Executive Summary

Q4 results showed steady top-line growth and improving senior housing fundamentals: revenue was $379.6M (+~5% YoY per management), normalized FFO was $5.3M ($0.02/share), and net loss was $87.4M (-$0.36/share) .
SHOP reached 80.0% occupancy (first time since Q1’20) with 6.7% rate growth and 250bps margin expansion YoY; consolidated SHOP NOI rose 56% YoY despite sequential margin pressure from weather-related costs .
Balance sheet actions de-risk near-term maturities: $340M of executed/near-final term sheets (expected ~6.5% rate, subject to Treasuries), $159M MUSE sale closed, $142M of additional collateral properties under agreement, and management is “very comfortable” repaying the $380M notes due June 2025 .
2025 outlook calls for CapEx of $150–$170M (down ~16% vs 2024) and segment NOI ranges of $120–$135M for SHOP and $104–$112M for MOB/Life Science; dividend maintained at $0.01/share declared Jan 16, 2025 .
Potential stock catalysts: refinancing clarity into June 2025, asset sale execution (Brookdale portfolio and others), SHOP occupancy/price mix momentum, and visible CapEx step-down supporting FCF traction .

What Went Well and What Went Wrong

What Went Well
- SHOP operating momentum: occupancy reached 80.0% with RevPOR up 6.7% YoY; consolidated SHOP NOI rose 56% YoY and margins expanded 250bps YoY. “We…remain bullish on the outlook within the sector and our SHOP portfolio going into 2025.” – CEO .
- Leasing/pricing power in MOB/Life Science: 111,812 sf leased in Q4 at rents 6.9% above prior levels; same-store occupancy held at 90.2% .
- De-risking maturities: $340M of term sheets secured (~6.5% expected rate) to address $380M June 2025 notes; $159M MUSE sale closed; 19 secured-note collateral properties under agreement for $142M; $17M AlerisLife dividend received .
What Went Wrong
- Sequential margin pressure in SHOP: Q4 consolidated SHOP NOI margin fell to 7.9% from 8.8% in Q3 and 9.4% in Q2; management cited ~$4.4M hurricane and remediation costs and certain closure impacts .
- Continued GAAP losses: Q4 net loss was $87.4M; impairments were $29.0M; interest expense remained elevated .
- MOB/Life Science occupancy still below pre-2023 levels: consolidated occupancy 82.2% in Q4 vs 86.9% in Q4’23; same-property occupancy 90.2% vs 92.5% YoY, reflecting a weaker leasing backdrop and asset mix .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Total Revenues ($USD Millions)	$361.535	$371.392	$373.640	$379.619
Net Loss per Share ($)	$(0.43)	$(0.41)	$(0.41)	$(0.36)
Normalized FFO per Share ($)	$0.03	$0.03	$0.02	$0.02
Adjusted EBITDAre ($USD Millions)	$59.189	$68.895	$66.817	$67.049

Segment breakdown – Q4 2024

Segment	Revenues ($USD Millions)	% of Total Revenue	NOI ($USD Millions)	% of Total NOI
Medical office	$34.756	9.2%	$17.349	26.9%
Life science	$16.959	4.4%	$9.982	15.5%
SHOP	$315.736	83.2%	$24.933	38.7%
Triple net senior living	$8.654	2.3%	$8.654	13.4%
Wellness centers	$3.514	0.9%	$3.525	5.5%
Total	$379.619	100.0%	$64.443	100.0%

KPIs – SHOP (consolidated)

KPI	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Occupancy (%)	79.3%	79.0%	79.4%	80.0%
Average Monthly Rate ($)	4,918	5,161	5,199	5,249
Residents Fees & Services ($000s)	294,336	308,522	312,005	315,736
Property Operating Expenses ($000s)	(278,358)	(279,538)	(284,572)	(290,803)
NOI ($000s)	15,978	28,984	27,433	24,933
NOI Margin (%)	5.4%	9.4%	8.8%	7.9%

KPIs – Medical Office & Life Science (consolidated)

KPI	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Occupancy (%)	86.9%	81.5%	80.8%	82.2%
Rental Income ($000s)	55,082	54,555	52,901	51,715
NOI ($000s)	30,355	30,273	27,827	27,331
NOI Margin (%)	55.1%	55.5%	52.6%	52.8%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
SHOP NOI	FY 2025	N/A (Mgmt said FY24 SHOP NOI $106M was at high end of revised guidance)	$120–$135M	New
Medical Office & Life Science NOI	FY 2025	N/A	$104–$112M	New
Total CapEx	FY 2025	N/A	$150–$170M (midpoint ~16% below 2024)	New
SHOP CapEx	FY 2025	N/A	$105–$120M	New
Refinancing plan	H1 2025	N/A	~$340M loan proceeds via term sheets; expected ~6.5% rate (subject to Treasuries)	New
Debt repayment	June 2025	N/A	“Very comfortable” repaying $380M senior notes due June 2025	New
Common dividend	Q1 2025	$0.01/share (prior)	$0.01/share declared Jan 16, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
SHOP fundamentals	Q2: same-property NOI +27%, occupancy +120bps, rates +6.1% . Q3: SHOP NOI +32.6% YoY; occupancy +100bps; margin +170bps .	80% occupancy; rates +6.7% YoY; NOI +56% YoY; margin +250bps; mgmt bullish .	Improving trajectory with pricing power; occupancy milestone
Dispositions	Q2: modest sale activity; set up CMBS; under agreement for small assets . Q3: expanded program: 28 properties for $348.1M including 18 triple net senior living ($135M) .	Closed MUSE at $159M; 19 collateral properties under agreement for $142M; Brookdale 18-community sale imminent .	Accelerating execution; focus on pruning underperformers
Debt strategy	Q2/Q3: zero-coupon notes 2026 with extension option; partial redemption of 2025 notes ($60M in Nov) .	$340M term sheets (~6.5% est. rate) secured by 27 SHOP assets; comfortable repaying $380M Jun-2025 notes .	Visibility improving; accretive refi vs 9.75% coupons
CapEx	Q2/Q3: elevated but targeted refresh projects .	2025 CapEx $150–$170M (down ~16% vs 2024); SHOP $105–$120M; many refresh items “behind us” .	Moderating spend supports cash flow
Weather/insurance	Not highlighted in Q2/Q3.	~$4.4M hurricane/remediation costs impacted Q4; excluding, SHOP margin +140bps .	One-off headwind (not embedded in guidance)
Leasing spreads	Q2/Q3: double-digit GAAP rent increases on leasing (12.1% in Q2; 4.8% in Q3) .	Q4: 6.9% rent roll-ups on 112k sf; pipeline >400k sf; double-digit roll-ups targeted .	Healthy pricing; volume/pipeline supportive

Management Commentary

Strategic messages
- “DHC ended the fourth quarter by reaching 80% SHOP occupancy…DHC achieved a 56% improvement in SHOP NOI, a 7.3% increase in SHOP revenues and a 6.7% improvement in average monthly rate, resulting in margin expansion of 250 basis points…we remain bullish…into 2025.” – CEO .
- “We are very comfortable with our ability to repay the $380 million of bonds due in June…$340 million [term sheets]…expected…~6.5%.” – CFO .
- “In the first quarter of 2025, we…sold the MUSE life science campus for $159 million…received a $17 million cash dividend from AlerisLife.” – CEO .
Important quotes
- “Removing the SHOP assets that we’re in the process of selling would have improved our fourth quarter NOI by $2.3 million, margin by 180 bps and occupancy by 60 bps.” – CEO .
- “Fourth quarter [G&A] included a $6.9 million reversal of business management incentive fee…no incentive fee incurred for 2024.” – VP .
- “We expect NOI to range from $120–$135 million in SHOP and $104–$112 million in MOB/Life Science…CapEx $150–$170 million.” – CFO .

Q&A Highlights

Consensus/SHOP beat drivers: Occupancy reached 80%; weather costs (~$4.4M) were in modeled guidance and came in as expected; FY24 SHOP NOI landed at high end of revised guidance .
Operator confidence for 2025: Active transitions, pruning underperforming assets, and intensive asset management underpin SHOP recovery .
Zero-coupon 2026 plan: ~$301M asset sale proceeds reduce balance to ~$640M; additional sales/financings targeted; extension option exists but not the current plan .
Secured financing rate: Estimated ~6.5% weighted average at today’s rates; base rate may move before closing .
Buyer base for dispositions: Mix of operators, PE-backed groups, and regional buyers; financing more challenging for lower-occupancy assets but buyers bring capital partners .

Estimates Context

S&P Global consensus: Not available at time of query due to system limit; therefore, we cannot quantify the beat/miss versus Street expectations. S&P Global consensus data was unavailable when requested.
Management stated Q4 normalized FFO of $0.02 exceeded consensus estimates, implying upward pressure on near-term estimates if operating momentum and refinancing cadence persist .

Key Takeaways for Investors

SHOP is inflecting: Occupancy hit 80%, price/mix is firm, and non-core sales would have lifted Q4 NOI/margins; continued pruning should enhance run-rate returns .
Balance sheet visibility improved: $340M term sheets (potentially ~6.5% rate) plus asset sale proceeds support repayment of $380M June 2025 notes without dilutive equity; further actions target the 2026 zero-coupon maturity .
CapEx downshifts in 2025: $150–$170M planned with SHOP focus; lower spend vs 2024 should benefit CAD trajectory as refresh cycle eases .
MOB/Life Science rent growth remains solid on re-leasing; occupancy stabilizing with 6.9% rent roll-ups and a >400k sf pipeline pointing to double-digit rent uplifts .
Watch transitory costs: Weather-related expenses pressured Q4 margins; management does not bake such events into guidance and will update as needed .
Dividend held at $0.01; sustainability hinges on execution of refinancing and dispositions and on SHOP margin progression through 2025 .

Appendix: Additional Operating and Liquidity Notes

Same-property cash NOI (consolidated) rose 18.7% YoY in Q4 but dipped 1.4% sequentially; the sequential decline was mainly hurricane/remediation costs in SHOP and was partially offset by $3.4M annual percentage rent recognized in triple-net senior living .
Liquidity: $149.9M cash and restricted cash as of Q4; $145M unrestricted cash at quarter-end—difference reflects restricted balances .
Debt: $380M of 9.75% senior notes due June 2025 outstanding post-$60M November redemption; $940.5M face value zero-coupon senior secured notes due Jan 2026 (paydown in progress via collateral sales) .

All data and quotations are sourced from DHC’s Q4 2024 Form 8-K exhibits and earnings call: , the Q3 and Q2 2024 Form 8-K exhibits: , the Q4 2024 earnings call transcript: , and the Jan 16, 2025 dividend press release: .

DIVERSIFIED HEALTHCARE TRUST (DHC)·Q4 2024 Earnings Summary