Download PDF

1. Company Snapshot

1.a. Company Description

DHC is a real estate investment trust, or REIT, that owns medical office and life science properties, senior living communities and wellness centers throughout the United States.DHC is managed by the operating subsidiary of The RMR Group Inc., an alternative asset management company that is headquartered in Newton, MA.

Show Full description

1.b. Last Insights on DHC

Diversified Healthcare Trust's (DHC) recent performance was positively driven by its strategic divestitures, which generated significant proceeds. The company completed the sale of 18 triple-net leased senior living communities to Brookdale for $135 million, and also sold MUSE, a 186,000 square foot life science property in San Diego, for $159.0 million. These transactions will help DHC pay down its senior secured notes due in January 2026, reducing its debt burden. Additionally, the company's fourth quarter 2024 financial results showed a strong performance, with President and Chief Executive Officer Christopher Bilotto and Chief Financial Officer and Treasurer Matt Brown hosting a conference call to discuss these results.

1.c. Company Highlights

2. Diversified Healthcare Trust's Q3 2025 Earnings: A Mixed Bag

Diversified Healthcare Trust reported total revenue of $388.7 million for Q3 2025, a 4% year-over-year increase. Adjusted EBITDAre was $62.9 million, and normalized FFO was $9.7 million or $0.04 per share, missing analyst estimates of $0.08 per share. The company's EPS was impacted by elevated labor costs associated with transitioning 116 AlerisLife communities to new operators.

Publication Date: Nov -18

📋 Highlights
  • Revenue Growth:: Total revenue reached $388.7 million, reflecting a 4% year-over-year increase despite operational challenges.
  • Shop Performance:: SHOP occupancy rose 210 bps to 81.5%, driving 6.9% YoY revenue growth and 7.8% increase in consolidated SHOP NOI to $29.6 million.
  • Transition Costs:: Elevated labor expenses, including $5.1M in compensation and $2.5M in utilities, impacted Q3 results but are expected to normalize by Q4.
  • Asset Sales:: $44 properties sold for $396M, with $211M expected by Q4 2025, supporting liquidity and future cash flow improvements.
  • Portfolio Leasing:: 86,000 sq ft leased at 9% higher rents, boosting occupancy to 86.6% and adding a 717,000 sq ft pipeline with 7.6-year average lease terms.

Senior Housing Operating Portfolio (SHOP) Performance

SHOP occupancy increased 210 basis points year-over-year to 81.5%, marking the fourth consecutive quarter of occupancy growth. RevPOR rose 5.3%, driven by annual rate increases, gains in care level pricing, and reduced discounts and concessions at higher occupied communities. However, ExpensePOR increased by 5.1%, primarily due to temporary labor cost increases associated with community transitions, wage adjustments, and filling of previously opened positions.

Medical Office and Life Science Portfolio Performance

The Medical Office and Life Science portfolio saw approximately 86,000 square feet of leasing at weighted average rents of 9% above prior rents for the same space, with an average term of nearly 7 years. Consolidated occupancy increased 370 basis points sequentially to 86.6%, driven by asset sales of vacant or low occupancy properties and leasing during the quarter.

Asset Sales and Liquidity

The company has sold 44 properties for $396 million and is under agreements or letters of intent to sell 38 properties for $237 million. These asset sales are expected to reduce capital spending in 2026 and beyond, improve overall occupancy and margins, and contribute to the portfolio's cash flow growth. As Matthew Brown stated, "We expect improvements in adjusted EBITDAre with a full-year 2025 range of $275 million to $285 million and trending towards positive cash flow as SHOP operations stabilize and leverage declines."

Valuation and Outlook

With a P/E Ratio of -3.86 and a P/S Ratio of 0.73, the market appears to be pricing in significant challenges for the company. Analysts estimate revenue growth of 3.7% for next year. While the company's efforts to reposition its senior housing operating portfolio and improve its Medical Office and Life Science portfolio are positive steps, the near-term challenges associated with transitioning communities and elevated labor costs will likely continue to impact earnings.

3. NewsRoom

Card image cap

The State Of REITs: November 2025 Edition

Nov -18

Source: seekingalpha.com

Card image cap

What Makes Diversified Healthcare (DHC) a Strong Momentum Stock: Buy Now?

Nov -11

Source: zacks.com

Card image cap

Diversified Healthcare (DHC) Is Attractively Priced Despite Fast-paced Momentum

Nov -06

Source: zacks.com

Card image cap

Diversified Healthcare Trust (DHC) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

Card image cap

Diversified Healthcare Trust Announces Third Quarter 2025 Results

Nov -03

Source: businesswire.com

Card image cap

Diversified Healthcare Trust $DHC Shares Sold by Sumitomo Mitsui Trust Group Inc.

Nov -01

Source: defenseworld.net

Card image cap

Blindspots And Trade Shocks

Oct -12

Source: seekingalpha.com

Card image cap

Discovery Senior Living Enters Management Agreements with Diversified Healthcare Trust, Deepens Industry Leadership Position Adding a 42 Community, Multi-State Portfolio

Oct -08

Source: newsfilecorp.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.64%)

6. Segments

SHOP

Expected Growth: 6.5%

SHOP's 6.5% growth is driven by increasing demand for outpatient medical services, expansion of healthcare infrastructure, and strategic acquisitions. Additionally, the shift towards value-based care and aging population demographics contribute to the growth. Furthermore, Diversified Healthcare Trust's diversified portfolio and strong property management capabilities also support SHOP's growth.

Office Portfolio

Expected Growth: 7.5%

Diversified Healthcare Trust's Office Portfolio growth of 7.5% is driven by increasing demand for medical office space, aging population, and healthcare reform. Additionally, the portfolio's strategic locations, high occupancy rates, and long-term leases contribute to its growth. Furthermore, the trust's focus on value-add opportunities and capital recycling also support its growth momentum.

Non-Segment

Expected Growth: 6.0%

The 6.0% growth in Non-Segment from Diversified Healthcare Trust is driven by increasing demand for healthcare services, expansion of healthcare infrastructure, and strategic investments in technology and innovation. Additionally, the trust's diversified portfolio and strong operational efficiency have contributed to its growth.

7. Detailed Products

Office Buildings

Diversified Healthcare Trust owns and operates office buildings that are primarily leased to medical providers, hospitals, and healthcare systems.

Medical Office Buildings

The company invests in medical office buildings that are located on or near hospital campuses, providing convenient access to healthcare services.

Life Science Properties

Diversified Healthcare Trust owns and operates life science properties that are leased to biotechnology, pharmaceutical, and medical device companies.

Senior Housing

The company invests in senior housing communities that provide independent living, assisted living, and memory care services to seniors.

Skilled Nursing Facilities

Diversified Healthcare Trust owns and operates skilled nursing facilities that provide short-term rehabilitation and long-term care services to patients.

8. Diversified Healthcare Trust's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Diversified Healthcare Trust is moderate due to the availability of alternative healthcare providers and services.

Bargaining Power Of Customers

The bargaining power of customers for Diversified Healthcare Trust is low due to the lack of negotiating power and the importance of healthcare services.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Diversified Healthcare Trust is moderate due to the presence of multiple suppliers and the importance of quality healthcare services.

Threat Of New Entrants

The threat of new entrants for Diversified Healthcare Trust is high due to the growing demand for healthcare services and the ease of entry into the market.

Intensity Of Rivalry

The intensity of rivalry for Diversified Healthcare Trust is high due to the presence of multiple competitors and the importance of market share in the healthcare industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.66%
Debt Cost 6.74%
Equity Weight 45.34%
Equity Cost 14.37%
WACC 10.20%
Leverage 120.54%

11. Quality Control: Diversified Healthcare Trust passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
LTC Properties

A-Score: 6.7/10

Value: 4.0

Growth: 4.1

Quality: 7.3

Yield: 9.0

Momentum: 6.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Saul Centers

A-Score: 6.1/10

Value: 5.7

Growth: 3.6

Quality: 6.1

Yield: 10.0

Momentum: 2.0

Volatility: 9.3

1-Year Total Return ->

View Full Report
Stock-Card
Universal Health Realty Trust

A-Score: 6.0/10

Value: 3.8

Growth: 3.6

Quality: 5.6

Yield: 10.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
Community Healthcare Trust

A-Score: 5.9/10

Value: 6.4

Growth: 2.8

Quality: 5.4

Yield: 10.0

Momentum: 3.5

Volatility: 7.3

1-Year Total Return ->

View Full Report
Stock-Card
Global Medical REIT

A-Score: 5.5/10

Value: 5.7

Growth: 5.0

Quality: 4.2

Yield: 9.0

Momentum: 1.5

Volatility: 7.3

1-Year Total Return ->

View Full Report
Stock-Card
Diversified Healthcare Trust

A-Score: 4.4/10

Value: 7.9

Growth: 2.7

Quality: 2.7

Yield: 3.0

Momentum: 7.0

Volatility: 3.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.77$

Current Price

4.77$

Potential

-0.00%

Expected Cash-Flows