Diversified Healthcare Trust Reports 4.1% Revenue Growth and Improved Net Loss in Q1 2025

Diversified Healthcare Trust reported its financial results for the first quarter of 2025, revealing total revenues of $386.9 million, a 4.1% increase from $370.8 million in the same period last year. The growth was primarily driven by a rise in residents' fees and services, which increased to $328.3 million from $308.1 million. However, the company experienced a net loss of $9.0 million, significantly improved from a loss of $86.3 million in the prior year, reflecting a 89.6% reduction in losses.

The company's financial position showed notable changes compared to the previous fiscal period. Total assets decreased to $4.996 billion from $5.137 billion, largely due to a reduction in real estate properties and cash equivalents. The company reported a decrease in total liabilities to $3.048 billion from $3.178 billion, primarily attributed to the redemption of senior secured notes. The equity of Diversified Healthcare Trust also declined to $1.948 billion from $1.959 billion, reflecting the net loss and distributions to shareholders.

In terms of operational developments, Diversified Healthcare Trust owned 343 properties across 34 states and Washington, D.C., as of March 31, 2025. The company executed a total of 145 new and renewal leases in its Medical Office and Life Science Portfolio segment during the quarter, with a weighted average rental rate increase of 18.4%. The occupancy rate for the SHOP segment improved to 80.2%, up from 78.9% a year earlier, indicating a positive trend in customer engagement and utilization of services.

The company also made strategic moves, including the sale of 24 properties for a total of $320.8 million, which were used to partially redeem outstanding senior secured notes. Additionally, Diversified Healthcare Trust executed a $140 million floating rate mortgage loan secured by 14 senior living communities, which is expected to enhance liquidity and support future growth initiatives. The company anticipates continued improvements in its SHOP segment, driven by favorable supply and demand dynamics in the senior living industry.

Looking ahead, Diversified Healthcare Trust remains cautious about the economic environment, particularly regarding inflation, interest rates, and labor market conditions. The company expects to navigate these challenges while focusing on optimizing its portfolio and enhancing operational efficiencies. The management expressed confidence in the ability to maintain sufficient liquidity and meet its financial obligations, while also planning for potential property dispositions to further strengthen its balance sheet.