Diversified Healthcare Trust(DHC)2025-02-26 17:21Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were $379.6 million, representing a 5% year-over-year increase [10] - Normalized FFO was $5.3 million or $0.02 per share, exceeding consensus estimates and showing a 31% sequential quarter increase [22] - Same property cash basis NOI was $63.7 million, an 18.7% improvement year-over-year [22] Business Line Data and Key Metrics Changes - SHOP sector achieved 80% occupancy for the first time since Q1 2020, with a 56% improvement in SHOP NOI and a 7.3% increase in SHOP revenues year-over-year [11] - Average monthly rate in the SHOP segment increased by 6.7%, contributing to margin expansion of 250 basis points [12] - Medical office and life science portfolio had same-store occupancy flat at 90.2%, with new and renewal leasing activity completing approximately 112,000 square feet [13] Market Data and Key Metrics Changes - The company completed property sales close to $179 million in Q1 2025, including the sale of the Muse Life Science campus for $159 million [15] - Approximately 7.9% of annualized revenue in the medical office and life science portfolio is scheduled to expire through year-end 2025 [13] Company Strategy and Development Direction - The company is focusing on strategic dispositions, with 34 communities in various stages of the disposition process, targeting proceeds of $68 million [17] - The company plans to invest between $150 and $170 million on CapEx in 2025, with a focus on senior living communities [32] - The company is actively marketing six MOB life science properties for estimated proceeds of $35.2 million [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the existing operators to drive recovery in the SHOP segment, highlighting a dedicated in-house asset management team [42] - The company is not planning to extend the maturity of zero coupon bonds to 2027, focusing instead on paying them down before the January 2026 maturity [45] - Management noted that adverse weather events are hard to predict and generally not included in forecasts, but guidance will be updated if necessary [54] Other Important Information - The company ended the quarter with approximately $145 million of unrestricted cash and has made significant progress on its financing strategy [26] - The company expects to close on the sale of 18 communities for $135 million shortly [18] Q&A Session Summary Question: Why did SHOP beat guidance this quarter? - Management noted occupancy growth reaching 80% and that the estimated insurance impact aligned with expectations [39] Question: How confident is the company in existing operators for 2025? - Management expressed comfort due to ongoing collaboration with operators and a dedicated asset management team [42] Question: What is the plan for the zero coupon bond? - Management clarified that they are not planning to extend the maturity and are focused on asset sales to pay it down [45] Question: What is the expected interest rate on the $340 million term sheets? - The expected weighted average rate is about 6.5%, which is favorable compared to the 9.75% debt being paid off [48]