Diversified Healthcare Trust(US:DHC)2019-11-07 21:20Financial 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].