[Updated] AlerisLife Winding Down Enterprise, Transitioning 116 DHC Communities To 7 Operators

AlerisLife, one of many nation’s largest senior residing suppliers, is winding down its enterprise in a course of that’s anticipated to be accomplished within the first half of 2026.

As a part of that course of, seven totally different operators will likely be taking over the administration of 116 properties within the portfolio of Newton, Massachusetts-based Diversified Healthcare Belief (Nasdaq: DHC), the true property funding belief introduced this morning. The communities are at the moment managed by 5 Star Senior Dwelling, the working division of AlerisLife. AlerisLife is also promoting all its belongings, together with 17 owned communities.

“In reference to the sale of AlerisLife’s belongings and after compensation of debt and fee of estimated wind-down prices, DHC expects to obtain estimated web proceeds of between $25 million to $40 million for its 34% curiosity in AlerisLife,” the DHC press launch said. “DHC plans to make use of these web proceeds to scale back leverage and for different common enterprise functions, together with reinvestment in its SHOP section.”

The transition of the 116 communities to the brand new operators will allow extra geographically targeted administration preparations, and these transactions are anticipated to shut beginning within the third quarter of this 12 months.

“These transactions are additionally anticipated to permit us to construct on the momentum from the improved efficiency of the 5 Star managed communities over the previous few years, additional strengthen our asset base and drive enhanced NOI development throughout our SHOP communities,” Chris Bilotto, president and CEO of DHC, mentioned within the launch. “We lengthen our gratitude to the AlerisLife group members, underneath the management of Jeff Leer, for the exceptional accomplishments achieved over the previous a number of years. The group’s dedication and focus have been the driving power behind the improved efficiency of the 5 Star managed communities, enabling us to create lasting worth.”

Jenifer Salamino, chief working officer at AlerisLife, mentioned these sorts of choices are made in one of the best curiosity of residents, their households and group members. Following a evaluate of the enterprise, this was decided to be the “finest path ahead to make sure long-term stability and continuity of care,” Salamino instructed Senior Housing Information.

“We’re working intently with trusted operators who’re stepping in to imagine administration of our portfolio, and our focus all through this transition is on making the method as seamless as potential for residents and group,” Salamino mentioned. “I couldn’t be prouder of the group that we’ve got right here and the wonderful accomplishments that they’ve achieved. It will likely be thrilling to look at them proceed their profitable trajectory on this new chapter.”

AlerisLife’s path from founding to shuttering

The predecessor to AlerisLife, 5 Star Senior Dwelling, was based by Stellar Senior Dwelling CEO Evrett Benton in 1999 with help from the REIT at the moment often called Diversified Healthcare Belief, which is externally managed by The RMR Group (Nasdaq: RMR). RMR additionally externally manages AlerisLife. In 2002, 5 Star went public and Benton left to discovered Stellar a decade later.

AlerisLife was as soon as among the many nation’s top-10 largest senior residing operators with tons of of communities. The corporate’s inventory worth had declined over a decade, and in 2021, the operator shrunk after Diversified Healthcare Belief transitioned 108 senior residing communities to different operators.

Early the next 12 months, 5 Star rebranded to AlerisLife to mark its new give attention to way of life companies. Multiple 12 months later, ABP Acquisition, a agency managed by RMR Group CEO Adam Portnoy, acquired AlerisLife for about $43.8 million and took the corporate non-public. On the time, AlerisLife CEO Jeff Leer mentioned the transfer would “permit us to reinforce our give attention to operational excellence, and put us in one of the best place to efficiently ship on our enterprise and mission.”

Diversified Healthcare Belief has had its personal share of struggles through the years, together with a merger with Workplace Properties Revenue Belief (Nasdaq: OPI) that was in the end known as off . Earlier that 12 months, Diversified had pitched the merger as a technique to regain stability and repay money owed after the REIT’s leaders warned there was “substantial doubt about our firm’s means to proceed as a going concern as a stand-alone firm.”

DHC has since engaged in senior residing gross sales, together with promoting 32 communities totaling 2,422 items from its senior housing working portfolio (SHOP) section

In the course of the firm’s second-quarter 2025 earnings name, President and CEO Chris Bilotto mentioned DHC was “bullish on the outlook for our SHOP section” given the AlerisLife-managed properties elevated common NOI margins to 14.1%, representing a achieve of 170 foundation factors versus the identical interval in 2024. Occupancy for the REIT’s SHOP section was 80.6% within the second quarter of 2025, in response to the corporate’s monetary filings.

In 2025, DHC has sought to shore up its debt profile by way of financing and pushing off maturities. The REIT secured a $150 million revolving credit score facility and obtained an combination $343 million of financings secured by 27 of its SHOP communities earlier this 12 months. The debt is because of mature in about six years and implies a valuation of $174,000 per unit.

“We’re more than happy with the result of those financings as they spotlight the worth of our SHOP communities, addressed our 2025 bond maturity and lowered our annual money curiosity expense by virtually $15 million,” Bilotto mentioned.

Wanting forward, DHC is investing about $3,500 per unit on recurring CapEx for its SHOP section.

“And on the redevelopment aspect, we’re making an attempt to be strategic by way of how we deploy capital there,” Bilotto mentioned.

SHN Reporter Andrew Christman and SHN Senior Editor Tim Regan contributed to this report.