Diversified Healthcare Trust(US:DHC)2022-05-04 19:00Financial Data and Key Metrics Changes - For Q1 2022, the company reported net income attributable to common shareholders of $240.4 million or $1.1 per share, which includes a $327.5 million gain from the joint venture sale of 10 office portfolio assets [29] - Normalized FFO was negative $21.9 million, approximately $5 million lower than the previous quarter, primarily due to the impact of joint venture sales [32] - The company ended the quarter with approximately $1.5 billion in cash available to repay debt and invest in the portfolio, with total outstanding debt of $3.6 billion [32] Business Line Data and Key Metrics Changes - The consolidated same property cash basis NOI increased by 10.3% compared to the last quarter, driven by a $6.6 million increase in same property SHOP NOI [31] - In the Office Portfolio segment, 27 new and renewal leases were executed totaling over 200,000 square feet, with an average rent increase of 8.2% [11] - Occupancy in the SHOP segment increased approximately 100 basis points from the prior quarter, with non-same property revenue growth of $4.5 million or 5.8% compared to the fourth quarter [20][21] Market Data and Key Metrics Changes - The company’s office portfolio consists of approximately 8.7 million square feet, while the senior living portfolio includes 264 communities with over 27,000 units [8] - The leasing pipeline is nearly 900,000 square feet, with about 40% of it for new tenants [12] - The senior living industry has seen modest occupancy improvements, but the recovery pace has been slower than anticipated [19] Company Strategy and Development Direction - The company aims to reduce debt and accelerate earnings growth while focusing on rejuvenating and stabilizing the SHOP segment [9] - Significant capital projects are planned, with a budgeted spend of approximately $110 million in 2022 for the same property portfolio [26] - The company is also exploring redevelopment opportunities in various locations, including Atlanta and Washington, DC [14][16] Management's Comments on Operating Environment and Future Outlook - Management noted that labor remains the biggest challenge facing the senior living industry, with expectations for wages and benefits to increase [23] - The company is optimistic about the recovery of the SHOP segment and believes that the right operator mix will yield benefits from capital investments [21][25] - Management emphasized the importance of converting tours to move-ins in the senior living segment, as occupancy growth is more pronounced in needs-based communities [40] Other Important Information - The company welcomed David Pierce as a new member of the Board of Trustees, bringing over 30 years of healthcare industry experience [28] - The company is not looking to add existing properties into joint ventures, indicating a strategic focus on current assets [37] Q&A Session Summary Question: Are there plans for more joint venture sales? - Management indicated they are not looking to add existing properties into joint ventures [37] Question: What is the strategy for the $1.5 billion in cash and callable debt? - Management plans to prepay some portion of the callable notes while assessing investments and liquidity [38] Question: What are the expectations for refinancing debt given rising interest rates? - Management noted they are not focused on issuing more debt currently, given their strong cash position [39] Question: What are the challenges in the SHOP segment regarding occupancy recovery? - Management highlighted that recovery is more weighted towards needs-based communities and emphasized the importance of converting tours to move-ins [40] Question: Can you provide a breakdown of CapEx for 2022? - Management expects total CapEx for the year to be close to $400 million, with approximately $125 million allocated to the Office Portfolio and the remainder to SHOP [41][43]