The P/CF ratio for DHC is 8.62, which is attractive compared to the industry's average P/CF of 15.45, indicating strong cash flow relative to its valuation [5]. - DHC's P/CF has ranged from -189.90 to 37.22 in the past year, with a median of 6.07 [5]. - Overall, DHC appears to be undervalued based on these metrics and has a strong earnings outlook, making it a compelling value stock [6].

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $382.7 million, a 3% increase year over year [7] - Adjusted EBITDAre was $73.6 million, up 7% year over year [7] - Normalized FFO increased 172% year over year to $18.6 million, or $0.08 per share [7] Business Line Data and Key Metrics Changes - Same property SHOP NOI increased by 18.5% year over year to $37.4 million [8] - Average monthly rate in the SHOP sector increased by 5.4% year over year, with occupancy rising by 160 basis points to 80.6% [8] - SHOP revenue increased by 6.2% year over year [8] - Medical office and life science portfolio had same property occupancy at 89.9%, down 10 basis points from Q1 [10] Market Data and Key Metrics Changes - The active leasing pipeline in the medical office and life science portfolio includes 691,000 square feet, with 246,000 square feet being new absorption [10] - Weighted average rents for new and renewal leasing activity were 11.5% higher than prior rents [10] Company Strategy and Development Direction - The company is focused on deleveraging its balance sheet through asset sales and refinancing at attractive rates [7] - DHC sold two unencumbered properties for a total of $16.4 million and three additional properties in July for $8.8 million [11] - The company aims to enhance its portfolio with a higher concentration of SHOP assets and stable cash flows from medical office and life science properties [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued recovery of the SHOP segment and the overall positive outlook for the business [10] - The company expects to meet its 2026 debt maturity and anticipates a reduction in leverage towards a target of 6.5 to 7.5 times [20] Other Important Information - The company reduced its 2025 CapEx guidance to $140 million to $160 million, a $10 million reduction from prior guidance [17] - As of July, the company had approximately $292 million in liquidity, including $142 million in unrestricted cash [18] Q&A Session Summary Question: Any notable one-time issues in Q2 2025? - Management indicated that the majority of the NOI benefit came in Q1, with a minor benefit in Q2 from PLGL insurance, approximately $1 million [24][38] Question: CapEx guidance change details? - The change was due to dispositions and a comparison of actual year-to-date spend against the budget [27] Question: Disposition pipeline and future sales? - Management confirmed a mix of assets under PSA and LOI, with additional properties expected to close by year-end or into 2026 [28][30] Question: Performance of Five Star assets compared to others? - Five Star properties have shown improvements due to operational enhancements and capital investments, leading to better performance [31][34] Question: Occupancy targets and growth expectations? - Management expects gradual occupancy growth towards the year-end target of over 82%, influenced by seasonal trends and ongoing dispositions [35]

分组1 - Diversified Healthcare (DHC) reported quarterly funds from operations (FFO) of $0.08 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.03 per share a year ago [1] - The company posted revenues of $382.71 million for the quarter ended June 2025, which was 1.21% below the Zacks Consensus Estimate, compared to $371.39 million in the same quarter last year [2] - The stock has increased approximately 42.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 6.1% [3] 分组2 - The current consensus FFO estimate for the upcoming quarter is $0.10 on revenues of $392.01 million, and for the current fiscal year, it is $0.31 on revenues of $1.57 billion [7] - The Zacks Industry Rank for REIT and Equity Trust - Other is in the top 38% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Part I Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Diversified Healthcare Trust as of June 30, 2025, and for the three and six-month periods then ended, including balance sheets, statements of comprehensive income (loss), statements of shareholders' equity, and statements of cash flows, along with accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$4.76 billion**, a decrease from **$5.14 billion** at year-end 2024, primarily due to dispositions of real estate properties, while total liabilities decreased to **$2.90 billion** from **$3.18 billion**, driven by the redemption of senior notes, consequently, total equity declined to **$1.85 billion** from **$1.96 billion** Condensed Consolidated Balance Sheets Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total real estate properties, net** | $4,153,639 | $4,340,475 | | Assets of properties held for sale | $96,919 | $276,270 | | Cash and cash equivalents | $141,769 | $144,584 | | **Total assets** | **$4,756,441** | **$5,137,005** | | Senior unsecured notes, net | $1,579,327 | $1,957,319 | | **Total liabilities** | **$2,901,468** | **$3,178,162** | | **Total equity** | **$1,854,973** | **$1,958,843** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) For the second quarter of 2025, the company reported a net loss of **$91.6 million**, or **($0.38)** per share, an improvement from a net loss of **$97.9 million**, or **($0.41)** per share, in the same period of 2024, driven by lower interest expense and a smaller loss on property sales, despite higher impairment charges, with total revenues increasing to **$382.7 million** from **$371.4 million** year-over-year, led by growth in residents fees and services Q2 and H1 2025 vs 2024 Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $382,712 | $371,392 | $769,576 | $742,168 | | Total expenses | $421,091 | $387,055 | $851,238 | $784,588 | | Impairment of assets | $30,993 | $6,545 | $69,465 | $18,687 | | Interest expense | ($50,926) | ($58,702) | ($108,757) | ($116,278) | | **Net loss** | **($91,639)** | **($97,861)** | **($100,625)** | **($184,120)** | | **Net loss per share** | **($0.38)** | **($0.41)** | **($0.42)** | **($0.77)** | [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Total shareholders' equity decreased from **$1.96 billion** at December 31, 2024, to **$1.85 billion** at June 30, 2025, primarily attributable to the net loss of **$100.6 million** for the six-month period and distributions to shareholders totaling **$4.8 million** - Total equity decreased by approximately **$104 million** in the first six months of 2025, driven by a net loss of **$91.6 million** in Q2 and **$8.9 million** in Q1, plus distributions of **$4.8 million**[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash from operating activities was **$49.8 million**, a decrease from **$72.9 million** in the prior year, mainly due to a **$34.7 million** payment of accreted interest on senior secured notes, while net cash provided by investing activities was **$270.0 million**, a significant shift from a **$95.7 million** use of cash in the prior year, driven by **$334.1 million** in proceeds from property sales, and financing activities used **$321.1 million**, primarily for the redemption of senior notes Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $49,777 | $72,894 | | Net cash provided by (used in) investing activities | $270,038 | ($95,691) | | Net cash (used in) provided by financing activities | ($321,088) | $45,921 | | **(Decrease) increase in cash** | **($1,273)** | **$23,124** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information supporting the financial statements, including disclosures on property dispositions and impairments, debt structure, segment performance, management agreements with related parties, and fair value measurements - During the first six months of 2025, the company sold 26 properties for gross proceeds of **$337.2 million**, resulting in a net gain of **$102.7 million**. The proceeds were primarily used to redeem senior secured notes[27](index=27&type=chunk)[28](index=28&type=chunk) - Impairment charges of **$69.5 million** were recorded in the first six months of 2025, primarily related to 10 medical office properties (**$52.3 million**) and 10 senior living communities (**$17.2 million**) that were revalued to their estimated fair values[31](index=31&type=chunk)[32](index=32&type=chunk) - The company fully redeemed its **$380 million** 9.75% senior unsecured notes due June 2025 using proceeds from new mortgage financings and cash on hand. It also partially redeemed **$299.2 million** of its senior secured notes due 2026 using proceeds from property sales[56](index=56&type=chunk)[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, highlighting positive trends in the Senior Housing Operating Portfolio (SHOP) segment, including rising rates and occupancy, and its focus on optimizing the portfolio through dispositions and debt management [Portfolio Overview](index=28&type=section&id=Portfolio%20Overview) As of June 30, 2025, the portfolio consisted of 341 properties, with the SHOP segment representing the largest portion by gross book value (**68.2%**) and Q2 2025 revenues (**85.6%**), and occupancy in the SHOP segment improved to **80.6%** from **79.0%** year-over-year Portfolio Summary as of June 30, 2025 | Segment | Properties | Gross Book Value | % of Total | Q2 2025 Revenues | % of Total | Q2 2025 NOI | % of Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | SHOP | 230 | $4,619,413 | 68.2% | $327,545 | 85.6% | $36,615 | 52.2% | | Medical Office and Life Science | 92 | $1,811,962 | 26.7% | $48,056 | 12.6% | $26,487 | 37.8% | | Triple net leased senior living | 9 | $135,640 | 2.0% | $3,213 | 0.8% | $3,210 | 4.6% | | Wellness centers | 10 | $208,110 | 3.1% | $3,898 | 1.0% | $3,820 | 5.4% | | **Total** | **341** | **$6,775,125** | **100.0%** | **$382,712** | **100.0%** | **$70,132** | **100.0%** | [Results of Operations](index=31&type=section&id=Results%20of%20Operations) For Q2 2025, total NOI increased **4.2%** year-over-year to **$70.1 million**, driven by a **26.3%** increase in SHOP NOI to **$36.6 million**, partially offset by a **12.5%** decrease in Medical Office and Life Science Portfolio NOI, with total NOI for the six-month period growing **9.3%** to **$142.7 million** Q2 2025 vs Q2 2024 NOI by Segment (in thousands) | Segment | Q2 2025 NOI | Q2 2024 NOI | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | SHOP | $36,615 | $28,984 | $7,631 | 26.3% | | Medical Office and Life Science Portfolio | $26,487 | $30,273 | ($3,786) | (12.5)% | | All Other | $7,030 | $8,070 | ($1,040) | (12.9)% | | **Total NOI** | **$70,132** | **$67,327** | **$2,805** | **4.2%** | - Comparable properties in the SHOP segment saw an **18.5%** increase in NOI for Q2 2025, driven by a **5.9%** rise in residents fees and services from higher occupancy and rates, which outpaced a **4.3%** increase in operating expenses[132](index=132&type=chunk) [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures such as FFO, Normalized FFO, and NOI to evaluate performance, with Normalized FFO for Q2 2025 at **$18.6 million**, or **$0.08** per share, and for the first six months of 2025 at **$32.9 million**, or **$0.14** per share FFO and Normalized FFO Reconciliation (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | ($91,639) | ($97,861) | ($100,625) | ($184,120) | | FFO | $13,577 | $14,563 | $3,571 | $17,151 | | **Normalized FFO** | **$18,572** | **$6,830** | **$32,877** | **$10,353** | | FFO per share | $0.06 | $0.06 | $0.01 | $0.07 | | **Normalized FFO per share** | **$0.08** | **$0.03** | **$0.14** | **$0.04** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are operating cash flows and property dispositions, with **$141.8 million** in cash and full availability of **$150.0 million** under its new revolving credit facility, and recent financing activities including **$343.2 million** in new mortgage financings used to redeem **$380 million** senior unsecured notes, with **$641.4 million** of senior secured notes due January 2026 as the next significant debt maturity - In June 2025, the company obtained a new **$150 million** secured revolving credit facility maturing in June 2029. As of August 1, 2025, there were no borrowings outstanding[204](index=204&type=chunk)[205](index=205&type=chunk) - During H1 2025, the company sold 26 properties for **$337.2 million**. As of August 1, 2025, 49 additional properties were under agreements to be sold for an aggregate price of **$279.9 million**[201](index=201&type=chunk) - The company received a **$17.0 million** cash dividend from its equity investment in AlerisLife on February 14, 2025, and a further **$3.4 million** on July 15, 2025[195](index=195&type=chunk)[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rate fluctuations on its **$140 million** floating-rate debt, which is managed through an interest rate cap agreement, while the majority of its debt, **$2.57 billion**, is fixed-rate, mitigating the impact of rising interest rates - As of June 30, 2025, the company had **$140 million** of floating-rate mortgage debt with an interest rate of SOFR + 2.50%. An interest rate cap is in place with a SOFR strike rate of **4.50%**[232](index=232&type=chunk)[233](index=233&type=chunk) - A one percentage point increase in interest rates would have a minimal impact on the existing floating rate debt due to the interest rate cap, increasing annual interest expense by only about **$255,000**[236](index=236&type=chunk)[238](index=238&type=chunk) - The company's fixed-rate debt totaled approximately **$2.57 billion** as of June 30, 2025, insulating a significant portion of its capital structure from interest rate volatility[244](index=244&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The President and Chief Executive Officer and the Chief Financial Officer and Treasurer concluded that the company's disclosure controls and procedures are effective[248](index=248&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[249](index=249&type=chunk) Part II Other Information [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to risk factors from those previously disclosed in the company's Annual Report[258](index=258&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the second quarter of 2025, the company purchased **38,908** of its common shares at a weighted average price of **$2.64** per share to satisfy tax withholding obligations for former officers and employees of RMR in connection with the vesting of share awards Issuer Purchases of Equity Securities (Q2 2025) | Calendar Month | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 7,965 | $2.47 | | May 2025 | 30,943 | $2.68 | | **Total / weighted average** | **38,908** | **$2.64** | [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section provides a list of all exhibits filed with the Form 10-Q, including corporate governance documents, debt indentures, compensation plans, and required certifications

[Financial Results](index=3&type=section&id=FINANCIAL%20RESULTS) [Q2 2025 Financial Results Announcement](index=3&type=section&id=Diversified%20Healthcare%20Trust%20Announces%20Second%20Quarter%202025%20Financial%20Results) DHC reported solid Q2 2025 results with significant SHOP same-property NOI growth, strong Medical Office and Life Science leasing, and progress on debt maturities - SHOP segment same property NOI increased **18.5%** year-over-year to **$37.4 million**[5](index=5&type=chunk) - In the Medical Office and Life Science segment, new and renewed leases achieved weighted average rents **11.5% higher** than prior rents, with an average lease term of approximately **7 years**[5](index=5&type=chunk) - The company has addressed its June 2025 debt maturity by completing over **$343 million** in mortgage financings since March 2025 and closing a new **$150 million** secured revolving credit facility[6](index=6&type=chunk) - DHC declared a quarterly common share distribution of **$0.01 per share**[8](index=8&type=chunk) [Second Quarter 2025 Highlights](index=4&type=section&id=Second%20Quarter%202025%20Highlights) DHC reported a Q2 2025 net loss of $91.6 million, with Normalized FFO of $18.6 million, driven by strong SHOP NOI growth and improved liquidity Q2 2025 Key Financial Results | Metric | Value | Per Share | | :--- | :--- | :--- | | Net Loss | $(91.6) million | $(0.38) | | Normalized FFO | $18.6 million | $0.08 | Same Property Cash Basis NOI Growth (YoY) | Segment | Q2 2025 ($ in thousands) | % Change YoY | | :--- | :--- | :--- | | SHOP | $37,372 | 18.5% | | Medical Office and Life Science | $27,057 | 0.7% | | All Other | $6,757 | 19.8% | | **Consolidated** | **$71,186** | **11.2%** | - SHOP occupancy increased **160 basis points** year-over-year to **80.6%**, and average monthly rates increased by **5.4%**[12](index=12&type=chunk) - Since April 1, 2025, DHC sold **five properties** for **$25.2 million** and has an additional **49 properties** under agreement or letter of intent to sell for a total of **$279.9 million**[12](index=12&type=chunk) [Second Quarter 2025 Results (Detailed)](index=5&type=section&id=Second%20Quarter%202025%20Results) DHC's Q2 2025 results show improved profitability with Normalized FFO surging to $18.6 million and Adjusted EBITDAre growing to $73.6 million, alongside improved SHOP occupancy Q2 2025 Financial Performance vs. Prior Periods | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net loss | $(91.6) million | $(9.0) million | $(97.9) million | | Normalized FFO | $18.6 million | $14.3 million | $6.8 million | | Normalized FFO per share | $0.08 | $0.06 | $0.03 | | Adjusted EBITDAre | $73.6 million | $75.1 million | $68.9 million | Portfolio Occupancy Rates | Portfolio | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | SHOP | 80.6% | 80.2% | 79.0% | | Medical Office & Life Science | 82.9% | 80.6% | 81.5% | | **Same Property** | | | | | SHOP (Same Property) | 81.0% | 80.8% | 80.0% | | Medical Office & Life Science (Same Property) | 89.9% | 90.0% | 92.0% | [Financial Statements](index=6&type=section&id=FINANCIALS) [Key Financial Data](index=6&type=section&id=Key%20Financial%20Data) DHC's key financial data shows declining assets and equity due to dispositions, stable revenues, and improving operating metrics despite consistent net losses Quarterly Financial Trends (in thousands) | Metric | 6/30/2025 | 3/31/2025 | 12/31/2024 | 9/30/2024 | 6/30/2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | $4,756,441 | $4,995,843 | $5,137,005 | $5,285,196 | $5,333,447 | | Total revenues | $382,712 | $386,864 | $379,619 | $373,640 | $371,392 | | Net loss | $(91,639) | $(8,986) | $(87,446) | $(98,689) | $(97,861) | | Adjusted EBITDAre | $73,613 | $75,109 | $67,049 | $66,817 | $68,895 | | Normalized FFO | $18,572 | $14,305 | $5,290 | $4,026 | $6,830 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) DHC's balance sheet as of June 30, 2025, shows total assets of $4.76 billion and total liabilities of $2.90 billion, reflecting property dispositions Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total real estate properties, net | $4,153,639 | $4,340,475 | | Assets of properties held for sale | $96,919 | $276,270 | | **Total assets** | **$4,756,441** | **$5,137,005** | | Senior unsecured notes, net | $1,579,327 | $1,957,319 | | Secured debt and finance leases, net | $456,948 | $126,611 | | **Total liabilities** | **$2,901,468** | **$3,178,162** | | **Total equity** | **$1,854,973** | **$1,958,843** | [Condensed Consolidated Statements of Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20Loss) DHC reported Q2 2025 total revenues of $382.7 million and a net loss of $91.6 million, an improvement from the prior year, despite asset impairments Income Statement Summary (Three Months Ended June 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues | $382,712 | $371,392 | | Property operating expenses | $312,580 | $304,065 | | Impairment of assets | $30,993 | $6,545 | | Interest expense | $50,926 | $58,702 | | **Net loss** | **$(91,639)** | **$(97,861)** | - General and administrative expenses increased to **$11.2 million** from **$6.3 million** YoY, which included **$4.1 million** in incentive management fees in Q2 2025[22](index=22&type=chunk) [Debt and Leverage](index=9&type=section&id=DEBT%20AND%20LEVERAGE) [Debt Summary](index=9&type=section&id=Debt%20Summary) As of June 30, 2025, DHC's total debt was approximately $2.71 billion, with a weighted average interest rate of 4.175% and 7.0 years maturity Debt Composition as of June 30, 2025 | Debt Type | Principal Balance ($ in thousands) | Weighted Avg. Interest Rate | | :--- | :--- | :--- | | Secured Floating Rate | $140,000 | 6.822% | | Unsecured Fixed Rate | $1,600,000 | 5.126% | | Secured Fixed Rate | $972,676 | 2.229% | | **Total Debt** | **$2,712,676** | **4.175%** | - The largest near-term maturity is the **$641.4 million** in zero-coupon senior secured notes due January 15, 2026[26](index=26&type=chunk) [Debt Maturity Schedule](index=10&type=section&id=Debt%20Maturity%20Schedule) DHC's debt maturity schedule shows significant maturities in 2026 ($643.3 million) and 2028 ($500.0 million), with an option to extend 2026 notes - The company faces a major debt maturity of **$643.3 million** in 2026, followed by **$500.0 million** in 2028 and another **$500.0 million** in 2031[29](index=29&type=chunk) - DHC has an option to extend the maturity of its senior secured notes due 2026 by one year, subject to certain conditions[30](index=30&type=chunk) [Leverage Ratios, Coverage Ratios and Bond Covenants](index=11&type=section&id=Leverage%20Ratios,%20Coverage%20Ratios%20and%20Bond%20Covenants) DHC's Q2 2025 leverage ratios show Net Debt to Adjusted EBITDAre at 8.7x and interest coverage at 1.4x, with the company remaining compliant with bond covenants Key Ratios as of June 30, 2025 | Ratio | Value | Requirement/Trend | | :--- | :--- | :--- | | Net debt / annualized Adjusted EBITDAre | 8.7x | Improved from 8.8x QoQ | | Adjusted EBITDAre / interest expense | 1.4x | Improved from 1.2x QoQ | | Total unencumbered assets / unsecured debt | 238.6% | Minimum 150.0% | | Total debt / adjusted total assets | 38.9% | Maximum 60.0% | [Investments](index=12&type=section&id=INVESTMENTS) [Summary of Capital Expenditures](index=12&type=section&id=Summary%20of%20Capital%20Expenditures) In Q2 2025, DHC invested $34.0 million in capital expenditures, primarily recurring expenses and SHOP development activities Capital Expenditures for Q2 2025 (in thousands) | Category | SHOP | Medical Office & Life Science | Total | | :--- | :--- | :--- | :--- | | Recurring Capital Expenditures | $24,283 | $5,046 | $29,329 | | Development & Redevelopment | $4,660 | $0 | $4,660 | | **Total Capital Expenditures** | **$28,943** | **$5,046** | **$33,989** | [Redevelopment Information](index=13&type=section&id=Redevelopment%20Information) DHC has three active SHOP redevelopment projects with estimated costs of $44.1 million, expected to be completed by Q1 2026 - Total estimated project costs for ongoing SHOP redevelopments are **$44.1 million**, with **$24.0 million** incurred as of June 30, 2025[38](index=38&type=chunk) - The largest projects are Pueblo Norte Senior Living in Scottsdale, AZ, and Residences of Chevy Chase in Chevy Chase, MD, both expected to be completed in **Q1 2026**[38](index=38&type=chunk) [Property Dispositions Information](index=14&type=section&id=Property%20Dispositions%20Information%20Since%20January%201,%202025) Since January 1, 2025, DHC has sold 29 properties for $346.0 million and has 49 more under agreement for $279.9 million - Completed dispositions since January 1, 2025 total **29 properties** for **$346.0 million**[42](index=42&type=chunk) - As of August 1, 2025, **49 properties** are under agreement or letter of intent to be sold for an estimated **$279.9 million**[43](index=43&type=chunk) - Net proceeds from the sale of **11** of the properties under agreement, totaling **$90.6 million**, are required to be used to partially redeem the senior secured notes due 2026[43](index=43&type=chunk)[44](index=44&type=chunk) [Investments in Unconsolidated Joint Ventures](index=15&type=section&id=Investments%20in%20Unconsolidated%20Joint%20Ventures) DHC holds $139.2 million in two unconsolidated joint ventures, primarily in life science and medical office properties, with a proportionate debt share of $153.3 million Joint Venture Summary | Joint Venture | Property Type | DHC Ownership | DHC Carrying Value ($ in thousands) | | :--- | :--- | :--- | :--- | | Seaport Innovation LLC | Life Science | 10% | $94,415 | | The LSMD Fund REIT LLC | Medical Office/Life Science | 20% | $44,736 | - DHC's proportionate share of the total **$1.08 billion** in debt held by these joint ventures is **$153.3 million**[46](index=46&type=chunk) - Vertex Pharmaceuticals Inc. is the largest tenant in the joint venture portfolio, representing **66.7%** of the JVs' annualized rental income[54](index=54&type=chunk) [Portfolio Information](index=17&type=section&id=PORTFOLIO%20INFORMATION) [Portfolio Summary](index=17&type=section&id=Portfolio%20Summary) As of June 30, 2025, DHC's portfolio comprises 341 properties with a gross book value of $6.8 billion, diversified geographically and by property type Portfolio Breakdown by Segment (Q2 2025) | Segment | Number of Properties | Gross Book Value ($ in thousands) | % of Total NOI | | :--- | :--- | :--- | :--- | | SHOP | 230 | $4,619,413 | 52.2% | | Medical Office and Life Science | 92 | $1,811,962 | 37.8% | | Triple net leased senior living | 4 | $135,640 | 4.6% | | Wellness centers | 10 | $208,110 | 5.4% | | **Total** | **341** | **$6,775,125** | **100.0%** | - Geographic concentration is led by Florida (**11%**), Texas (**9%**), Georgia (**7%**), and California (**7%**) based on gross book value[57](index=57&type=chunk) [SHOP Portfolio](index=19&type=section&id=SHOP%20Portfolio) DHC's SHOP portfolio demonstrated strong Q2 2025 performance with consolidated NOI growth of 26.3% to $36.6 million, driven by increased occupancy and average monthly rates [SHOP Units by Operator](index=19&type=section&id=SHOP%20Units%20by%20Operator) DHC's SHOP portfolio, comprising 229 communities and 24,872 units, is primarily managed by Five Star Senior Living, which operates 70% of the units - Five Star Senior Living manages **118 properties**, representing **17,287 units** or about **70%** of the total SHOP portfolio units[62](index=62&type=chunk) [SHOP Segment and Same Property - Results of Operations](index=20&type=section&id=SHOP%20Segment%20and%20Same%20Property%20-%20Results%20of%20Operations) In Q2 2025, consolidated SHOP NOI increased 26.3% to $36.6 million, with same-property NOI up 18.5% to $37.4 million, driven by occupancy and rate gains SHOP Performance (Q2 2025 vs Q2 2024) | Metric | Consolidated | Same Property | | :--- | :--- | :--- | | YoY NOI % Change | +26.3% | +18.5% | | Occupancy | 80.6% (+160 bps) | 81.0% (+100 bps) | | Avg. Monthly Rate | $5,440 (+5.4%) | $5,364 (+5.2%) | - On a consolidated basis, communities managed by operators other than Five Star had a year-over-year NOI increase of **43.1%**, while Five Star managed communities' NOI increased by **22.6%**[69](index=69&type=chunk) [Senior Living NOI by Manager and Location](index=22&type=section&id=Senior%20Living%20NOI%20by%20Manager%20and%20Location) In Q2 2025, Five Star Senior Living contributed 72.8% of senior living NOI, with primary markets showing the strongest year-over-year NOI growth at 44.1% - Five Star Senior Living contributed **$29.0 million**, or **72.8%**, of the total Q2 2025 senior living NOI[72](index=72&type=chunk) - Primary markets accounted for **53.7%** of SHOP NOI and demonstrated the strongest year-over-year NOI growth of **44.1%**[74](index=74&type=chunk) [Medical Office and Life Science Portfolio](index=24&type=section&id=Medical%20Office%20and%20Life%20Science%20Portfolio) The Medical Office and Life Science portfolio generated $26.5 million in Q2 2025 NOI, with same-property Cash Basis NOI up 0.7% despite an occupancy drop, and positive leasing activity [Medical Office and Life Science - Results of Operations](index=24&type=section&id=Medical%20Office%20and%20Life%20Science%20-%20Results%20of%20Operations) Q2 2025 consolidated Medical Office and Life Science NOI was $26.5 million, down 12.5% YoY, while same-property Cash Basis NOI increased 0.7% to $27.1 million Same Property Performance (Q2 2025 vs Q2 2024) | Metric | Value | YoY Change | | :--- | :--- | :--- | | Occupancy | 89.9% | (210) bps | | NOI | $26.7 million | (1.9)% | | Cash Basis NOI | $27.1 million | +0.7% | - Within the same-property portfolio, the Medical Office segment's Cash Basis NOI grew **2.2%** YoY, while the Life Science segment's Cash Basis NOI declined **2.2%** YoY[82](index=82&type=chunk) [Portfolio Leasing Summary](index=26&type=section&id=Portfolio%20Leasing%20Summary) In Q2 2025, DHC leased 106,274 square feet in its Medical Office and Life Science portfolio, achieving an 11.5% weighted average increase in GAAP rent Q2 2025 Leasing Activity | Leasing Metric | New Leases | Renewals | Total | | :--- | :--- | :--- | :--- | | Square Feet | 4,000 | 102,274 | 106,274 | | % Change in GAAP Rent | (1.9)% | 12.0% | 11.5% | | Weighted Avg. Lease Term (Yrs) | 6.2 | 7.1 | 7.0 | [Major Tenants and Lease Expirations](index=27&type=section&id=Major%20Tenants%20and%20Lease%20Expirations) DHC's Medical Office and Life Science portfolio has a diversified tenant base, with Advocate Aurora Health as the largest tenant and staggered lease expirations - The top tenant, Advocate Aurora Health, represents **7.6%** of total annualized rental income[85](index=85&type=chunk) Medical Office & Life Science Lease Expiration Schedule (% of Annualized Rental Income) | Year | % Expiring | Cumulative % | | :--- | :--- | :--- | | 2025 | 4.0% | 4.0% | | 2026 | 11.1% | 15.1% | | 2027 | 10.1% | 25.2% | | 2028 | 18.5% | 43.7% | | 2029+ | 56.3% | 100.0% | [All Other Lease Expiration Schedule](index=29&type=section&id=All%20Other%20Lease%20Expiration%20Schedule) The 'All Other' segment features a long-dated lease expiration profile, with no expirations until 2027 and a weighted average remaining lease term of 10.2 years - There are no lease expirations in the 'All Other' segment until **2027**, when **15.9%** of the segment's annualized rental income expires[89](index=89&type=chunk) - The weighted average remaining lease term for this segment is **10.2 years**, weighted by annualized rental income[89](index=89&type=chunk) [Appendix](index=30&type=section&id=APPENDIX) [Company Profile and Governance](index=30&type=section&id=Company%20Profile%20and%20Governance) DHC is a REIT with a $6.8 billion portfolio of 341 healthcare properties, externally managed by The RMR Group - DHC is a REIT focused on high-quality healthcare properties, with a portfolio valued at approximately **$6.8 billion** as of June 30, 2025[93](index=93&type=chunk) - The company is managed by The RMR Group, an alternative asset management company with approximately **$40 billion** in assets under management[94](index=94&type=chunk) [Calculation and Reconciliation of Non-GAAP Measures](index=32&type=section&id=Calculation%20and%20Reconciliation%20of%20Non-GAAP%20Measures) This section provides detailed calculations and reconciliations for DHC's non-GAAP financial measures, including NOI, EBITDAre, FFO, Normalized FFO, and CAD - Provides the reconciliation of GAAP Net Loss to non-GAAP metrics including NOI and Cash Basis NOI[100](index=100&type=chunk)[101](index=101&type=chunk) - Details the calculation of EBITDA, EBITDAre, and Adjusted EBITDAre, starting from GAAP Net Loss[102](index=102&type=chunk) - Shows the reconciliation of GAAP Net Loss to FFO, Normalized FFO, and Cash Available for Distribution (CAD)[104](index=104&type=chunk)[106](index=106&type=chunk) [Non-GAAP Financial Measures and Certain Definitions](index=37&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Certain%20Definitions) This section defines non-GAAP financial measures like NOI, EBITDAre, FFO, and CAD, along with key operational and financial terms used in the report - Defines key non-GAAP measures like NOI, EBITDAre, FFO, and CAD, explaining their calculation and utility for investors[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - Provides definitions for important operational terms such as 'Same Property', 'SHOP' (Senior Housing Operating Portfolio), and 'Medical Office and Life Science Portfolio'[135](index=135&type=chunk)[136](index=136&type=chunk)[131](index=131&type=chunk) [Warning Concerning Forward-Looking Statements](index=42&type=section&id=WARNING%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) This section warns that the report contains forward-looking statements subject to risks and uncertainties, advising readers to consult SEC filings for detailed risk factors - The report contains forward-looking statements regarding DHC's plans, expectations, and future performance, which are not guarantees of future results[143](index=143&type=chunk) - Readers are advised not to place undue reliance on these statements and are referred to the 'Risk Factors' section of DHC's SEC filings for a detailed list of potential risks[144](index=144&type=chunk)

Group 1 - DHC is classified as a conventional healthcare REIT with significant exposure to volatility in senior housing, indicating a need for nuanced understanding of its current situation [1] - The company is undergoing substantial changes since the onset of COVID-19 in 2020, which may impact its operational and financial performance [1] - The analysis of DHC is part of a broader examination of publicly traded companies across various industries, showcasing the analyst's extensive experience and expertise in financial analysis [1] Group 2 - The analyst possesses CPA qualifications and has experience in evaluating financial statements, which aids in identifying risks and opportunities within companies [1] - The research includes a diverse range of companies, highlighting the analyst's comprehensive approach to market analysis [1]

Core Viewpoint - The article highlights the importance of value investing and identifies Diversified Healthcare Trust (DHC) as a potentially undervalued stock based on various financial metrics [2][4][6]. Company Analysis - Diversified Healthcare Trust (DHC) currently holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - DHC's current P/E ratio is 8.12, significantly lower than the industry average P/E of 15.67, suggesting that the stock may be undervalued [4]. - Over the past 52 weeks, DHC's Forward P/E has fluctuated between a high of 45.38 and a low of 5.77, with a median of 8.07, indicating volatility in its valuation [4]. Financial Metrics - DHC has a P/CF ratio of 9.25, which is attractive compared to the industry's average P/CF of 15.55, further supporting the notion of undervaluation [5]. - In the past 12 months, DHC's P/CF has ranged from a high of 37.22 to a low of -189.90, with a median of 5.38, reflecting significant variability in cash flow performance [5]. - The combination of these metrics suggests that DHC is likely undervalued and presents an impressive value opportunity at the moment [6].

Core Insights - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] - Identifying the right entry point for momentum stocks can be challenging, as they may lose momentum if their valuations exceed future growth potential [1] Group 1: Momentum Investing Strategy - Investing in bargain stocks with recent price momentum can be safer, utilizing tools like the Zacks Momentum Style Score to identify potential candidates [2] - The 'Fast-Paced Momentum at a Bargain' screen helps in finding fast-moving stocks that remain attractively priced [2] Group 2: Diversified Healthcare (DHC) Analysis - DHC has shown a four-week price change of 4.7%, indicating growing investor interest [3] - Over the past 12 weeks, DHC's stock has gained 71.5%, demonstrating its ability to deliver positive returns over a longer timeframe [4] - DHC has a beta of 2.45, suggesting it moves 145% higher than the market in either direction, indicating fast-paced momentum [4] Group 3: Valuation and Earnings Estimates - DHC has a Momentum Score of B, suggesting it is an opportune time to invest in the stock [5] - The stock has a Zacks Rank 2 (Buy) due to an upward trend in earnings estimate revisions, which typically attracts more investors [6] - DHC is trading at a Price-to-Sales ratio of 0.57, indicating it is relatively cheap at 57 cents for each dollar of sales [6] Group 4: Additional Opportunities - DHC is not the only stock that meets the 'Fast-Paced Momentum at a Bargain' criteria; other stocks are also available for consideration [7] - There are over 45 Zacks Premium Screens available to help identify winning stock picks based on various investing styles [8]