Diversified Healthcare Trust Encounters Operational ‘noise’ In Ongoing Portfolio Transitions

Leaders with Diversified Healthcare Trust (Nasdaq: DHC) reported lower-than-expected average occupancy and revenue in the second quarter of this year as the company continues to transition communities once belonging to former operator AlerisLife.

Average occupancy for the company’s same-store senior housing operating portfolio (SHOP) registered at 83.1% for the second quarter of 2026, representing a sequential occupancy gain of 70 basis points over 1Q26 and an annual gain of 160 basis points versus 2Q25.

The company’s total revenue of $317.9 million in the second quarter of 2026 is lower than its total revenue of $327.5 in the same period during 2025.

At the same time, same-property NOI margins increased to 17.3%, representing a gain of 390 basis points versus 2Q25.

Leaders with Diversified Healthcare reaffirmed the company’s SHOP NOI guidance for the year of 2026 but revised the company’s annual occupancy growth guidance to 200 basis points, representing a reduction of 100 basis points from its previous guidance. The company is also forecasting total revenue growth of about 6.6% this year, reflecting a reduction of about 140 basis points from its previous guidance.

But, the state of occupancy and revenue is a “function of timing, and we continue to see steady month-over-month improvement,” according to President and CEO Chris Bilotto, who added that the latest figures amount to “transition noise” related to switching operators for 116 communities formerly operated by AlerisLife.

“One thing that’s important to note is when these communities were transitioned, it wasn’t uncommon that many of the operators took on the existing operations infrastructure and team members, and over the course of the last six months, have continued to rework that,” he said during the REIT’s second-quarter 2026 call Tuesday. “This isn’t a function, in our view, of hitting certain occupancy levels. It’s just a delay in the timing of that ramp-up. Overall, we remain bullish on our outlook for driving occupancy across the portfolio, and again, have the tools and the resources in place to do that.”

Bilotto also noted that the company’s revenue per occupied room (RevPOR) is trending up in 2026.

“Outside of the work that’s being done and opportunities identified through driving occupancy, we’re also seeing a good pace and uptick in other ancillary revenues in the level of care, which is driving outsized results with respect to how that informs RevPOR,” he added.

Diversified Healthcare Trust owns 23,797 senior living units and works with 14 different SHOP operators. The company is managed by The RMR Group (Nasdaq: RMR).

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