Diversified Healthcare Trust (NASDAQ:DHC) Q4 2019 Results Conference Call March 2, 2020 10:00 AM ET Company Participants Michael Kodesch - Director, IR Jennifer Francis - President and COO Rick Siedel - CFO and Treasurer Conference Call Participants Drew Babin - Baird Vikram Malhotra - Morgan Stanley Bryan Maher - B. Riley FBR Michael Carroll - RBC Capital Markets Omotayo Okusanya - Mizuho Operator Good morning, and welcome to the Diversified Healthcare Trust Fourth Quarter 2019 Financial Results Conference ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-15319 DIVERSIFIED HEALTHCARE TRUST (Exact Name of Registrant as Specified in Its Charter) Maryland 04-3445278 (State of Organization) (IRS Employer Identification N ...

Financial Performance - The total revenues for Q3 2019 amounted to $255.5 million, with a total NOI of $130.7 million[143]. - Total revenues for the three months ended September 30, 2019, were $255.827 million, a decrease of 8.3% from $278.969 million in the same period of 2018[164]. - Net income attributable to common shareholders for the three months ended September 30, 2019, was a loss of $29.390 million, compared to a profit of $45.805 million in the same period of 2018, representing a decline of 164.2%[164]. - The managed senior living communities segment reported revenues of $107.816 million for the three months ended September 30, 2019, an increase of 2.4% from $105.321 million in 2018[164]. - Net operating income (NOI) decreased to $18,360, down 17.5% from $22,251 in the same quarter last year[186]. - Net income fell to $2,204, a significant decline of 62.9% compared to $5,945 in the previous year[186]. - Net income attributable to common shareholders for the nine months ended September 30, 2019, was $74,719, down 1.8% from $76,062 in 2018[209]. - Net operating income (NOI) for the nine months ended September 30, 2019, was $189,624, reflecting a decrease of 0.5% from $190,504 in 2018[209]. - Net loss for the period was $45,853, an increase of 60.7% compared to a loss of $28,537 in the prior year[193]. - Net loss decreased by 15.5% to $20,776 for the nine months ended September 30, 2019, compared to $24,579 for the same period in 2018[227]. Property and Occupancy - As of September 30, 2019, the undepreciated carrying value of the company's properties was $8.6 billion, with 436 properties owned across 41 states and Washington, D.C.[140]. - The occupancy rate for MOBs was 92.3% as of 2019, down from 95.6% in 2018[147]. - The occupancy rate for medical office buildings (MOBs) was 94.6% as of September 30, 2019, down from 95.9% in the same period of 2018[166]. - The total number of tenants across all properties was 672 as of September 30, 2019[158]. - The occupancy rate for the total buildings was 94.4% in 2019, down from 95.8% in 2018[206]. - The number of total properties in the triple net leased senior living communities segment was 205 as of September 30, 2019, compared to 209 in the previous year[176]. Rental Income and Expenses - Rental income for the three months ended September 30, 2019, decreased by 4.3% to $100.010 million from $104.492 million in the same period of 2018[169]. - Rental income decreased primarily due to a reduction in rental income at comparable properties and the sale of 23 senior living communities, totaling a decrease of $1,722 in non-cash straight line rent adjustments for the nine months ended September 30, 2019[220]. - Residents fees and services decreased by 0.2% to $300,638 for the nine months ended September 30, 2019, compared to $301,265 for the same period in 2018[229]. - Property operating expenses rose to $85,346, reflecting a 2.7% increase from $83,070 in the prior year[186]. - Property operating expenses increased by 4.9% to $92,279 for the nine months ended September 30, 2019, compared to $87,953 in 2018[209]. Asset Impairment and Depreciation - The company experienced a significant impairment of assets totaling $26.037 million during the three months ended September 30, 2019[169]. - The company recorded asset impairment charges of $26,037 during the nine months ended September 30, 2019[213]. - Depreciation and amortization expense increased by $3,324, or 18.1%, to $(21,687) for the three months ended September 30, 2019, compared to $(18,363) for the same period in 2018[177]. - Depreciation and amortization expense increased to $15,736, up 2.6% from $15,341 in the same period last year[186]. - Asset impairment charges of $15,385 were recorded to reduce the carrying value of 16 senior living communities to their estimated fair value during the nine months ended September 30, 2019[223]. Financing and Debt - The company has $1.85 billion in outstanding principal amount of senior unsecured notes and $550.0 million under two term loans as of September 30, 2019[297]. - The company has a total outstanding fixed rate debt of $2.54 billion as of September 30, 2019, with an annual interest expense of $130.625 million[309]. - Interest expense for Q3 2019 was $44,817 million, slightly down from $45,416 million in Q3 2018[255]. - Interest expense decreased by $151, or 47.6%, to $(166) for the three months ended September 30, 2019, compared to $(317) for the same period in 2018[184]. - A hypothetical one percentage point increase in interest rates would increase the company's annual interest cost by approximately $25.4 million[311]. Transactions and Agreements - The company entered into a Transaction Agreement with Five Star, resulting in a reduction of monthly minimum rent to $10.8 million, subject to further adjustments[141]. - The company sold 18 senior living communities since July 1, 2018, impacting rental income negatively[179]. - The company recorded a gain on the sale of five MOBs during the three months ended September 30, 2019[173]. - During the nine months ended September 30, 2019, the company sold 15 properties from its MOB segment for approximately $23.5 million[274]. - The company sold 18 SNFs for an aggregate sales price of approximately $29.5 million, resulting in a reduction of annual rental income by $2.2 million[278]. Cash Flow and Distributions - Cash provided by operating activities decreased to $195.7 million in the nine months ended September 30, 2019, down from $286.0 million in the same period of 2018[262]. - The company paid quarterly cash distributions totaling approximately $164.0 million during the nine months ended September 30, 2019[291]. - A regular quarterly distribution of $0.15 per share, amounting to approximately $35.7 million, was declared on October 17, 2019[292]. - The regular quarterly distribution rate was lowered to $0.15 per common share, based on a target payout ratio of approximately 80% of projected cash available for distribution[259]. Future Outlook and Strategy - The company has identified additional properties to sell aggregating approximately $900 million, focusing on underperforming senior living communities and non-core assets[256]. - The company plans to explore refinancing alternatives as significant amounts are outstanding under its revolving credit facility[267]. - The company believes it will have access to various types of financing to fund future acquisitions and obligations[293].

Senior Housing Properties Trust (SNH) Q3 2019 Earnings Conference Call November 7, 2019 10:00 AM ET Executives Michael Kodesch - Director, IR Jennifer Francis - President, COO Richard Siedel - CFO, Treasurer Analysts Michael Carroll - RBC Capital Markets Todd Stender - Wells Fargo Bryan Maher - B. Riley FBR Jonathan Hughes - Raymond James Operator Good morning, and welcome to the Senior Housing Properties Trust Third Quarter 2019 Financial Results Conference Call. [Operator Instructions] Please note, this e ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-15319 SENIOR HOUSING PROPERTIES TRUST (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) (IRS ...

Senior Housing Properties Trust (SNH) Q2 2019 Results Conference Call August 8, 2019 10:00 AM ET Company Participants Michael Kodesch - Director of Investor Relations Jennifer Francis - President and Chief Operating Officer Richard Siedel - Chief Financial Officer Conference Call Participants Todd Stender - Wells Fargo Securities Bryan Maher - B. Riley FBR Drew Babin - Robert W. Baird Operator Good morning, and welcome to the Senior Housing Properties Trust Second Quarter 2019 Financial Results Conference C ...

[PART I Financial Information](index=3&type=section&id=PART%20I%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited statements show a significant net income decrease to $30.1 million from $236.0 million year-over-year, driven by a non-recurring gain on property sales in 2018 Balance Sheet Summary (in thousands) | Balance Sheet Items | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$7,145,900** | **$7,160,426** | | Total real estate properties, net | $6,298,986 | $6,341,908 | | Cash and cash equivalents | $39,875 | $54,976 | | **Total Liabilities** | **$4,032,462** | **$3,980,556** | | Senior unsecured notes, net | $2,217,989 | $2,216,945 | | Secured debt and capital leases, net | $742,883 | $744,186 | | **Total Equity** | **$3,113,438** | **$3,179,870** | Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Total Revenues | $266,286 | $275,770 | | Rental income | $158,241 | $173,728 | | Residents fees and services | $108,045 | $102,042 | | Total Expenses | $213,288 | $203,575 | | (Loss) gain on sale of properties | ($122) | $181,154 | | **Net Income** | **$31,504** | **$237,405** | | **Net Income Attributable to Common Shareholders** | **$30,082** | **$236,022** | | **EPS (basic and diluted)** | **$0.13** | **$0.99** | Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,515 | $84,034 | | Net cash (used in) provided by investing activities | ($43,308) | $80,349 | | Net cash used in financing activities | ($13,526) | ($158,463) | | **(Decrease) increase in cash** | **($15,319)** | **$5,920** | Notes to Condensed Consolidated Financial Statements Key notes detail a major tenant restructuring with Five Star Senior Living, a $6.2 million impairment charge, a significant dividend reduction, and subsequent debt management activities - During Q1 2019, the company recorded impairment charges of **$6,206 thousand** to adjust the carrying values of 15 skilled nursing facilities (SNFs) to their aggregate estimated fair value[40](index=40&type=chunk) - In May 2019, the company redeemed all of its outstanding 3.25% senior notes due 2019 for a redemption price of **$400 million**, plus accrued interest, funded by cash on hand and borrowings under its revolving credit facility[54](index=54&type=chunk) - On April 18, 2019, the company declared a regular quarterly distribution of **$0.15 per share**, a significant reduction from the previous quarter's distribution of $0.39 per share paid on February 21, 2019[69](index=69&type=chunk) - Due to substantial doubt about Five Star's ability to continue as a going concern, a Transaction Agreement was entered into in April 2019, which included a reduction of monthly minimum rent payable by Five Star to **$11 million** from February 1, 2019, through December 31, 2019[77](index=77&type=chunk)[78](index=78&type=chunk)[106](index=106&type=chunk) - The Transaction Agreement with Five Star proposes terminating all existing master leases and management agreements and replacing them with new management agreements for all senior living communities, effective **January 1, 2020**, subject to shareholder and other approvals[103](index=103&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The discussion centers on the Five Star Senior Living restructuring, which reduced rental income and key metrics like NOI and Normalized FFO, prompting a dividend cut and asset sales Portfolio Summary as of March 31, 2019 | Facility Type | Number of Properties | % of Total Investment | Q1 2019 NOI | % of Q1 2019 NOI | | :--- | :--- | :--- | :--- | :--- | | MOBs | 153 | 44.6% | $71,024 | 47.6% | | Senior living communities | 304 | 53.3% | $73,320 | 49.2% | | Wellness centers | 10 | 2.1% | $4,700 | 3.2% | | **Total** | **467** | **100.0%** | **$149,044** | **100.0%** | - Five Star is the largest tenant, with its leased properties representing **26.5% of the total investment** and contributing **26.4% of Q1 2019 NOI**[123](index=123&type=chunk)[125](index=125&type=chunk) Results of Operations Total revenues decreased due to a $17.7 million decline in rental income from the Five Star rent reduction, while net income fell sharply due to a non-recurring prior-year gain - Rental income from the Triple Net Leased Senior Living Communities segment decreased by **26.0% to $50.3 million**, primarily due to a $12.8 million rent reduction from Five Star as part of the Transaction Agreement[166](index=166&type=chunk)[167](index=167&type=chunk) - Managed Senior Living Communities' NOI decreased by **7.6% to $23.0 million** as a 10.2% increase in property operating expenses outpaced revenue growth[174](index=174&type=chunk)[176](index=176&type=chunk) - General and administrative expenses decreased significantly to **$9.8 million from $25.1 million**, primarily because no business management incentive fees were accrued for Q1 2019[184](index=184&type=chunk)[187](index=187&type=chunk) - Acquisition and other transaction-related costs were **$7.8 million**, including **$7.7 million** related to the Five Star Transaction Agreement[189](index=189&type=chunk) Non-GAAP Financial Measures FFO and Normalized FFO Reconciliation (in thousands, except per share data) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net income attributable to common shareholders | $30,082 | $236,022 | | **FFO attributable to common shareholders** | **$80,411** | **$92,666** | | **Normalized FFO attributable to common shareholders** | **$88,225** | **$107,163** | | FFO per share | $0.34 | $0.39 | | **Normalized FFO per share** | **$0.37** | **$0.45** | | Distributions declared per share | $0.39 | $0.39 | Net Operating Income (NOI) by Segment (in thousands) | Segment | Q1 2019 NOI | Q1 2018 NOI | | :--- | :--- | :--- | | MOB NOI | $71,044 | $70,213 | | Triple net leased communities NOI | $50,320 | $67,975 | | Managed communities NOI | $23,000 | $24,882 | | All other operations NOI | $4,700 | $4,602 | | **Total NOI** | **$149,064** | **$167,672** | Liquidity and Capital Resources Reduced cash flow from the Five Star restructuring prompted a dividend cut, planned asset sales to reduce leverage, and triggered a credit rating downgrade from S&P to BB+ - Following the entry into the Transaction Agreement with Five Star, the company reduced its regular quarterly distribution rate to **$0.15 per common share**[205](index=205&type=chunk) - The company intends to sell properties, focusing on underperforming senior living communities and non-core assets, to **reduce leverage**[204](index=204&type=chunk) - In April 2019, S&P downgraded the company's issuer credit rating from **BBB- to BB+** following the announcement of the Five Star business restructuring[217](index=217&type=chunk) - As of March 31, 2019, the company had **$225.0 million outstanding** under its $1.0 billion revolving credit facility, with **$775.0 million available** for borrowing[211](index=211&type=chunk)[212](index=212&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from its $3.0 billion in fixed-rate and $775 million in floating-rate debt, and notes the upcoming LIBOR phase-out Floating Rate Debt Sensitivity as of March 31, 2019 (in thousands) | Scenario | Outstanding Floating Rate Debt | Annual Interest Expense | Annual Earnings Per Share Impact | | :--- | :--- | :--- | :--- | | At March 31, 2019 | $775,000 | $29,450 | $0.12 | | One percentage point increase | $775,000 | $37,200 | $0.16 | - As of March 31, 2019, the company had approximately **$3.0 billion in fixed-rate debt**, and a hypothetical 1% interest rate increase would increase annual interest cost by approximately $29.8 million if all debt were refinanced[252](index=252&type=chunk)[255](index=255&type=chunk) - The company acknowledges the expected phase-out of **LIBOR in 2021**, which will require amendments to its credit facility and term loan agreements[267](index=267&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the period, the company's management concluded that disclosure controls and procedures are **effective**[269](index=269&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, internal controls[270](index=270&type=chunk) [PART II Other Information](index=53&type=section&id=PART%20II%20Other%20Information) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to risk factors from those 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[292](index=292&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including officer certifications and XBRL data, with key agreements incorporated by reference - The exhibits include **Rule 13a-14(a) and Section 1350 certifications**, as well as XBRL formatted financial statements[293](index=293&type=chunk)[294](index=294&type=chunk)

Financial Data and Key Metrics Changes - The first quarter of 2019 saw a normalized FFO of $88.2 million or $0.37 per share, down $0.08 per share compared to the same quarter last year [19] - An 8.6% decrease in consolidated same-property cash basis NOI was reported for the first quarter compared to the same quarter last year, primarily due to a $12.8 million reduction in rent from Five Star [7][19] - General and administrative expenses decreased approximately $15.3 million or almost 61% for the first quarter compared to last year [20] Business Line Data and Key Metrics Changes - Same-property cash basis NOI in the medical office portfolio decreased by 2.7%, with a corresponding 190 basis point decrease in occupancy due to a tenant vacating a 140,000 square-foot property [9] - The managed senior living portfolio saw a 50 basis point increase in same-property occupancy, with residence fees and service revenue increasing by $1.3 million or 1.2% compared to the same quarter last year [13] - Same-property cash basis NOI in the MOB segment increased by 80 basis points, driven by a 4.2% increase in life science properties [8] Market Data and Key Metrics Changes - The market for senior living is showing signs of stabilization, with absorption at its highest since 2007 and new construction starts slowing [30] - The number of units delivered was less than the number of units absorbed for the first time since 2016, indicating a potential market turnaround [30] Company Strategy and Development Direction - The company is focused on a transitional year, restructuring business arrangements with Five Star, resetting dividends, and executing a disposition strategy to reduce financial leverage [6] - A target to sell properties valued at up to $900 million by the end of 2019 is in place, with a focus on underperforming senior living communities and noncore properties [17] - The company is actively marketing for sales 13 buildings in Central Massachusetts and is nearing completion of planning for redevelopment in San Diego [11][12] Management's Comments on Operating Environment and Future Outlook - Management believes that the current challenges in senior living, such as wage pressure and competition for quality leadership, are being addressed through increased investment in workforce [14][15] - The company expects to transition management agreements with Five Star on January 1, 2020, and is confident in the execution of this plan [31][48] - Management is optimistic about the potential for improved occupancy and rent growth as the market stabilizes [47] Other Important Information - The company ended the first quarter with $39.9 million in cash and $225 million outstanding on its revolving credit facility [23] - The debt-to-adjusted EBITDAR ratio was reported at 6.7x, with expectations to rise above 7x mid-2019 due to reduced rent from Five Star [24] Q&A Session Summary Question: Can you provide details on redevelopment plans at Scripps? - Management indicated strong market demand with rents approaching $5 per foot, and they are completing planning and permitting for a complete redevelopment [26] Question: Are all skilled nursing facilities currently being marketed for disposition? - Yes, all standalone skilled nursing facilities are being marketed, with expectations for successful dispositions despite some underperforming assets [28] Question: What is the outlook for occupancy in the senior living market? - Management noted a potential market turn with slowing new construction and increased absorption, indicating a stabilization in occupancy [30] Question: Can you clarify the transition with Five Star scheduled for January 1, 2020? - Management expressed confidence that the transition will occur as planned, with necessary licensing and preparations underway [31] Question: What is the EBITDAR situation for the skilled nursing facilities sold? - The sold facilities had negative EBITDAR, and the current portfolio being marketed also generally has negative EBITDAR [33][36]

Senior Housing Properties Trust (SNH) Restructuring of Business Arrangements with Five Star Senior Living Conference Call April 2, 2019 10:00 AM ET Company Participants Brad Shepherd - Senior Director of Investor Relations Jennifer Francis - President and Chief Operating Officer Rick Siedel - Chief Financial Officer and Treasurer Conference Call Participants Drew Babbin - Baird Michael Carroll - RBC Capital Markets Tayo Okusanya - Jefferies Vikram Malhotra - Morgan Stanley Matt Boone - B. Riley FBR Operator ...

Financial Data and Key Metrics Changes - In Q4 2018, normalized funds from operations (FFO) were reported at $0.27 per share, while for the full year 2018, it was $1.59 per share [25] - The company experienced a flat same property cash net operating income (NOI) compared to 2017, despite a 6.8% decrease in managed senior living portfolio same property cash NOI [7][9] - The total debt to gross assets ratio at year-end was 42.4%, with total debt to adjusted EBITDA at 6.0 times, excluding the incentive fee [27] Business Line Data and Key Metrics Changes - The managed senior living portfolio's occupancy increased by 30 basis points year-over-year, while average monthly rates decreased by less than 1% [14] - The medical office building (MOB) portfolio's same property cash NOI increased by 1% in Q4 compared to the previous year and by 80 basis points for the full year [19] - Cash NOI growth of 1.2% was achieved in 2018, despite selling approximately $150 million more in assets than purchased [8] Market Data and Key Metrics Changes - The managed senior living portfolio faced wage pressure and increased operating expenses, with wages and benefits accounting for approximately 60% of the decrease in same property cash NOI [16][17] - The company noted that new construction starts in senior living are trending down, but supply continues to exceed demand [15] Company Strategy and Development Direction - The company plans to focus on increasing the MOB segment as a percentage of the total portfolio and maximizing the performance of the senior living portfolio [29] - There is a commitment to continue deploying capital in existing properties where strong returns are expected, while being patient and disciplined in acquiring new medical office and life science properties [22] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2019 will be a transitional year, with ongoing discussions regarding restructuring agreements with Five Star Senior Living [10][11] - The management expressed optimism about the potential for occupancy growth despite current challenges in the market [62] Other Important Information - The company recognized awards received by its properties, including J.D. Power senior living certification for three managed senior living communities [12] - The company is actively marketing properties vacated by major tenants, including Reliant Medical Group and Scripps Research Institute, with plans for repositioning [20][21] Q&A Session Summary Question: Status of Cedars-Sinai lease expirations - Management expects Cedars-Sinai to renew their leases and likely increase rent due to their long-term presence and connection to the hospital [31] Question: Impact of Five Star on performance - Management believes that the performance issues are primarily due to higher wages and benefits rather than Five Star's situation [32] Question: Pricing on vacated MOBs - Management indicated that the pricing discussion is not focused on cap rates, as these properties have been occupied for a long time [35] Question: Coverage ratios for Five Star - Management acknowledged that coverage ratios are expected to trend lower based on recent performance [47] Question: Future of joint ventures - Management sees potential for joint ventures but is currently focused on addressing shorter-term challenges [42] Question: Plans for acquisitions - Management confirmed that acquisitions are not on hold and the team is actively underwriting potential deals [58]