“The jump came after a poor performance in the prior quarter when the Dow Jones Equity All REIT Index recorded a negative 8.4% return,” Hudgins said.

Based on data compiled Jan. 2, Diversified Healthcare Trust led the pack among all REITs that had market caps greater than $200 million, at 93.9%. The Newton, MA-based REIT’s stock rose to $3.74 per share at the end of 2023 after a $0.65 decline to $3.09 share in 2022.

DHC’s portfolio includes senior living communities managed by Aleris Life’s Five Star Senior Living and several other operators.

Office Properties Income Trust, with whom DHC called off a planned merger in September,  also performed well in the fourth quarter, after a rocky start earlier in the year. OPI recorded a return of 89.3% for the fourth quarter, but its share price was down for 2023, recording a total return of negative 35.7%.

Omega Healthcare Investors, LTC Properties and Sabra Health Care REIT landed near the bottom of the list of worst-performing US equity REITs. Hunt Valley, MD-based Omega’s fourth quarter return was negative 5.7% for the quarter and 19.9% for the year. Westlake Village, CA-based LTC yielded a 1.8% total return in the fourth quarter and negative 3.2% for 2023. Sabra, based in Irvine, CA, rang out the year with a 4.5% return in the fourth quarter and 26.2% for the year.

Although that percentage still is 560 basis points below the pre-pandemic November 2019 rate, it represents a 20-basis-point increase from October 2023.

Year-to-date occupancy through Nov. 30 was 78.6%. That percentage is 780 basis points below the same period in 2019. 

Among the 117 communities in the portfolio that are managed by Aleris Life’s Five Star Senior Living, year-to-date occupancy as of Nov. 30 was 79.3%. Year-to-date occupancy as of Nov. 30 for the 106 properties managed by other operators was 77%.

Overall SHOP income from resident fees and services was approximately $1 million through the first 11 months of the year. With property operating expenses of approximately $978,900, SHOP net operating income for the period was $74,176. Factoring in gains from sales of properties, interest on other income and interest expenses, the REIT’s SHOP net income was a loss of $86,285.

“We are actively evaluating all strategies to strengthen DHC’s balance sheet, regain debt covenant compliance, source additional capital to fund our ongoing SHOP recovery and best position the company for long-term growth,” Chief Financial Officer and Treasurer Matt Brown previously said. 

One strategy undertaken by executives from DHC was to hire financial adviser B. Riley Securities to evaluate options to address near-term debt maturities and return the company to growth. Another action, taken Dec. 22, was to repay in full a $450 million secured credit facility and issue a notice of redemption of $250 million of senior unsecured notes maturing in May 2024. At the same time, DHC closed $941 million in zero coupon senior secured notes with a maturity date in January 2026 and a one-year extension option.

As of Sept. 30, DHC’s approximately $7.2 billion portfolio included 376 properties (in the SHOP plus leased senior housing communities, life sciences and medical office buildings) in 36 states and Washington, DC. The total includes more than 27,000 senior living units.

DHC’s portfolio includes 117 properties managed by AlerisLife / Five Star Senior Living and 106 properties managed by other owners.

Year-to-date through Oct. 31, SHOP NOI was $66 million. That’s $107.6 million (62%) less than the same period in 2019. Year-to-date NOI margin through Sept. 30, 2023, was 7.1%, 990 basis points below the same period in 2019. 

The company’s SHOP NOI margin was 7.1% in October, or 210 basis points below September’s figures. Compared with October 2019 data, NOI has declined 750 basis points, DHC reported.

Occupancy in October was 79.9%, for a 50-basis-point, month-over-month increase. SHOP occupancy, however, is still 600 basis points below the October 2019 level, according to the data.

The most recent update from DHC  comes after the August collapse of a planned merger with Office Properties Income Trust, or OPI. In September, DHC announced changes to its board and executive leadership team and enlisted the services of a financial adviser as it sought solutions to its financial needs.

Earlier this month, the REIT announced that it will see a change at the top in 2024 with the retirement of President and CEO Jennifer Francis. She will be succeeded effective Jan.1 by Christopher Bilotto, the current president and CEO of OPI, who was to lead DHC if its merger with OPI had been approved.

Both Francis and Bilotto are executive vice presidents for The RMR Group, which manages both DHC and OPI. All three companies are based in Newton, MA. Francis also is resigning from The RMR Group. She will continue as a managing trustee of DHC.

LCS promotes Kyle Exline to SVP, director of operations management at Life Care Services

Kyle Exline has been promoted to the position of senior vice president, director of operations management, at Life Care Services, an LCS company. 

Exline started his career with LCS in 2008. He will assume responsibility for the strategy and operations of 18 LCS equity-owned life plan communities and will oversee a team of operations and regional marketing and sales professionals.

Exline holds a degree in healthcare administration from Indiana University.

Central Baptist Village names Anna-Liisa LaCroix CEO

Anna-Liisa LaCroix has been named CEO of Central Baptist Village, Norridge, IL.

LaCroix had held the position of administrator for the past seven years and has more than 28 years of senior living experience. She holds an undergraduate degree in psychology, a master’s degree in public health with a healthcare administration focus, and a gerontology certificate.

Diversified Healthcare Trust announces upcoming retirement of CEO, appointment of successor

Jennifer Francis is resigning from her roles as president and CEO of Diversified Healthcare Trust (DHC) effective Dec. 31, and Christopher Bilotto will succeed her in those roles effective Jan. 1, the Newton, MA-based real estate investment trust announced Nov. 17.

Francis will retire from The RMR Group, which manages DHC, effective July 1. She currently is an executive vice president there but is resigning from that role effective Dec. 31 as well.

Francis has been a member of DHC’s senior management since 2018 and a managing trustee of DHC since 2021. She will continue as a managing trustee of DHC.

Bilotto currently is president and CEO of Newton, MA-based Office Properties Income Trust (OPI), which also is managed by The RMR Group, where he also is an executive vice president. Before joining RMR in 2011, Bilotto worked at General Growth Properties in various management roles.

Francis’ impending departure follows a previous announcement by DHC of changes to its board and executive leadership team after calling off a proposed merger with OPI in August. If the merger had occurred, Bilotto was to have led the combined companies.

RMR Group President and CEO Adam Portnoy congratulated Francis on her upcoming retirement and thanked her for 17 years of service to the company.

“Jennifer has made exceptional contributions to our company and provided tremendous mentorship and inspiration for the next generation of leaders at RMR,” Portnoy said in a statement. “As a result, I am confident that we have identified the right leaders to assume Jennifer’s roles at RMR and its managed companies, and that there will be a seamless transition of responsibilities during the coming months.”

Residence at Bala Cynwyd appoints Ashley Russo new executive director

Ashley Russo has been named the executive director at The Residence at Bala Cynwyd, an LCB Senior Living community in Bala Cynwyd, PA. 

Russo has 15 years of experience in the senior living industry, having served in a variety of leadership roles in several communities. Before joining The Residence at Bala Cynwyd, she was an executive director for HarborChase.

Russo holds master’s degrees in gerontology and health administration from the University of Southern California as well as an undergraduate degree in communications from Rider University. She is a certified assisted living administrator and a certified dementia practitioner, and she is pursuing a license as a personal care home administrator.

Springs Living promotes Tyler McClellan to executive director at Springs at Grand Park

Tyler McClellan has been promoted to executive director at The Springs at Grand Park, Billings, MT. 

Most recently, McClellan was the food and beverage director at The Springs at Grand Park, having been promoted from executive chef. He has held a variety of other roles, growing his senior living experience since starting with The Springs Living in 2009.

McClellan was recognized by the company in 2023, receiving the Spark Award for his leadership after increasing efficiency of processes, implementing cost-saving measures and finding solutions to provide consistent quality service.

Buckner names Sara Solo healthcare administrator for Parkway Place

Sara Solo has been named healthcare administrator for Parkway Place, a Buckner Retirement Services community in Houston. 

Solo’s most recent position was as facility administrator for Paradigm Healthcare, a nursing care provider with multiple Houston communities. She holds an MBA from the University of North Texas and a Bachelor of Science degree in psychology, sociology and gerontology from Appalachian State University.

Solo is a licensed nursing home administrator in Texas. 

Mass-ALA adds Michael Gordon, Bodo Liesenfeld to board

Michael Gordon, chief investment officer of Epoch Senior Living, and Bodo Liesenfeld, co-founder and managing partner of Anthemion Senior Lifestyles, have been named to the Massachusetts Assisted Living Association board of directors. 

Gordon has worked at Epoch for 25 years, the past 20 serving as senior vice president of planning and development and now as chief investment officer. He holds an MBA from Bryant University.

Liesenfeld, in addition to leading Anthemion Senior Lifestyle, has participated in numerous voluntary positions in associations, the government and across industries such as healthcare and education. Previously, he was the CEO and chairman of German-based Rohde & Liesenfeld for almost 30 years, founded and served as chairman of the board for Menck Windows, and became a fellow at Harvard’s Weatherhead Center for International Affairs.

Previously, he was the CEO and chairman of German-based Rohde & Liesenfeld for almost 30 years, founded and served as chairman of the board for Menck Windows, and became a fellow at Harvard’s Weatherhead Center for International Affairs.

Oak Cottage of Santa Barbara’s Jovany Guerra nabs CALA award

Jovany Guerra, a nurse at Oak Cottage of Santa Barbara memory care, has been named the 2023 Southern California Outstanding Community Nurse by the California Assisted Living Association.

Guerra has worked in nursing since 2011. He has seen significant growth in his role at Oak Cottage and has become a valued resource for dementia and Alzheimer’s care within the community.

AJAS President and CEO Donald Shulman to receive Shore Award of Honor

Donald J. Shulman, president and CEO of the Association of Jewish Aging Services, was named the 2024 recipient of the esteemed Dr. Herbert Shore Award of Honor and will be recognized during the AJAS annual conference Feb. 25-28 in La Jolla, CA. 

AJAS membership consists of more than 90 nonprofit Jewish senior living organizations across North America and Israel.

The Dr. Herbert Shore Award of Honor is presented annually to an outstanding professional who best exemplifies the goals and ideals of AJAS and service to Jewish older adults. Award criteria include personal and professional attributes such as dedication, integrity, commitment and leadership as well as contributing to the success of the association.

Shulman, who will retire in 2024, has been with AJAS since 2012.

DIGroup Architecture’s LoriAnne Jones named to 40 Under 40 list

LoriAnne Jones, senior project manager at DIGroup Architecture, has been named among the 40-Under-40 Class of 2023 “rockstars” in the architecture, engineering, construction and real estate development fields by Building Design + Construction magazine.

A graduate of New Jersey Institute of Technology with a degree in architecture, Jones also holds an MBA from Rutgers University. In addition to AIA certification, her credentials include NOMA and LEED AP BD+C. 

The firm’s projects include senior living ones.

Send your personnel news to Lois Bowers at lois.bowers@mcknights.com. High-quality color headshots are welcome but not required.

Diversified Healthcare Trust will see a change at the top in 2024 with the retirement of President and CEO Jennifer Francis.

The Newton, MA-based real estate investment trust announced Friday that Francis will step away from her executive positions at DHC and The RMR Group effective Dec. 31 and will retire from RMR on July 1. Succeeding her on Jan. 1 at DHC will be Christopher Bilotto, an executive vice president of The RMR Group and current president and chief operating officer of Newton, MA-based Office Properties Income Trust.

Both DHC and OPI are managed by The RMR Group, which also is based in Newton, MA. RMR also manages AlerisLife, the parent company of Fire Star Senior Living and a primary operator in DHC’s senior housing operating portfolio.

Francis’ impending departure follows a previous announcement by DHC of changes to its board and executive leadership team after calling off a proposed merger with OPI in August. If the merger had been approved, Bilotto was to lead the combined companies.

Francis, an RMR executive vice president, has been a member of DHC senior management since 2018 and a managing trustee since 2021. She will remain a non-executive employee of RMR during the transition and until her retirement and will continue afterward as a managing trustee of DHC.

RMR Group President and CEO Adam Portnoy congratulated Francis on her retirement and thanked her for 17 years of service to the company.

“Jennifer has made exceptional contributions to our company and provided tremendous mentorship and inspiration for the next generation of leaders at RMR,” Portnoy said in a statement. “As a result, I am confident that we have identified the right leaders to assume Jennifer’s roles at RMR and its managed companies, and that there will be a seamless transition of responsibilities during the coming months.”

In his role at RMR, Bilotto oversees portfolio management for all office, industrial and retail properties managed by RMR and hotel and senior living asset management, as well as US development and redevelopment. Before joining RMR in 2011, he worked at General Growth Properties. 

DHC also previously announced that it hired B. Riley Securities as its financial adviser to help evaluate options to address near-term capital needs, including upcoming debt maturities. 

During a recent third-quarter earnings call, Chief Financial Officer and Treasurer Matthew C. Brown said that DHC has more than $700 million in debt coming due next year and remains out of compliance with its debt and current covenant. But the REIT expects to regain compliance by the end of 2024.

As of Sept. 30, according to a presentation posted in conjunction with the release of third-quarter financial information, 119 of the 230 senior living communities in DHC’s senior housing operating portfolio were operated by Five Star. Other operators, according to the presentation, included Cedarhurst Senior Living, Charter Senior Living, IntegraCare Senior Living, Life Care Services, Navion Senior Solutions, Northstar Senior Living, Oaks-Caravita Senior Care, Omega Senior Living, Oaks Senior Living, Phoenix Senior Living, Stellar Senior Living and The RMR Group.

Outside of the senior housing operating portfolio, DHC’s senior living portfolio also includes 27 communities with triple net leases, with tenants including Brookdale Senior Living and Stratford Retirement.

Diversified Healthcare Trust is implementing a recovery strategy to return the company to a position of growth, pinning its hopes on continued improvement in its senior housing operating portfolio, although executives are unsure when or whether that business will return to historical, pre-pandemic levels for operations, finances and cash flow.

“We are actively evaluating all strategies to strengthen DHC’s balance sheet, regain debt covenant compliance, source additional capital to fund our ongoing SHOP [senior housing operating portfolio] recovery and best position the company for long-term growth,” Chief Financial Officer and Treasurer Matt Brown said Thursday during a third-quarter earnings call, adding that he expects the company to regain debt compliance before the end of 2024.

One strategy undertaken by executives from the Newton, MA-based real estate investment is hiring financial adviser B. Riley Securities to evaluate options to address near-term debt maturities and return the company to growth. The action followed the August collapse of a merger agreement with Office Properties Income Trust.

In addition to considering property sales, joint ventures and permissible financing, President and CEO Jennifer Francis said, DHC also is in discussions with its bank group to potentially extend the maturity date of its credit facility and amend certain covenants. Doing so, she said, would allow the company flexibility to use proceeds from capital-raising initiatives to pay off debt and fund recently deferred capital projects.

Selling properties

Francis said that the company has initiated a disposition strategy for several properties from each of its operating segments, to increase liquidity. From Jan. 1 through Oct. 23, DHC has sold six properties, including four senior living communities, and is in the pre-marketing stage of a disposition program that includes 66 properties, the company outlined in a presentation issued in conjunction with the call. The REIT owned 376 properties as of Sept. 30 and has not made any acquisitions in 2023.

“The sequencing and timing of our plan to address near-term debt maturities and return DHC to growth is still yet to be determined,” Francis said. “But we’re working diligently to advance this plan on all fronts.”

Despite those efforts, the company continued to express “substantial doubt” about its ability to continue as a growing concern for at least one year.

Senior living recovery continues

The REIT said that it is unsure when or if its senior living business will return to historical pre-pandemic levels for operations, finances and cash flows, according to a Securities and Exchange Commission filing. The COVID-19 pandemic, as well as economic and market conditions, have had a significant negative effect on DHC’s operations, financial position and cash flows, the REIT said, adding that although signs of improvement exist, the recovery in the REIT’s SHOP segment has been slower than previously anticipated, and uneven.

But as the senior living industry continues to show improvement from the effects of the COVID-19 pandemic, DHC’s SHOP saw an $11.3 million (64%) reduction in the use of contract labor from 2022. Operator costs, however, remain elevated due to insurance premium increases, new staff and seasonal expenses, the REIT reported. 

“Our SHOP progress can be attributed to strategic operational improvements, strong industry fundamentals and our capital investments in our communities,” Francis said, adding that during the quarter, DHC invested $49 million in the segment, bringing its year-to-date SHOP investments total to $128 million. “While SHOP recovery remains pressured by higher operating expenses and our deferral of capital, our operators continue to achieve rental growth and occupancy gains above the industry benchmark for comparable properties year over year,” she added.

Brown said that the SHOP segment saw a $9.8 million increase in expenses in the quarter, mostly due to $5.3 million in labor costs, $2.6 million in insurance premium increases and $2.3 million from season cooling costs. 

Those expense increases were partially offset by a 13.2% revenue increase, a 370-basis-point occupancy increase, to 78.4%, and a 7% increase in average monthly rates for the third quarter.

As of Sept. 30, according to a presentation, 119 of the 230 senior living communities in DHC’s senior housing operating portfolio were operated by Five Star Senior Living. Other operators, according to the presentation, included Cedarhurst Senior Living, Charter Senior Living, IntegraCare Senior Living, Life Care Services, Navion Senior Solutions, Northstar Senior Living, Oaks-Caravita Senior Care, Omega Senior Living, Oaks Senior Living, Phoenix Senior Living, Stellar Senior Living and The RMR Group.

DHC’s senior living portfolio also includes 27 communities with triple net leases, with tenants including Brookdale Senior Living and Stratford Retirement.

“Based on the execution of certain financing strategies being contemplated, it could lead to covenant compliance sooner,” Brown said.

The annual earnings before interest, taxes, depreciation and amortization, or EBITDA, shortfall to achieve compliance is $61 million, Brown said. The debt prevents DHC from issuing any new debt or refinancing existing debt.

“As we look forward, we believe we have several viable options available to us to address our near-term capital needs, and … we are pursuing all of these options concurrently,” Brown said. “We have a significant pool of unencumbered assets with a gross book value of approximately $5.9 billion available to pursue various strategies.” 

Normalized funds from operations for the third quarter amounted to $8.3 million, or $0.03 per share. That’s an increase of $22.5 million from negative $14 million in the prior year. 

“While the SHOP [senior housing operating portfolio] recovery remains uneven and pressured by higher operating expenses, our operators continue to achieve rental rate growth and occupancy gains above the industry benchmark for comparable

properties year over year,” Brown said in a press release issued in conjunction with the earnings call. 

“The overall backdrop in the senior living industry continues to be supportive of a recovery,” he said on Thursday’s call.

President and CEO Jennifer Francis added that “costs for SHOP operators remain elevated due to insurance premium increases, acquiring new staff and seasonal expenses, such as the impact of heat waves across the United States this summer.” 

SHOP occupancy increased 370 basis points to 78.4%, and average monthly rates increased by 7% year over year, resulting in a 13.2% increase in SHOP revenues.

Overall, the REIT’s consolidated same-property, cash-basis net operating income was $56.2 million, which represents a $22.1 million, or 64.6%, year-over-year improvement.

For additional coverage of the DHC earnings call, see McKnight’s Senior Living.