Moody's trims Diversified Healthcare

Moody's Investors Service said it downgraded the ratings of Diversified Healthcare Trust, including its corporate family rating to B3 from B2, its guaranteed senior unsecured notes to B3 from B2 and its senior unsecured notes to Caa1 from B3. The speculative grade liquidity rating was maintained at SGL-4.

“DHC's B3 CFR reflects weak cash flows related to the healthcare REIT's senior housing operating business. The senior housing operating business, 62% of gross book real estate but only 14% of total NOI for 2Q22, experienced steep cash flow declines over the course of the coronavirus pandemic, driven by falling occupancy and rising expenses, particularly labor. NOI has improved in recent quarters, but the trajectory of recovery remains slow and labor costs remain a significant challenge for margins,” Moody’s said in a press release.

The outlook remains negative.

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