Diversified Healthcare Trust will amend its management arrangements with Five Star Senior Living to transition 108 senior living communities, representing approximately 7,500 units, to other operators by the end of 2021. The announcement came Friday as Five Star released a new strategic plan that will see the company exiting the skilled nursing business completely as it shifts its focus to larger senior living communities.

“The changes in the management arrangements with Five Star are being made to improve the operating performance of DHC’s [senior housing operating portfolio] business in the future,” DHC President and Chief Operating Officer Jennifer Francis said in a statement. “We believe the transition of management of our 108 smaller communities to a diverse group of best in class operators will enhance their performance and we have already initiated discussions with many potential new operators.” 

The real estate investment trust expects that the transitioning communities will be divided into smaller portfolios, each with a new manager. Collectively, the managers will have a combination of experience operating in certain regions of the United States, serving residents with higher health needs, and managing smaller communities, the REIT said. 

The move will leave Five Star with 144 senior living communities under management, including 120 of which are with DHC. Francis said that the REIT expects that the results for these 120 communities, which make up approximately 66% of DHC’s senior housing operating portfolio, will improve because these communities are larger and serve lower-need residents, an area of operational strength for Five Star and where the operator plans to focus its business in the future. The change also will allow Five Star to focus on its larger senior living communities, stand-alone active adult and independent living communities, and its rehabilitation and wellness services, according to Five Star President and CEO Katherine “Katie” Potter.

“We believe that this shift in our focus is critical to the future success of Five Star and better positions us to expand our senior living management business and continue to diversify revenue sources in the future,” Potter said in a statement. “More specifically, the implementation of this new strategic plan will showcase the operational strengths of Five Star to current and potential partners and customers in the future.”

For more information, see this McKnight’s Senior Living article.