Diversified Healthcare Trust Outlines 2025 Roadmap and Financial Targets

In a strategic update presented on December 8, Diversified Healthcare Trust (DHC) detailed its operational and financial objectives for 2025. The healthcare-focused real estate investment trust is executing a plan to fortify its balance sheet and drive portfolio growth, with key initiatives centered on property dispositions, occupancy improvements, and debt reduction.

For the full year 2025, the company is forecasting a Net Operating Income (NOI) ranging from $265 million to $285 million. A primary operational focus is increasing occupancy within its Senior Housing Operating Portfolio (SHOP), targeting a rate between 82% and 83%.

The third-quarter 2025 results, released on November 3, revealed a loss per share of -$0.38. This figure came in below the -$0.21 estimate, despite revenue slightly exceeding expectations. The market will be watching future earnings reports to gauge the effectiveness of the current strategic shift. On the day of the December 8 presentation, DHC shares closed at $4.76.

Strategic Asset Sales and Capital Allocation

A cornerstone of the strategy involves the disposition of non-core assets. Management anticipates generating between $625 million and $635 million in property sale proceeds during 2025. By the presentation date, the trust had already realized $414 million from such sales. These funds are earmarked primarily for paying down debt and reinvesting in the SHOP segment.

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Furthermore, the company expects to receive net proceeds of $25 million to $40 million from its 34% interest in the wind-down of AlerisLife. These funds are also intended for debt reduction. With no significant debt maturities until 2028, DHC believes its strengthened liquidity position allows it to pursue additional opportunities.

Operational Progress and Segment Highlights

Operationally, the consolidated SHOP NOI saw an annual increase of 8%. This growth was achieved despite higher personnel costs associated with the transition of 116 AlerisLife-managed properties to new operators. This transition process began in mid-September and is scheduled for completion by the end of 2025.

The office and life science property portfolio demonstrated robust performance, with 86,000 square feet of new leasing and rental rate increases averaging 9.1%. As of September 30, the company’s available liquidity stood at $351 million.

Diversified Healthcare Trust aims to complete the handover of the AlerisLife communities as planned by year-end. The successful execution of its updated strategic priorities will be critical for the REIT’s performance in the coming year.