Contradictions in Focus: Diversified Healthcare Trust's Q2 2025 Earnings Call Reveals Divergent Strategies on Occupancy and CapEx

Occupancy growth strategy and expectations, CapEx guidance and allocation, timing and strategy for asset dispositions, CapEx guidance and strategic investments are the key contradictions discussed in Diversified Healthcare Trust's latest 2025Q2 earnings call.



Strong Financial Performance:
- Diversified Healthcare Trust (DHC) reported revenue of $382.7 million for Q2 2025, a 3% increase over the previous year.
- Adjusted EBITDAre came in at $73.6 million, up 7% year-over-year, and FFO increased by 172% to $18.6 million or $0.08 per share.
- The growth was driven by the recovery in the SHOP segment and successful capital expenditure investments.

SHOP Segment Recovery:
- DHC's SHOP segment experienced an 18.5% year-over-year increase in same-property SHOP NOI, reaching $37.4 million.
- The average monthly rate increased by 5.4%, and occupancy rose by 160 basis points to 8.6%.
- The improvements were attributed to strong sector fundamentals and significant capital expenditures made over the past several years.

Asset Disposition and Strategic Initiatives:
- DHC sold 2 unencumbered properties in Q2, and another 3 in July for a total of $24.2 million.
- The company obtained a new $150 million credit facility and redeemed its outstanding senior notes due in June 2025.
- These initiatives are part of a broader strategy to deleverage the balance sheet, reduce CapEx spending, and enhance the portfolio's overall quality and growth potential.