DHC Raises SHOP Outlook After Occupancy and Rate Gains

The Tip Desk · November 3, 2026 · 4 min read

Same-property senior housing cash-basis NOI was $48.0 million, up 50.4% from a year earlier, as occupancy reached 84.4% and average monthly rates rose 5.2%.

Diversified Healthcare Trust (DHC), a healthcare-focused real estate investment trust, reported same-property senior housing cash-basis NOI of $48.0 million for the three months ended September 30, 2026, up 50.4% from a year earlier, as occupancy and rates continued to lift the segment.

SHOP same-property occupancy reached 84.4%, up 200 basis points from the year-ago 82.4% and 130 basis points from 83.1% at June 30. Average monthly rates grew 5.2% year over year. Same-property NOI margins expanded 470 basis points to 15.8%.

The sequential decline in SHOP same-property cash-basis NOI from $52.0 million in the second quarter, down 7.6%, was attributed by the company to $2.2 million of one-time expense benefits recognized in the second quarter, $1.5 million of which was previously disclosed, and to seasonally higher utility costs in the third quarter.

Consolidated same-property cash-basis NOI was $77.9 million, up 25.6% year over year. Medical Office and Life Science same-property cash-basis NOI was $22.9 million, down 2.3% sequentially from $23.4 million and 1.6% below the year-ago $23.2 million. All Other same-property cash-basis NOI was $7.0 million.

Medical Office and Life Science same-property occupancy declined 120 basis points sequentially to 94.5%, unchanged from the year-ago 94.5%, primarily due to a previously disclosed tenant vacating a property. The company said it is evaluating strategic options for that property. In the quarter it leased approximately 130,000 square feet in the Medical Office and Life Science portfolio at rents 25.2% higher than prior levels, with a weighted average lease term of 9.7 years.

Adjusted EBITDAre was $73.4 million, up 28.4% year over year. Normalized FFO was $30.7 million, or $0.13 a share, compared with $0.02 a share a year earlier. Consolidated NOI was $80.8 million, up 27.5% year over year. Total revenues were $367.7 million. Net loss was $50.2 million, or $0.21 a share, versus a $164.0 million loss, or $0.68 a share, a year earlier.

Beginning in the third quarter, Adjusted EBITDAre, Normalized FFO and CAD include incentive management fees as recognized under GAAP, after recent SEC input; prior periods were recast. Third-quarter results included $5.4 million, or $0.02 a share, of incentive management fees.

On October 1, 2026, DHC transitioned seven skilled nursing facilities from management agreements to a 15-year triple net lease with operating subsidiaries of The Ensign Group, Inc. Initial annual rent is $8.0 million, versus $5.1 million of NOI on those communities in the twelve months ended September 30, 2026, when capital expenditures were $1.6 million. The company said the net lease structure is expected to significantly reduce future capital expenditure requirements.

As of November 2, 2026, DHC was under agreement to sell a vacant medical office property for $10.5 million, excluding closing costs. That property generated negative NOI of $369 thousand in the nine months ended September 30, 2026.

Full-year 2026 guidance was updated. Same-property SHOP NOI guidance was raised to $190.0 million–$200.0 million from $185.0 million–$195.0 million. Medical Office and Life Science same-property NOI guidance remained $94.0 million–$98.0 million, and All Other remained $28.0 million–$30.0 million. SHOP recurring capital expenditure guidance was lowered to $70.0 million–$80.0 million from $80.0 million–$90.0 million; Medical Office and Life Science recurring capex guidance remained $20.0 million–$25.0 million.

Adjusted EBITDAre guidance was set at $275.7 million–$290.7 million and Normalized FFO at $110.7 million–$125.7 million, or $0.46–$0.52 a share, versus prior ranges of $300.0 million–$315.0 million and $135.0 million–$150.0 million, or $0.56–$0.62 a share. The update added an estimated $29.3 million incentive management fee and a $24.3 million reduction.

Net debt to annualized Adjusted EBITDAre was 8.2x, down from 10.7x a year earlier. Adjusted EBITDAre to interest expense was 2.0x. Total liquidity was $260.7 million, including $150.0 million available on an undrawn secured revolving credit facility and $110.7 million of cash and cash equivalents. Gross book value of unencumbered properties was $4.0 billion, or 64.5% of the portfolio.

As of September 30, 2026, the approximately $6.3 billion portfolio included 285 properties in 33 states and Washington, D.C., with 23,773 senior living units, approximately 5.6 million square feet of medical office and life science properties and about 250 tenants. On October 8, 2026, DHC declared a quarterly distribution of $0.01 a share on common shares, payable on or about November 12, 2026.