Diversified Healthcare Trust(DHC) - 2025 Q1 - Quarterly Results

Financial Performance - SHOP NOI increased by 49.0% year over year to $36.8 million, with a margin increase of 320 basis points [5] - The company reported a net loss of $9.0 million, or $0.04 per share, for Q1 2025 [12] - Normalized FFO was $14.3 million, or $0.06 per share [12] - For Q1 2025, the company reported a net loss of $8,986,000, a significant improvement from a net loss of $86,259,000 in Q1 2024, reflecting an 89.6% decrease in losses year-over-year [13] - Normalized Funds From Operations (FFO) for Q1 2025 was $14,305,000, up 170.4% from $5,290,000 in Q4 2024 and 306.0% from $3,523,000 in Q1 2024 [15] - Adjusted EBITDAre increased to $75,109,000 in Q1 2025, a 12.0% increase from $67,049,000 in Q4 2024 and a 17.2% increase from $64,060,000 in Q1 2024 [15] - Total revenues for Q1 2025 reached $386,864,000, a 4.0% increase compared to $370,776,000 in Q1 2024 [22] - The company declared an annualized dividend of $0.04 per common share, maintaining the same level as in previous quarters [15] - The normalized FFO payout ratio improved to 16.7% in Q1 2025, compared to 50.0% in Q4 2024 [15] - The company recognized a gain of $7,522,000 from insurance recoveries during Q1 2025, contributing positively to the financial results [24] - The company reported a Net Operating Income (NOI) of $25,528 for Q1 2025, with a gross book value of real estate assets amounting to $1,361,618 [29] - The total revenues for Q1 2025 amount to $386,864,000, with a net operating income (NOI) of $72,538,000 [61] - DHC reported a net loss of $8,986 million for Q1 2025, compared to a net loss of $97,861 million in the previous quarter [109] - EBITDA for the three months ended March 31, 2025, was reported at $117,219,000, significantly higher than $41,637,000 in Q1 2024 [112] - The company recorded a net loss of $8,986,000 for the three months ended March 31, 2025, compared to a net loss of $86,259,000 for the same period in 2024 [112] Portfolio and Asset Management - As of March 31, 2025, DHC's portfolio was valued at approximately $6.8 billion, including 343 properties [10] - The company had approximately $306.7 million in cash and cash equivalents as of March 31, 2025 [12] - The total assets decreased to $4,995,843,000 as of March 31, 2025, from $5,137,005,000 at the end of Q4 2024 [18] - Total liabilities decreased to $3,047,792,000 as of March 31, 2025, down from $3,178,162,000 in Q4 2024 [18] - DHC's portfolio as of March 31, 2025, is valued at approximately $6.8 billion, consisting of 343 properties across 34 states and Washington, D.C. [101] - The company has over 26,000 senior living units and approximately 7.6 million square feet of medical office and life science properties, occupied by around 450 tenants [101] - The company has a total of 343 properties, with 231 in the SHOP segment and 75 in the Medical Office segment [61] - The company has incurred total costs of $22,200,000 for ongoing redevelopment projects, with an estimated completion date for the Pueblo Norte Senior Living project in Q1 2026 [41] - A total of 25 properties were disposed of since January 1, 2025, generating gross sales of $331,975,000 [43] Occupancy and Revenue Metrics - Year-over-year first quarter SHOP occupancy increased by 130 basis points to 80.2% [12] - Average monthly rates increased by 4.8%, resulting in a 6.5% increase in revenue [12] - The company's occupancy rate for the Senior Housing Operating Portfolio (SHOP) was 80.2% as of March 31, 2025, slightly up from 80.0% in Q4 2024 and up from 78.9% in Q1 2024 [13] - The occupancy rate for the Medical Office and Life Science Portfolio stands at 91.8% [29] - The occupancy rate for the Medical Office and Life Science Portfolio is 49.2%, while the SHOP segment has an occupancy rate of 84.2% as of May 2, 2025 [44] - The average monthly rate for same properties increased by 4.5% to $5,303 compared to $5,074 in Q1 2024 [65] - Total residents fees and services for Q1 2025 amounted to $328,306, up from $308,126 in Q1 2024, representing a growth of 6.5% [64] - The average monthly rate for Senior Living properties increased by 4.8% to $5,413 in Q1 2025 from $5,165 in Q1 2024 [75] - The average remaining lease term, weighted by annualized rental income, is 5.2 years, while the average remaining lease term weighted by leased square feet is 4.9 years [90][92] Debt and Financing Activities - The company completed two debt financings totaling $249 million in March and April 2025 [6] - DHC sold 22 properties securing senior notes due in 2026 for $299 million in net proceeds [6] - The company executed a $140.0 million mortgage loan secured by 14 senior living communities in March 2025 [12] - As of March 31, 2025, the company has a total debt of $2,890,338, with a weighted average interest rate of 4.718% [30][34] - The company plans to redeem $140,000 of its senior unsecured notes due June 2025 using loan proceeds and cash on hand [32] - The company anticipates addressing its 2025 and 2026 debt maturities through potential property dispositions and refinancing options [153] Management and Governance - RMR Group manages DHC and has approximately $40 billion in real estate assets under management, providing a competitive advantage through lower management costs [102] - DHC's management believes that RMR's experience in the real estate industry enhances operational efficiency and strategic decision-making [102] - DHC's governance includes a board of trustees with a mix of independent and managing trustees, ensuring oversight and strategic direction [105] - The company is actively exploring market expansion opportunities and new strategies to enhance its portfolio and operational performance [101] Operational Efficiency and Cost Management - The company incurred interest expenses of $57,831,000 for the three months ended March 31, 2025, slightly down from $57,576,000 in the previous year [112] - The company incurred depreciation and amortization expenses of $68,325,000 in Q1 2025, slightly down from $77,508,000 in Q4 2024 [114] - Total recurring capital expenditures for Q1 2025 were $26,486, a decrease from $44,241 in Q4 2024 [39] - Cash Available for Distribution (CAD) for Q1 2025 was $25,985,000, compared to a negative CAD of $(16,875,000) in Q4 2024, showcasing improved cash flow management [116] - The company has commitments for leasing expenditures and concessions, which include tenant improvements and leasing commissions [137] Market and Strategic Focus - The company is focused on diversifying its healthcare property portfolio across various care delivery types and locations [101] - The company is focused on enhancing its senior living communities and healthcare-related properties to meet increasing demand from the aging U.S. population [154] - The company is subject to various risks, including market conditions and regulatory changes, which could impact its financial performance and operational strategies [154]