Diversified Healthcare Trust(US:DHC)2021-08-05 18:37Financial Data and Key Metrics Changes - The company reported normalized FFO attributable to common shareholders of $0.05 per share and adjusted EBITDA of $87.8 million for Q2 2021 [29] - Interest expense increased to $67.7 million, up $7.6 million from the previous quarter due to drawing $800 million on the revolving credit facility [31] - The company had $849 million of unrestricted cash on hand and $59 million of restricted cash at the end of Q2 2021 [31] Business Line Data and Key Metrics Changes - In the SHOP segment, same-property cash basis NOI increased by $6.9 million from Q1 2021, while same-property revenues decreased by $15.9 million or 6.1% due to the closure of approximately 1,500 skilled nursing units [30] - Same-property occupancy in the Office Portfolio segment was 92.3%, a decrease of 130 basis points from the previous quarter [22] - The company completed 36 new and renewal leases totaling approximately 632,000 square feet, achieving an average roll-up in rents of 5.9% [23] Market Data and Key Metrics Changes - Same-property SHOP average occupancy increased by 40 basis points from Q1 2021, reaching 72.2% by the end of July [21] - Parking revenue increased by approximately $600,000, a 20% increase from Q1 2021, reaching about 90% of pre-pandemic averages [24] Company Strategy and Development Direction - The company is transitioning close to 50% of its SHOP communities to new operators, having entered into four new management agreements for a total of 76 communities [8][9] - The company remains confident in the recovery and long-term prospects of senior living and healthcare real estate due to the aging U.S. population [33] - The company plans to sell over 500 skilled nursing bed licenses, expecting to generate proceeds of over $10 million to reinvest into communities [30] Management's Comments on Operating Environment and Future Outlook - Management believes that increasing vaccine acceptance will benefit the senior living industry, with over 70% of the U.S. adult population having received at least one vaccine dose [17] - The emergence of the Delta variant poses uncertainty, but management is optimistic about the vaccine rollout reducing the impact of COVID-19 [18] - Management expects a post-Labor Day occupancy bump as adults return to work and children return to school, increasing the need for senior living [40] Other Important Information - The company recognized approximately $15.7 million of CARES Act funds during the quarter, which are included in interest and other income but excluded from reported NOI results [31] - The company was recognized as a Green Lease Leader by the U.S. Department of Energy for meeting energy efficiency and sustainability best practices [27] Q&A Session Summary Question: Can you clarify on the SNF license sales? - The company is marketing 500 out of 1,500 skilled nursing bed licenses for sale, having sold 10 so far [34][35] Question: Was the CARES Act money received in the quarter? - Much of the $15.7 million was received in Q2 2021, with hopes for more funding in the future [36][37] Question: Is the $250 million CapEx plan still in place? - The plan remains, but some projects may slip into early 2022 due to labor shortages [38][39] Question: What is the expected impact of transitions on occupancy and RevPOR? - The company expects increased NOI from the transitioning operators as they grow occupancy [46] Question: How did the transition and retained portfolios perform relative to each other? - The retained portfolio saw occupancy increase by 170 basis points, while the transitioning portfolio saw a 90 basis point increase [50][51]