Operating expenses rose last month within the Newton, MA-based Diversified Healthcare Trust’s senior housing operating portfolio.
Total SHOP operating expenses for March increased 3.3% and 6.7% on a sequential month and year-over-year basis, respectively, according to a company update released Thursday. One reason for the increase on a sequential month basis, according to the real estate investment trust, is higher salaries and wages from the previous month, as March had two additional days in the month compared with February. The expenses were partially offset by reduced contract labor.
“The year-over-year increase is primarily due to higher salaries and wages driven by inflation, wage adjustments and filling open positions, partially offset by reduced contract labor,” the company said.
Occupancy dropped in March by 10 basis points to 78.8% from the previous month, the REIT said. That amount, however, is 150 basis points higher than the amount for March 2023.
The company’s monthly update indicated that 119 of the 232 senior living communities in DHC’s SHOP were operated by AlerisLife / Five Star Senior Living. Occupancy in those communities remained fairly stagnant at 78.7%, compared with 78.8% in January and February.
Of the 113 properties managed by other DHC operators, occupancy was stable at 79.1% in February and March.
DHC’s net operating income was $7.3 million in March, a decrease of $2.8 million, or 27.3%, from February 2024, and higher by $3 million, or 68.6%, compared with March 2023. March 2024 NOI margin was 7.1%, or 280 basis points below February 2024 but 250 basis points above March 2023.
The REIT’s total SHOP revenues for March 2024 increased slightly on a sequential month basis. On a year-over-year basis, total SHOP revenues increased 9.2%, primarily from higher rental rates and occupancy.
