Diversified Healthcare Trust and National Health Investors held earnings calls with analysts and investors Wednesday to highlight their fourth-quarter and full-year 2024 results.
Diversified Healthcare Trust ends 2024 ‘on high note’
DHC ended the fourth quarter of 2024 “on a high note,” particularly in its senior housing operating portfolio, or SHOP, President, CEO and Managing Trustee Chris Bilotto said Wednesday.
DHC’s SHOP includes more than 27,000 senior living units. Within the SHOP segment, Billotto said, the REIT has 34 communities that are in various stages of the disposition process.
The Newton, MA-based real estate investment trust saw 80% occupancy in SHOP for the first time since the first quarter of 2020. Year over year, Bilotto said, SHOP net operating income improved by 56%, SHOP revenues increased by 7.3%, and the average monthly rate improved by 6.7%, resulting in margin expansion of 250 basis points.
“These positive trends show our growing momentum and are the result of a dedicated asset management team throughout 2024,” Bilotto said. “We are pleased with the progress and remain bullish on the outlook within the segment going into 2025.”
The positive trends were offset by some nonrecurring expense increases totaling $4.4 million, according to Vice President Anthony Paula. Those include a previously discussed $1 million insurance deductible related to Hurricane Milton for water intrusion remediation.
“Excluding these $4.4 million of additional weather-related expenses, our consolidated fourth quarter SHOP NOI margin would have been 140 basis points higher. For full year 2024, our SHOP NOI of $106 million from the high end of our revised SHOP guidance,” Paula said.
Chief Financial Officer and Treasurer Matt Brown said that the REIT is confident it will accretively meet its $380 million June 2025 debt maturity.
For additional coverage of the earnings call, see McKnight’s Senior Living.
NHI: Results exceed expectations
NHI ended the fourth quarter with a “strong note, as the fourth-quarter results exceeded our expectations with contributions from across the portfolio,” President and CEO Eric Mendelsohn said Wednesday.
Moving into 2025, Mendelsohn said, the Murfreesboro, TN-based REIT is “looking for other avenues to support internal growth. Specifically, we’re considering select opportunities to transition triple-net senior housing assets to SHOP structures, where we see excellent long-term potential with existing or new operators.”
Net operating income from the REIT’s SHOP portfolio for the year and fourth quarter increased 32% and 12.5%, to $12.2 million and $3.2 million, respectively, compared with the prior-year periods, Chief Financial Officer John Spaid said.
According to Chief Investment Office Kevin Pascoe, the REIT’s entrance-fee and skilled nursing facility portfolios are performing well.
“The discretionary senior housing portfolio, which includes our entrance-fee portfolio, had coverage of 1.7 times compared to 1.6 time in the sequential period,” he said.
Regarding the company’s master lease on six properties in a partnership with Discovery Senior Living, Pascoe said, some growth in net operating income has occurred, but the buildings have not performed as expected. NHI, therefore, is evaluating several options, including transitioning the properties to another operator, he said.
“These properties generated $4.5 million in 2024 base rent and approximately $1.2 million in deferral repayments,” Pascoe said. “While no final decisions have been made, we currently model a slight increase in the base rent, but not to levels contemplated in the 2023 amendment.”
NHI reported another quarter with improving earnings before interest, taxes, depreciation, amortization, rent and management fees, or EBITDARM, coverage and cash collections as well as solid contributions from acquisitions and SHOP growth.
On Tuesday, the REIT announced a first-quarter 2025 dividend of $0.90 per common share to be paid on May 2.
For additional coverage of the earnings call, see McKnight’s Senior Living.