Diversified Healthcare Trust (DHC) delivered a mixed QQ1 2024 performance characterized by meaningful NOI strength in the SHOP (senior living and related senior housing operations) segment, alongside occupancy and revenue headwinds in the Medical Office and Life Science portfolio. Consolidated revenue rose 7.2% year-over-year to $370.8 million, yet net income remained negative at $86.3 million as non-cash amortization and other expenses weighed on reported profitability. Management emphasized ongoing asset-management initiatives, operator transitions, and a capital-strategy pivot aimed at strengthening liquidity and reducing interest expense through secured financings.
The SHOP segment demonstrated durable demand and pricing power, with same-property SHOP NOI up 43.6% year-over-year driven by occupancy gains (200 basis points) and higher RevPOR (up 6.8%). Sequential momentum was solid as well, with SHOP revenue up 4.7% versus the prior quarter. In contrast, the MOB/Life Science portion faced occupancy-related softness, contributing to a 3.6% decline in same-property NOI in that portfolio, despite continued double-digit rent-roll-ups in select medical office and life-science leases. The company reaffirmed its 2024 SHOP NOI guidance of $120–$140 million and provided Q2 guidance of $26–$31 million, signaling a heavier performance lift in the back half of the year as operator transitions complete and new leasing activity absorbs vacancies.
Balance-sheet and liquidity actions remain a priority. DHC ended the quarter with roughly $207 million of cash and disclosed a financing plan to issue $175–$200 million of CMBS debt in Q2 and to secure fixed-rate debt against select SHOP properties. The use of proceeds is earmarked to fund portfolio capex, invest further in SHOP, and repay approximately $500 million of maturing notes due June 2025 (9.75% coupon), which management expects to reduce interest expense by more than 200 basis points. Management underscored the potential dispositions of up to eight MOB/Life Science properties and a selective set of SHOP assets to enhance liquidity and NOI, with anticipated proceeds of $50–$60 million if dispositions close. Taken together, the QQ1 2024 results reflect a portfolio still undergoing a strategic reset, with the near-term earnings trajectory hinging on SHOP NOI acceleration and MOB/Life Science occupancy recovery in the second half of 2024.