Diversified Healthcare Trust ‘substantially Done’ With Shop Sales, Plans To Reinvest In Portfolio

Diversified Healthcare Trust (NASDAQ: DHC) is “substantially done” with its community sales after offloading more properties in the fourth quarter of 2025. Now, the company is redeploying those funds into its communities.

The company in 2025 offloaded 69 properties, including 19 communities in its senior housing operating portfolio (SHOP), for approximately $605 million. Subsequent to the end of the fourth quarter of 2025, the real estate investment trust (REIT) sold 16 SHOP and 21 medical office and Life Science properties for proceeds of about $251.2 million, excluding closing costs. The company also is as of Feb. 20 under agreement to sell 13 more properties for aggregate proceeds of $23 million.

Diversified Healthcare Trust’s SHOP segment now numbers 212 properties, down from 232 at the end of 2024. The portfolio’s total average occupancy as of the fourth quarter of 2025 was 81.6%.

The REIT used its 2025 disposition proceeds to fully redeem the remaining balance of its previously outstanding zero-coupon senior secured notes. Now, the REIT has no debt maturities until 2028 and approximately $255.4 million of total liquidity, including $105.4 million in cash.

“Moving forward, dispositions will be on a more opportunistic basis,” said CEO Chris Bilotto on the company’s fourth-quarter 2025 earnings call Tuesday.

Net operating income for the company’s SHOP segment registered at more than $139 million in the quarter, driven by SHOP occupancy 90 basis points to an average of 82.4% and higher revenue thanks to an annual rate increase of 5.8% among its SHOP partners.

Diversified Healthcare Trust reported a loss of $$21.2 million in the fourth quarter of 2025.

Diversified Healthcare Trust’s stock is priced at $6.10, down 0.8% from the previous close.

Overall, the REIT had a “noisy quarter” in 4Q25 stemming from its ongoing transfer of 116 communities from now-defunct operator AlerisLife to Discovery Senior Living, Sinceri Senior Living and Tutera Senior Living.

The company is seeking to increase its number of move-ins through a number of initiatives in 2026, including rolling out a new customer relationship management (CRM) system. The company also is seeking “tighter and more coordinated procurement programs, the introduction of differentiated care levels to capture unmet demand and dynamic pricing strategies that directly capitalized on market specific conditions,” Bilotto said.

That is in addition to a “healthy pipeline” of projects to boost NOI ahead.

“This will come through the repositioning of underutilized areas within our communities, including former and now closed skilled nursing wings, where we can deploy a modest amount of capital to renovate and reopen these areas with the appropriate acuity needs,” Bilotto said. “This initiative has the potential to add approximately 500 SHOP units to the portfolio that could deliver on unlevered mid teens in ROI.”

Bilotto added during the call he believes there is a longer runway ahead to grow SHOP occupancy, revenue and margins. He also believes that the company’s ongoing AlerisLife transitions will improve its financial profile as it completes more of them.

“One of the benefits of transitioning these communities is we’re getting the much more targeted, local, regional penetration of staffing, … but there’s still some work that the operators are going to do with respect to bringing in kind of the right team at the local level,” he said. “I think that’s a long winded way of saying there is definitely opportunity on the front end.”

However, growth will likely not come from additional acquisitions at this time. While they are not ruled out, Bilotto said it is not Diversified Healthcare Trust’s focus.

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