Diversified Healthcare Trust to Transfer 116 Senior Living Contracts to 7 Operators

Diversified Healthcare Trust, a real estate investment trust, will shift 116 senior living management contracts to 7 operators. The trust owns medical office and life science properties, senior living communities, and other healthcare-related properties in the US. The shift aims to improve operational efficiency and enhance the quality of services provided to residents.

Title: Diversified Healthcare Trust Shifts 116 Senior Living Management Contracts

Diversified Healthcare Trust (DHC), a real estate investment trust (REIT), has announced a strategic transaction to shift the management of 116 senior living communities to seven new operators. The move is part of DHC's broader effort to enhance operational efficiency and improve the quality of services provided to residents.

The transaction, which is expected to be completed by the end of the year, involves the transition of management agreements for these communities from Five Star Senior Living, an operating division of AlerisLife Inc. AlerisLife has agreed to sell all its assets, including its 17 owned communities, and expects to complete a full wind-down of its business and operations in the first half of 2026. DHC, which owns a 34% stake in AlerisLife, is expected to receive net proceeds of between $25 million to $40 million from this sale [1].

The new operators will purchase the management agreements for the 116 DHC communities, with the transaction expected to close in tranches beginning in the third quarter of 2025. The closing of these transactions is subject to customary closing conditions and lender and regulatory approvals where required.

Chris Bilotto, President and Chief Executive Officer of DHC, commented on the significance of this transaction. "Executing on these transactions marks an important milestone in optimizing our SHOP segment performance. By expanding our base of high-quality operators, improving concentration in key markets, and partnering with groups that are making meaningful investments for our management agreements, we expect to enhance performance in our SHOP segment and increase returns for our shareholders. These transactions are also expected to allow us to build on the momentum from the improved performance of the Five Star managed communities over the past few years, further strengthen our asset base, and drive enhanced NOI growth across our SHOP communities" [1].

The strategic shift is part of DHC's broader strategy to diversify its operator base and improve operational efficiencies. The new operators are expected to unlock operational efficiencies, drive cost savings, and position DHC’s SHOP segment for accelerated revenue and NOI growth opportunities. Additionally, the investment being made by the operators to purchase the management agreements, as well as resulting changes to the terms of the management agreements to be more performance-based, are expected to further align the interests of DHC and the operators, helping achieve improved operating results and strengthening opportunities for the long-term success of DHC’s SHOP communities [1].

The sale of the DHC management agreements is expected to close beginning in the third quarter of 2025, subject to customary closing conditions and lender and regulatory approvals where required. DHC plans to use the net proceeds to reduce leverage and for other general business purposes, including reinvestment in its SHOP segment [1].

DHC’s portfolio includes approximately 341 properties in 34 states and Washington, D.C., with more than 26,000 senior living units, approximately 7.4 million square feet of medical office and life science properties, and occupied by approximately 450 tenants. The company is managed by The RMR Group, a leading U.S. alternative asset management company with approximately $40 billion in assets under management as of June 30, 2025 [1].

References:
[1] https://www.stocktitan.net/news/DHC/dhc-announces-the-sale-by-aleris-life-of-116-management-agreements-t85fg00grk75.html