Diversified Healthcare Belief (Nasdaq: DHC) is making progress on its plans to transition 116 AlerisLife communities to new operators and expects to finish these transitions by year-end.
In September, Diversified Healthcare Belief revealed it’s winding down its AlerisLife administration platform, with seven operators together with Discovery Senior Dwelling, Sinceri Senior Dwelling, Stellar Senior Dwelling and Tutera Senior Dwelling taking up the communities beforehand managed beneath the 5 Star Senior Dwelling banner.
As of Tuesday’s third-quarter earnings name with buyers and analysts, DHC had transitioned 85 of the communities and the corporate’s leaders count on to wrap up that course of by the top of 2025, in keeping with CEO Chris Bilotto.
“Strategically it positions us to be a greater associate with the brand new operators, and to develop our total efficiency as we head into 2026 and future years,” he stated throughout the name Tuesday.
Bilotto beforehand informed Senior Housing Information that transitioning the communities and winding down AlerisLife will assist the REIT “go on the offense” and enhance its standing in markets throughout the nation.
“There’s important untapped potential in our communities — bettering margins and occupancy, and repurposing former expert nursing wings for various acuity ranges with focused capital,” Bilotto informed SHN beforehand. “Past acquisitions, we’ll prioritize these natural alternatives.”
Whereas the corporate transitions the communities from AlerisLife’s 5 Star model to different operators, it additionally expects potential money stream dips associated to these adjustments. Within the third quarter of 2025, the corporate posted a web lack of $164 million as NOI declined and labor prices elevated with the transitions, in keeping with firm administration.
“These elevated labor prices are primarily pushed by required investments and operational assist, together with payroll allocations for property, excursions, neighborhood evaluations, coaching and onboarding to assist incoming operators,” Bilotto stated throughout the firm’s name Tuesday. “Moreover, momentary worker overlap obligatory to fulfill required discover intervals previous to terminations has contributed to the rise.”
Diversified Healthcare Belief’s normalized funds from operations (FFO) per share landed at 4 cents within the quarter. As of Sept. 30, the Newton Massachusetts-based actual property funding belief’s (REIT’s) $6.7 billion portfolio included 335 properties, together with greater than 26,000 senior dwelling models, in 34 states and Washington, D.C.
Diversified Healthcare Belief’s share value ended the buying and selling day at $4.20, representing a lack of slightly below 4.9%.
SHOP efficiency improves amid transitions
Whereas the transitions from winding-down AlerisLife to different operators is inflicting short-term noise in operational outcomes, Diversified’s leaders stated they’re inspired by the efficiency of the operator’s 228-property senior housing working portfolio (SHOP).
The section’s common occupancy rose to 81.5% within the third quarter of 2025, a rise of 210 foundation factors over the identical interval final yr. All informed, the section represents virtually 47% of the REIT’s annual web working revenue (NOI).
Through the third quarter of 2025, Diversified Healthcare offered six properties for about $16.5 million not together with closing prices. Since October, DHC has offered a further 12 properties for about $31.4 million and one encumbered property for $42.1 million, excluding closing prices.
The REIT can also be as of Nov. 3 beneath agreements or letters of intent to promote one other 38 properties for about $237.2 million, excluding closing prices.
These asset gross sales, coupled with different latest financing actions, will permit the REIT to pay its 2026 debt maturity as early as the top of 2025 and enter the approaching yr with no debt maturities due till 2028.
