Diversified Healthcare Trust

Good morning and welcome to the Diversified Healthcare Trust Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the call over to Matt Murphy, Manager of Investor Relations. Please go ahead.

Good morning. Joining me on today's call are Chris Bellotto, President and Chief Executive Officer, Matt Brown, Chief Financial Officer and Treasurer, and Anthony Paula, Vice President. Today's call includes a presentation by management, followed by a question and answer session with sell-side analysts. Please note that the recording and retransmission of today's conference call is strictly prohibited without the prior written consent of the company. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based upon DHC's beliefs and expectations as of today, Tuesday, February 24, 2026. the company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call, other than through filings with the Securities and Exchange Commission, or SEC. In addition, this call may contain non-GAAP numbers, including normalized funds from operations, or normalized FFO, net operating income, or NOI, and cash basis net operating income, or cash basis NOI. A reconciliation of these non-GAAP measures to net income is available in our financial results package, which can be found on our website at www.dhcree.com. Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our filings with the SEC. Investors are cautioned not to place under-reliance on any forward-looking statements. And finally, we will be providing guidance on this call, including NOI. We are not providing a reconciliation of these non-GAAP measures as part of our guidance because certain information required for such reconciliation is not available without unreasonable efforts or at all, such as gains and losses or impairment charges related to the disposition of real estate. With that, I would now like to turn the call over to Chris.

Thank you, Matt, and thank you, everyone, for joining our call today. I want to start with a recap of a very busy and successful 2025 for DHC in which we executed on the stated initiatives that we identified early in the year and ended the year as the best performing REIT in the U.S. as measured by both share price appreciation and total shareholder return. In 2025, we completed over $1.4 billion in capital markets activity principally focused on financing, asset sales, and the establishment of a $150 million undrawn credit facility. We also completed the wind down of a layer slide transitioning 116 communities representing over 17,000 units to seven regionally focused operators and completed renovations at over 30 communities. These efforts combined with the work of our dedicated asset management team resulted in full year consolidated NOI growth of 31.3%. a reduction in our leverage of over three terms, and no debt maturities until 2028. As one of the largest owners of senior housing properties in the country, we believe our recent accomplishments, combined with the investments we have made in the portfolio and a favorable industry outlook, sets the stage for continued outsized growth in our shop portfolio as reflected in our 2026 guidance, which Matt will expand upon momentarily. Turning to the quarter. After the market closed yesterday, DHC reported strong fourth quarter results, particularly as it relates to our shop NOI, which improved 27.6% over last year to $38.3 million, reflecting continued execution on our highlighted initiatives and further strengthening DHC's financial position. For the quarter, DHC delivered total revenue of $379.6 million, adjusted EBITDA RE of $72.4 million, and normalized SFO of $21.8 million, or 9 cents per share. Turning first to our senior housing portfolio, shop and wine for the full year came in at $139.3 million, which was toward the high end of our guidance. This was driven by same property occupancy that increased 90 basis points year over year to 82.4%, an average monthly rate that increased 5.8%. same property shop NOI margins continued to improve, up 230 basis points year over year. These results were achieved despite a somewhat noisy quarter reflecting the transition of 116 shop communities to seven different operators that have proven track records and well-established regional footprints. With all the transitions completed during the quarter, we remain focused on executing property-specific business plans and targeted opportunities identified across the portfolio. We are intensely focused on executing in lockstep with our operators, combining disciplined operational oversight with their deep regional expertise to deliver measurable gains in occupancy and portfolio NOI. We are focused on driving higher lead to move and conversion through the rollout of advanced CRM platforms, tighter and more coordinated procurement programs, the introduction of differentiated care levels to capture unmet demand, and dynamic pricing strategies that directly capitalize on market-specific conditions. Our early engagement with these operators, many of whom are industry leaders, reinforces our confidence in achieving our 2026 outlook. In addition to the operational opportunities within SHOP, we also have a healthy pipeline of ROI projects that provide an additional driver of earnings upside over the next several years. This will come through the repositioning of underutilized areas within our communities including former and now closed skilled nursing wings where we can deploy a modest amount of capital to renovate and reopen these areas with the appropriate acuity needs. This initiative has the potential to add approximately 500 shop units to the portfolio that could deliver an unlevered mid-teens ROI. We look forward to sharing more details on this opportunity in the coming quarters. Turning to our medical office and life science portfolio, During the fourth quarter, we completed approximately 81,000 square feet of leasing at weighted average rents that were 7.9% above prior rents for the same space with an average term of over eight years. Consolidated occupancy increased 460 basis points sequentially to 91.2%, primarily driven by the sales of vacant or low occupancy properties and leasing completed during the quarter. Same property cash basis NOI increased 3.8% year over year with margins improving 100 basis points to 59.6%. Looking ahead, 10.1% of annualized revenue in our medical office and life science portfolio is scheduled to expire through 2026, of which 241,000 square feet or approximately 3.9% of annualized revenue is expected to vacate. Our leasing pipeline remains active, totaling 1 million square feet, and reflects average lease terms of 6.9 years and gap rent spreads averaging more than 10%. Turning to our capital markets and balance sheet initiatives, as it relates to our disposition and deleveraging initiatives, we sold 37 non-core properties in the fourth quarter for approximately $250 million, bringing the full year disposition to 69 properties for approximately $605 million. These proceeds were used to fully repay our senior secured zero coupon bonds due in 2026, and we now have no debt maturities until 2028. Our deleveraging efforts in 2025 reduced net debt to adjusted EBITDA from 11.2 times at year end 2024 to 8.1 times at the end of 2025. As we have previously noted, our near-term goal is targeted leverage levels of 6.5 times to 7.5 times. As of February 20th, we were under agreement to sell 13 properties for $23 million. Following the completion of the sale and excluding normalized course capital recycling opportunities that may arise, we are substantially done with our large-scale disposition program. With the asset sales that have been completed over the past two years, combined with the significant investments we have made upgrading our communities, we expect to see a continued decline in our CapEx spend, as Anthony will discuss in more detail. Moving forward, dispositions will be on a more opportunistic basis with proceeds used to either reduce leverage or to redeploy into accretive initiatives. To conclude, demand for our shop communities is robust, supported by a growing 80-plus population and the outlook of new supply expected to remain muted for several years. Despite the strong gains in our share price in 2025 and 2026 to date, We still see additional share price upside as we deliver materially improving shop NOI and benefit from lower interest costs and reduced capex spend. It is our focus to continue delivering on the momentum of the past two years and to further drive shareholder value for our investors. With that, I will now turn the call over to Anthony.