DHC reaffirms 2026 normalized FFO of $0.52 to $0.58 per share as it targets $175M to $185M of SHOP NOI

Earnings Call Insights: Diversified Healthcare Trust (DHC) Q1 2026

MANAGEMENT VIEW

* "DHC delivered a strong first quarter, demonstrating the powerful combination of our active asset management and the deep expertise of our expanded operating partners." (President, CEO & Managing Trustee Christopher Bilotto)
* "We reported normalized FFO of $33.1 million or $0.14 per share and adjusted EBITDAre of $74 million." (President, CEO & Managing Trustee Bilotto)
* "Consolidated NOI increased 4.7% year-over-year to $75.9 million." (President, CEO & Managing Trustee Bilotto)
* "Our same-property SHOP portfolio delivered a robust 13.5% increase in NOI year-over-year, reaching $44.3 million." (President, CEO & Managing Trustee Bilotto)
* "Our same-property NOI margin expanded by 160 basis points to 14.9%, with occupancy holding at 82.4%." (President, CEO & Managing Trustee Bilotto)
* "We have identified a pipeline of opportunities across 16 communities, including 6 communities as part of the first phase." (President, CEO & Managing Trustee Bilotto)
* "These 6 initial projects are expected to cost approximately $20 million and will add roughly 150 units to the portfolio... these projects are expected to be immediately accretive to earnings upon completion with expected returns starting in the mid-teens." (President, CEO & Managing Trustee Bilotto)
* "During the first quarter, we delivered solid results as same-property occupancy increased 60 basis points year-over-year to 95.3%, generating $25.4 million of NOI." (President, CEO & Managing Trustee Bilotto)
* "In March, we sold 13 unencumbered non-core SHOP communities for aggregate proceeds of $23 million." (President, CEO & Managing Trustee Bilotto)
* "At quarter end, we had total liquidity of $272 million, including $122 million of cash and cash equivalents and the full $150 million available under our secured revolving credit facility." (Manager of Investor Relations Matt Murphy)
* "Net debt to annualized adjusted EBITDAre was 7.8x at quarter end, down from 8.8x a year ago." (Manager of Investor Relations Murphy)
* "In April, Moody's upgraded DHC's corporate family rating to B3 from Caa1 and revised the outlook to positive." (Manager of Investor Relations Murphy)

OUTLOOK

* "For the full year 2026, we are reaffirming the ranges outlined in our fourth quarter earnings as follows: $175 million to $185 million of SHOP NOI, $94 million to $98 million of Medical Office and Life Science segment NOI, $28 million to $30 million of NOI from our triple net lease senior living communities and wellness centers, adjusted EBITDAre of $290 million to $305 million and normalized FFO of $0.52 to $0.58 per share." (Manager of Investor Relations Murphy)
* "We are pleased with our first quarter results, particularly the continued growth in SHOP NOI, which is tracking ahead of our initial expectations." (Manager of Investor Relations Murphy)
* "As a result of our recently completed disposition program and disciplined capital allocation, we are reaffirming our 2026 recurring CapEx guidance of $100 million to $115 million, representing approximately 18% reduction at the midpoint." (Vice President Anthony Paula)
* Change from the previous quarter’s call: "For the full year 2026, we are expecting NOI as follows. $175 million to $185 million in our SHOP segment, $94 million to $98 million in our Medical Office and Life Science segment, and $28 million to $30 million from our triple net leased senior living communities and wellness centers... adjusted EBITDAre to be between $290 million and $305 million and normalized FFO of $0.52 to $0.58 per share." (CFO & Treasurer Matthew Brown, Q4 2025 call)

FINANCIAL RESULTS

* "Our consolidated same-property cash basis NOI was $75.9 million, representing an 8.6% increase year-over-year and a 7.8% increase sequentially." (Vice President Paula)
* "During the quarter, we secured new dietary and food and beverage contracts... locking in significant cost savings for the year." (President, CEO & Managing Trustee Bilotto)
* "Labor costs continues to moderate with reduced contract labor and the rightsizing of regional and community labor costs." (President, CEO & Managing Trustee Bilotto)
* "When adjusting for insurance proceeds received in Q1 2025, our SHOP same-property NOI would have increased 22% year-over-year." (Vice President Paula)
* "Our first quarter G&A expense includes $6.6 million of incentive management fees. Excluding the impact of the incentive fee, G&A expense would have been $7.4 million for the quarter." (Vice President Paula)

Q&A

* Michael Carroll, RBC Capital Markets, Research Division: "Is that true maintenance CapEx?..."; President, CEO & Managing Trustee Bilotto: "The $90 million includes maintenance capital and some refresh capital... we'd like to see some modest pullback in maintenance capital as the years progress."
* Michael Carroll, RBC Capital Markets, Research Division: "...the recurring CapEx number would run around 3,500 a unit..."; Vice President Paula: "So the 3,500, we expect to go down in future periods. We think that's a good run rate for 2026... we expect $5 million to $10 million of refresh capital... embedded within that recurring CapEx number."
* Michael Carroll, RBC Capital Markets, Research Division: "...potential acquisition opportunities...?"; President, CEO & Managing Trustee Bilotto: "Mostly the renovations... before we consider acquisitions."
* Michael Carroll, RBC Capital Markets, Research Division: "...G&A number..."; Vice President Paula: "From a G&A perspective, the most volatility we're going to see is from the business management fee... Depending on fluctuations in share price, it will adjust that number."
* John Massocca, B. Riley Securities, Inc., Research Division: "...anything else kind of onetime..."; CFO & Treasurer Matthew Brown: "No, that's the most material item that $2.7 million of business interruption insurance proceeds we received in Q1 '25."
* John Massocca, B. Riley Securities, Inc., Research Division: "...Aleris... transition..."; CFO & Treasurer Brown: "...we capture that in transaction-related costs... below the line and outside of NOI."; President, CEO & Managing Trustee Bilotto: "...the transitions are going very well... we expect to continue to get incremental benefit each quarter... at least through 2026."
* John Massocca, B. Riley Securities, Inc., Research Division: "...occupancy... flat quarter-over-quarter..."; CFO & Treasurer Brown: "Yes, it's both... some seasonality..." and "...given the fact that we can hold occupancy while we're going through a major transition... is a real win."
* John Massocca, B. Riley Securities, Inc., Research Division: "How is 2Q trending..."; CFO & Treasurer Brown: "Numbers are still coming in. So there's nothing kind of specific to speak to."
* John Massocca, B. Riley Securities, Inc., Research Division: "...difference in the SHOP NOI growth..."; Vice President Paula: "...we're continuing to guide to that 300 basis point increase in occupancy year-over-year... we are expecting 5-plus percent rate growth."
* John Massocca, B. Riley Securities, Inc., Research Division: "...flow-through from previous year CapEx..."; CFO & Treasurer Brown: "...a typical kind of stabilization period following a renovation is kind of 18 to 20 months."

SENTIMENT ANALYSIS

* Analysts: slightly negative to neutral; questions repeatedly pressed on maintenance vs. deferred CapEx, cadence of SHOP NOI vs. guidance, and one-time comparability items (e.g., "Is there anything else kind of onetime to be aware of...").
* Management: slightly positive; prepared remarks used confident language including "We are confident" and "we are well positioned," while Q&A responses leaned cautious on near-term trends (e.g., "Numbers are still coming in").
* Versus the previous quarter: the current call emphasized execution and cost controls already landing (e.g., food and labor), while the prior call mixed confidence with valuation language (e.g., "we still see additional share price upside").

QUARTER-OVER-QUARTER COMPARISON

* Guidance: reaffirmed; Q1 repeated the same 2026 ranges previously issued in Q4 for SHOP NOI, Medical Office and Life Science NOI, triple net lease NOI, adjusted EBITDAre, and normalized FFO.
* Strategic focus: Q1 moved from transition completion to ROI execution, with Bilotto detailing a near-term conversion plan of "16 communities" and an initial "approximately $20 million" phase; Q4 framed a larger long-run wing opportunity of "close to 500 units" with mid-teens ROI.
* Analyst focus: Q1 concentrated on recurring CapEx run-rate, incentive fee volatility in G&A, and how quickly SHOP occupancy and NOI accelerate; Q4 focused more on wing reopenings/units and NOI cadence after operator transitions.
* Tone: Q1 Q&A included more near-term uncertainty language ("nothing kind of specific to speak to"), while Q4 included more forward-looking runway framing ("there is definitely opportunity on the front end").

RISKS AND CONCERNS

* "Just over 9% of annualized rental income in our Medical Office and Life Science portfolio is scheduled to expire through 2026, of which 304,000 square feet or approximately 4.9% of annualized rental income is expected to vacate." (President, CEO & Managing Trustee Bilotto)
* "As a result of this, our first quarter G&A expense includes $6.6 million of incentive management fees." (Vice President Paula)
* "Numbers are still coming in. So there's nothing kind of specific to speak to." (CFO & Treasurer Brown)

FINAL TAKEAWAY

Management framed Q1 2026 as evidence that the 2025 SHOP operator changes are translating into higher SHOP NOI, margin improvement, and moderating labor and contract-labor costs, while keeping full-year 2026 guidance unchanged, including normalized FFO of $0.52 to $0.58 per share and SHOP NOI of $175 million to $185 million. The call also elevated reinvestment within the portfolio—especially skilled nursing wing conversions—as the primary capital deployment priority, alongside continued balance sheet progress highlighted by liquidity of $272 million, net debt to annualized adjusted EBITDAre of 7.8x, and a Moody’s upgrade to B3 with a positive outlook.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/dhc/earnings/transcripts]

MORE ON DIVERSIFIED HEALTHCARE TRUST

* Diversified Healthcare Trust (DHC) Q1 2026 Earnings Call Transcript [https://seekingalpha.com/article/4898702-diversified-healthcare-trust-dhc-q1-2026-earnings-call-transcript]
* Diversified Healthcare Trust (DHC) Q4 2025 Earnings Call Transcript [https://seekingalpha.com/article/4873991-diversified-healthcare-trust-dhc-q4-2025-earnings-call-transcript]
* Diversified Healthcare Trust Q1 2026 Earnings Preview [https://seekingalpha.com/news/4584155-diversified-healthcare-trust-q1-2026-earnings-preview]
* DHC outlines $290M–$305M adjusted EBITDAre target for 2026 amid SHOP segment growth and deleveraging progress [https://seekingalpha.com/news/4556041-dhc-outlines-290m-305m-adjusted-ebitdare-target-for-2026-amid-shop-segment-growth-and]
* Seeking Alpha’s Quant Rating on Diversified Healthcare Trust [https://seekingalpha.com/symbol/DHC/ratings/quant-ratings]