The following is a summary of the Diversified Healthcare Trust (DHC) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Mixed financial results in Q3 2024, with moderate revenue growth offset by cost increases.

• Normalized FFO was $4 million or $0.02 per share.

• Same property cash basis NOI was $65.8 million, a 16.1% improvement year-over-year but a 1.5% decline sequentially.

• SHOP NOI was $27.4 million, a 32.6% increase over Q3 last year but a decline sequentially.

• Due to mixed performance results, guidance for the year was lowered.

Business Progress:

• Completed 83,000 square feet of new and renewal leasing activity in the medical office and life science segments.

• SHOP sector showed a year-over-year revenue growth of 6.4% and an NOI growth of 32.6%.

• Successfully renewed annual insurance, resulting in a $6.8 million reduction in premiums.

• Advanced 23 refresh projects with an expectation to complete by year-end, with current high levels of dispositions aimed at refining the portfolio.

Opportunities:

• Opportunities in refinancing strategies, including diversifying financing sources with institutional real estate lenders alongside government-sponsored enterprise agencies.

• Potential value creation through asset refinancing and dispositions, highlighted by an agreement to sell 18 triple-net leased senior living communities.

Risks:

• Persisting cost increases, particularly from non-recurring expense items amounting to $2.5 million influencing quarterly results.

• Slower recovery in SHOP NOI due to occupancy not meeting expected targets, coupled with unforeseen costs due to natural disasters.

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