Diversified Healthcare Trust(US:DHC)2025-11-03 22:28Property and Occupancy - As of September 30, 2025, the company owned 335 properties across 34 states and Washington, D.C., with a total gross book value of real estate assets amounting to $6.66 billion[121][128]. - The SHOP segment reported an occupancy rate of 81.5%, up from 79.4% in the previous year, indicating a positive trend in occupancy[128]. - The Medical Office and Life Science Portfolio segment achieved an occupancy rate of 86.6%, compared to 80.8% in the prior year, reflecting strong demand[128]. - Occupancy rate for SHOP segment improved to 82.4% in Q3 2025 from 81.0% in Q3 2024[139]. - The number of properties in the senior living communities segment remained stable at 182 for both 2025 and 2024, with occupancy increasing to 81.6% from 80.6%[164]. - Occupancy rate for all properties improved to 86.6% in 2025 from 80.8% in 2024[169]. Financial Performance - Total revenues for Q3 2025 were $388.7 million, a 4.3% increase from $373.6 million in Q3 2024[136]. - Net loss for Q3 2025 was $164.0 million, compared to a net loss of $98.7 million in Q3 2024, representing a 66.2% increase in losses[138]. - Net operating income (NOI) for SHOP segment increased by 8.0% to $29.6 million in Q3 2025 from $27.4 million in Q3 2024[138]. - Medical Office and Life Science Portfolio reported a NOI decrease of 4.1%, from $27.8 million in Q3 2024 to $26.7 million in Q3 2025[138]. - Rental income for the Medical Office and Life Science Portfolio decreased by 8.9% to $48.2 million in Q3 2025 from $52.9 million in Q3 2024[144]. - The company reported a significant impairment of assets amounting to $93.2 million in Q3 2025, compared to $23.0 million in Q3 2024[138]. - The net loss for the nine months ended September 30, 2025, was $264,665 million, a decrease of 6.4% compared to a net loss of $282,809 million in 2024[163]. - Revenues for the nine months ended September 30, 2025, were $656,309, while expenses were $853,646, resulting in a loss from continuing operations of $363,993[234]. - The company reported a net loss of $355,570 for the nine months ended September 30, 2025[234]. Leasing and Rental Income - New leases in the Medical Office and Life Science Portfolio segment during Q3 2025 showed a weighted average rental rate increase of 29.8%[130]. - Total leasing costs and concession commitments for new leases in Q3 2025 amounted to $601,000, with a per square foot cost of $62.74[130]. - Annualized rental income from the Medical Office and Life Science Portfolio as of September 30, 2025, was $191.14 million[131]. - Average monthly rate for SHOP segment increased to $5,413 in Q3 2025, up from $5,142 in Q3 2024, reflecting a 5.3% increase[139]. - Total rental income for comparable properties decreased by $1,503, or 1.2%, to $119,518 for the nine months ended September 30, 2025, compared to $121,021 in 2024[170]. - Rental income for all properties decreased by $15,585, or 9.6%, to $146,020 for the nine months ended September 30, 2025, compared to $161,605 in 2024[169]. - Rental income for all other operations increased by $2,033, or 10.5%, to $21,346 for the nine months ended September 30, 2025, compared to $19,313 in 2024[173]. Expenses and Impairments - Property operating expenses for SHOP segment increased by 7.7% to $303.8 million in Q3 2025 from $284.6 million in Q3 2024[141]. - General and administrative expenses decreased to $32,966 million in 2025 from $27,763 million in 2024, a reduction of 18.7%[163]. - Impairment of assets increased significantly to $162,708 million in 2025 from $41,718 million in 2024, indicating a notable rise in asset impairment charges[163]. - Property operating expenses for comparable properties increased by $328, or 0.7%, to $47,834 in 2025, while non-comparable properties saw a decrease of $7,251, or 9.9%[171]. Cash Flow and Capital Expenditures - Cash and cash equivalents at the end of the nine months ended September 30, 2025, were $209,623, down from $261,400 in 2024, a decrease of 19.8%[199]. - Operating activities generated net cash of $492 for the nine months ended September 30, 2025, a significant decline from $94,028 in 2024[199]. - Total capital expenditures for the nine months ended September 30, 2025, were $108,645, down from $117,681 in 2024, a decrease of 7.5%[203]. - The company plans to invest approximately $20,405 in unspent leasing related obligations over the next 12 months[206]. - The company is currently redeveloping certain properties, primarily in managed senior living communities, which may require significant capital expenditures[207]. Debt and Financing - The company issued $375 million in aggregate principal amount of 7.25% senior secured notes due 2030, raising net proceeds of $364.726 million[223]. - The company has $334.370 million in outstanding senior secured notes due 2026, which are fully guaranteed by collateral properties[218]. - The company’s principal debt obligations at September 30, 2025, included $1.600 billion in senior unsecured notes and $709.370 million in senior secured notes[226]. - The company has a floating rate mortgage loan of $140,000 with an annual interest rate of 6.63%, resulting in an annual interest expense of $9,411[242]. - The company has fixed rate debt totaling $2,304,175 with an annual interest expense of $129,953 as of September 30, 2025[253]. - The company has no amounts outstanding under its revolving credit facility as of September 30, 2025[244]. Market Conditions and Economic Outlook - The company anticipates continued variability in labor, insurance, and food costs, which may impact cash flows during the management transition period[126]. - The company is closely monitoring economic uncertainties, including interest rates and inflation, which could affect financial conditions and market performance[126]. - The company expects future cash flows to depend on maintaining occupancy rates and controlling operating expenses amid inflationary pressures[198]. - A one percentage point increase in interest rates would raise the annual interest expense for the floating rate mortgage loan to $9,936, impacting earnings per share by $(0.04)[246]. - The company is exposed to market risks associated with interest rate fluctuations and employs derivative instruments to manage this risk[241]. Credit Ratings - Moody's upgraded the company's issuer credit rating from Caa3 to Caa1 in August 2025[224]. - S&P upgraded the company's issuer credit rating from CCC+ to B- in September 2025[225].