Q2 2024 Diversified Healthcare Trust Earnings Call
Operator: Good afternoon, and welcome to the Diversified Healthcare Trust's second quarter 2024 earnings conference call. All participants will be in lesson-only mode.
Unknown Executive: Good afternoon and welcome to the Diversified Healthcare Trust 2nd quarter, 2024, earnings conference call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero.
Good afternoon, and welcome to the diversified Health Care Trust second quarter 2024 earnings Conference call.
Speaker Change: All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: 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 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the call over to Kevin Brady, Director of Investor Relations. Please go ahead.
Unknown Executive: After today's presentation, there will be an opportunity to ask questions to ask a question. You may press star then one on your telephone keypad to withdraw your question. Please press star, then two.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question you my breast Star then one on your telephone keypad.
Speaker Change: The majority of a question. Please press Star then two.
Unknown Executive: Please note this event is being recorded.
Speaker Change: Please note. This event is being recorded I would now like to turn the call over to Kevin Brady Director of Investor Relations. Please go ahead.
Kevin Brady: I would now like to turn the call over to Kevin Brady, Director of Investor Relations. Please go ahead. Good afternoon. Joining me on today's call are Chris Bilotto, President and Chief Executive Officer, and Matt Brown, Chief Financial Officer and Treasurer. Today's call includes a presentation by management, followed by a question and answer session with Southside analysts.
Kevin Brady: Good afternoon. Joining me on today's call are Chris Bilotto, President and Chief Executive Officer, and Matt Brown, Chief Financial Officer and Treasurer. Today's call includes a presentation by management, followed by a question and answer session with Southside Analysts. Please note that the recording and retransmission of today's conference call are 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.
Kevin Brady: Yeah. Good afternoon, joining me on today's call are Crystal Auto President and Chief Executive Officer, and Matt Brown, Chief Financial Officer, and Treasurer. Today's call includes a presentation by management followed by a question answer session with sell side analysts.
Unknown Executive: Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company.
Kevin Brady: Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company.
Unknown Executive: Today's conference call contains forward-looking statements within the meeting 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, Friday, August 2nd, 2024. 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.
Kevin Brady: 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 DH seats beliefs and expectations as of today Friday August 2nd 2020 for.
Kevin Brady: These forward-looking statements are based upon DHC's beliefs and expectations as of today, Friday, August 2nd, 2024. 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, we will be discussing 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. DHCREIT.com
Kevin Brady: 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 the filings with the Securities and Exchange Commission or S. E C.
Unknown Executive: Other than through filings with the Securities and Exchange Commission or SEC.
Unknown Executive: In addition, we will be discussing non-GAT numbers, including normalized funds from operations or normalized telephone, net operating income or NOI, and cash-basis net operating income or cash-basis NOI. A reconciliation of these non-GAAP measures to an income is available in our financial results package, which can be found on our website at www.dhcread.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 unduly lights upon any forward-looking statements.
Kevin Brady: In addition, we will be discussing non-GAAP numbers, including normalized funds from operations or normalized <unk> net operating income or NOI and cash basis, net operating income or cash basis NOI a.
Kevin Brady: 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 Dot THC REIT dot com.
Kevin Brady: Actual results may differ materially from those projected in any forward-looking statement. Additional information concerning factors that could cause those differences is contained in our filings with the SEC. Investors are cautioned not to place undue reliance upon any forward-looking statement. And finally, we will be providing guidance on this call, including SHOP, Net Operating Income, or SHOP NOI. We are not providing a reconciliation of these non-GAAP measures as part of our guidance because certain information required for such a reconciliation is not available without unreasonable effort at all, such as gains and losses or impairment charges related to the disposition of real estate.
Kevin Brady: Actual results may differ materially from those projected in any forward looking statements.
Kevin Brady: Digital information concerning factors that could cause those differences is contained in our filings with the SEC.
Kevin Brady: Investors are cautioned not to place undue reliance upon any forward looking statements.
Unknown Executive: And finally, we will be providing guidance on this call, including shop, net operating income or shop 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 at all, such as gains and losses or impairment charges related to the disposition of real estate.
Kevin Brady: And finally, we will be providing guidance on this call, including shop net operating income or shop 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 at all such as gains and losses.
Chris: Our impairment charges related to the disposition of real estate with that I will turn the call over to Chris.
Christopher Bilotto: With that, I will turn the call over to Chris.
Christopher Bilotto: Thank you, Kevin. Good afternoon, everyone, and thank you for joining our call. Last evening, DHC reported second-quarter results that exceeded expectations for normalized SFO and reflect continued progress on our 2024 operating and financial priorities. Today's call, I will provide a high-level overview of DHC's second-quarter financial and operating results, along with an update on key strategic initiatives for 2020 or beyond. Later, Matt will review second quarter of financial results and provide an update on the steps we are taking to strengthen our capital and liquidity profile. Second quarter of financial results reflect continued momentum within our shop segment, along with continued double digit rent road with leasing activity in our medical office and life sciences segment.
Kevin Brady: With that, I will turn the call over to Chris.
Chris: Thank you, Kevin and good afternoon, everyone and thank you for joining our call last evening.
Chris Bilotto: Thank you, Kevin. Good afternoon, everyone, and thank you for joining us on our call. Last evening, DHT reported second-quarter results that exceeded expectations for normalized FFO and reflect continued progress on our 2024 operating and financial priorities. On today's call, I will provide a high-level overview of DHC's second quarter financial and operating results, along with an update on key strategic initiatives for 2024 and beyond. Later, Matt will review our second quarter financial results and provide an update on the steps we are taking to strengthen our capital and liquidity profile.
Chris: For the second quarter results that exceeded expectations for normalized <unk> and reflects continued progress on our 2020 for operating and financial priorities.
On today's call I will provide a high level overview of <unk> second quarter financial and operating results.
Chris: Along with an update on key strategic initiatives for 2020.
Chris: Later, Bob will review second quarter financial results and provide an update on the steps we are taking to strengthen our capital and liquidity profile.
Chris Bilotto: Second quarter financial results reflect continued momentum within our shop segment, along with continued double-digit rent growth and leasing activity in our medical office and life sciences segment. Our consolidated gap in cash basis NOI increased 12.2% and 7.1%, respectively, compared to the prior year, supported by favorable trends in senior housing and healthcare in general, in addition to favorable tailwinds and senior housing. Our results are benefiting from the prudent capital investments we have made within our communities and from an emphasis on improving operator performance. In May, we issued a $120 million mortgage loan secured by eight medical office and life science properties and used $60 million to partially redeem the then $500 million of senior notes scheduled to mature in 2025.
Bob: Second quarter financial results reflect continued momentum within our shop segment, along with continued double digit rent growth with leasing activity in our medical office and life Sciences segment.
Christopher Bilotto: Our consolidated gap in cash faces and a line increased 12.2%, 7.1% respectively, compared to the prior year, supported by terrible trends in senior housing and healthcare in general. In addition to favorable till and senior housing, our results are benefiting from the proven capital investments we have made within our communities and from an emphasis on improving operator performance. In May, we issued a $120 million mortgage loan secured by 8 medical office and life science properties and used $60 million to partially redeem the $500 million senior notes scheduled to mature in 2025. We are currently working to establish additional security financing within the shop segment in order to repay the remainder of the 2025 debt maturity and to further enhance our liquidity.
Bob: Our consolidated GAAP and cash basis, NOI increased 12, 2%.
Bob: One, 1%, respectively compared to the prior year supported by favorable trends in senior housing and healthcare.
Bob: In addition to favorable tailwind in senior housing.
Bob: Our results are benefiting from our prudent capital investments, we have made within our communities and from an emphasis on improving operator performance.
Bob: In May we issued a $120 million mortgage secured by eight medical office and life Science properties and you.
Bob: $60 million and partially redeemed $500 million of senior notes scheduled to mature in 2005.
Chris Bilotto: We're currently working to establish additional secure financing within the SHOP segment in order to repay the remainder of the 2025 debt maturity and to further enhance our liquidity. Matt will provide additional details on our financing strategy shortly. Now, turning to the second quarter operating performance.
Bob: We're currently working to establish additional secured financing within the South segment in order to repay the remainder of the 2025 debt maturity and to further enhance our liquidity that will provide additional details on our financing strategy shortly.
Christopher Bilotto: Matt will provide additional details in our financing strategy shortly. Turning it to the second quarter operating performance within our shop segment, same property cash faces and a line increased 27% over the years old period, driven by an increase in shop occupancy and corresponding increase in the rep or in which Matt will expand on more detail. We will continue to build on the year-to-date shop and on the wide growth of 34% by prioritizing initiatives with our operators to continue to enhance the resident experience, supporting retention and external growth. Further, we can see the highlight longer term initiatives that will strengthen our portfolio, including the rationalization of underperforming communities and those of incremental performance opportunities.
Bob: Turning to the second quarter operating performance within our shop segment same property cash basis, NOI increased 27% over the year ago period, driven by an increase in shop occupancy and a corresponding increase in reservoir, which Matt will expand on in more detail.
Chris Bilotto: Within our shop segment, same property cash basis NOI increased 27% over the year-ago period, driven by an increase in shop occupancy and corresponding increase in REV-IV, which Matt will expand on in more detail. We will continue to build on the year-to-date shop and white growth of 34% by prioritizing initiatives with our operators to continue to enhance the resident experience, supporting retention and external growth. In addition, we continue to highlight longer-term initiatives that will strengthen our portfolio, including the rationalization of underperforming communities and those with incremental performance opportunities.
Speaker Change: We will continue to build on the year to date shop NOI growth of 34%, while prioritizing initiatives with our operators continue to enhance the resident experience.
Matt: Supporting retention and external growth.
Matt: Further we continue to highlight and longer term initiatives that will strengthen our portfolio, including the rationalization of underperforming communities and those with Ingram outperformance opportunity.
Christopher Bilotto: To accomplish this, we are working through our portfolio with an emphasis on stronger densification of communities and operator relationships in certain markets, positive management for the support of our asset management team, enhanced living experience for residents through targeted capital improvements, and the advancement of additional operator transitions and property sales. Regarding operating transitions, the successful handover of 13 Midwest communities earlier this year had dropped in our partnership with a current operator known for their community-focused strategy and strong management, which had markedly enhanced the performance of their legacy managed communities. We foresee a comparable path of performance enhancement for the newly transitioned communities, particularly as we move into the latter part of 2024 and continue the 2025.
Chris Bilotto: To accomplish this, we are working through our portfolio with an emphasis on stronger densification of communities and operator relationships in certain markets. House Management with the support of our asset management, and an Enhanced Living Experience for Residents Through Targeted Capital Improvements and the Advancement of Additional Operator Transitions and Property Sales. Regarding Operating Transitions, the successful handover of 13 Midwest communities earlier this year has broadened our partnership with a current operator known for their community-focused strategy and strong management, which has markedly enhanced the performance of their legacy managed communities.
Matt: To accomplish this we are working through our portfolio with an emphasis on stronger densification communities and operator relationships in certain markets.
Matt: Management is supportive of our asset management team enhanced living experience for our residents through targeted capital improvements and the advancement of additional operator transitions and property sales.
Matt: Regarding number of new transition.
Matt: Successful handover 13 Midwest communities earlier this year have broaden our partnership with the current operator no for their community focused strategy and strong management, which has markedly enhanced the performance of their legacy managed communities, we foresee a comparable path of performance enhancement for the newly transition communities, particularly as we move.
Chris Bilotto: We foresee a comparable path of performance enhancement for the newly transitioned communities, particularly as we move into the latter part of 2024 and continue into 2025. Additionally, we are engaged in discussions to facilitate more transitions within our portfolio. Although any forthcoming transitions are expected to be more modest in size, they are an integral part of our ongoing strategy.
Matt: Move into the latter part of 2024 and continue into 2025.
Christopher Bilotto: Additionally, we are engaged in the sessions that facilitate more transitions within our portfolio. Although any forthcoming transitions are expected to be more modest in size, they are an integral part of our ongoing strategy. In my list of our strategy to optimize asset allocation within shop, we have signed no-wise or in the process of marketing properties for sale that encompass approximately 1,100 units with an estimated value between $80 and $100 million. During the second quarter, these properties have resulted in a negative underlying of approximately $830,000 and an occupancy rate of 72%. These properties typically are in locations where further gross prospects seem constrained, require significant capital investment, lack portfolio synergies, or in circumstances where we believe we have maximized value.
Matt: Additionally, we are engaged in discussions to facilitate more transactions within our portfolio.
Matt: Although any forthcoming transitions are expected to be more modest in size. They are an integral part of our ongoing strategy.
Chris Bilotto: In line with our strategy to optimize asset allocation within Shop, we have signed LOIs or are in the process of marketing properties for sale that encompass approximately 1,100 units with an estimated value between $80 and $100 million. In the second quarter, these profits resulted in a negative NLI of approximately $830,000 and an occupancy rate of 72%. These properties typically are in locations where further growth prospects seem constrained, require significant capital investment, lack portfolio synergies, or in circumstances where we believe we have maximized value.
Matt: In line with our strategy to optimize asset allocation within shop, we have signed LOI is where in the profitable marketing properties for sale that encompass approximately 1100 units with an estimated value between 80 and $100 million.
Matt: Late in the second quarter. These properties have resulted in a negative NOI of approximately $830000 and an occupancy rate of 72%.
Matt: These properties typically are in locations, where further growth prospects seem constrained require significant capital investment.
Matt: Portfolio synergies or in circumstances, where we believe we have maximized value.
Christopher Bilotto: We will continue evaluating portfolio optimization initiatives, which involve investing from underperforming or non-chloric acid, and look forward to providing future updates. Regarding our renovation initiatives, we are on course to allocate the estimated $25 million or $23 million project this year, and in current incremental return of 8-10% of constabilization, with respect to major renovations. Over the past year, we have completed or have substantially complete major renovations that six communities reflect on close to $44 million in aggregate spending. These communities are within the ramp-up period, which can take into the 20 months. When stabilized, we are targeting annual incremental NLI of 15-20% on invested renovation capital.
Chris Bilotto: We will continue evaluating portfolio optimization initiatives, which involve divesting from underperforming or non-core assets, and look forward to providing future updates regarding our renovation of these. We are on course to allocate an estimated $25 million for 23 refurbishment projects this year, aiming for an incremental return of 8-10% upon stabilization with respect to major renovations. Over the past year, we have completed or substantially completed major renovations at six communities, reflecting close to $44 million in aggregate spend. These communities are within the ramp-up period, which can take 18 to 20 months.
Matt: We will continue evaluating portfolio optimization initiatives, which involve divesting underperforming or noncore assets and look forward to providing future updates.
Regarding our renovation of this winter.
I mean, we're on course to allocate at an estimated $25 million or 23 refurbishment projects. This year any incremental return of 8% to 10% upon stabilization.
Matt: With respect to the major renovation.
Speaker Change: Over the past year, we have completed or have substantially completed major renovations of six communities, reflecting close to $44 million in aggregate is bad.
Speaker Change: These communities are within their ramp up period, which can take 18 to 20 months on stabilized we are targeting incremental NOI of 15% to 20% of invested renovation capital.
Chris Bilotto: When stabilized, we are targeting annual incremental NOI at 15 to 20% on invested renovation capital. For context, these major renovations typically involve substantial upgrades in common areas and resident rooms, new FF&E, along with changes or expansions to the acuity mix. For example, we're underway with a major renovation at a community located in Scottsdale, Arizona. The project includes major improvements to the resident experience with new upgraded common areas, new amenities, including a theater, bistro, lounge, and fitness room, the addition of 27 new memory care units, and up to 20 new assisted living units through the conversion of a closed skilled nursing wing.
Christopher Bilotto: For context, these major renovations typically involve substantial upgrades to common areas in resident rooms. New FFNE, along with changes or expansions to the acuity mix. For example, we run their way with the major renovation out of community of all kids in Scottsville, Arizona. The project includes major improvements to the resident experience with new upgraded common areas, new amenities, including a cedar, v-stral lounge, and fitness room, the addition of 27 new memory care units, and the 20 new assistance and living units through a conversion of a close skilled nursing wing. We initially targeted this renovation given the favorable outlook of the three-mile statistical range, including a five-year outlook for the 75-plus population growth rate of 12.2%.
Speaker Change: For context. These major renovations typically involves substantial upgrades in common areas resident Roes.
Speaker Change: Anthony along with changes our expansion to the acuity mix. For example, we are underway with a major renovation at a community located in Scottsdale, Arizona.
Speaker Change: <unk> includes major improvements to the resident experience, but upgrading common areas.
Speaker Change: Putting a theater bistro lounge and fitness around the addition of 27, new memory care units. After 'twenty two assisted living units through a conversion of a closed skilled nursing Wang.
Chris Bilotto: We initially targeted this renovation given the favorable outlook within the 3-mile statistical range, including a 5-year outlook for the 75-plus population growth rate of 12.2%, a 65-plus average home value of over $560,000, and a favorable outlook supporting labor and other operating fundamentals. When stabilized following its completion in 2025, we estimate income at Illinois of $4 million, equivalent to a 15% return on a $27 million investment.
Speaker Change: We initially targeted renovation given the favorable outlook within the three mile system.
Speaker Change: Putting a five year outlook for the 75, plus population growth rate of 12, 2% or 65, plus average home value of over $560000 and a favorable outlook supporting labor and other operating fundamentals.
Christopher Bilotto: The 65-plus average home value of over $560,000, and a favorable outlook supporting labor and other operating fundamentals. When the stable are following a completion of 2025, we estimate incremental NLI of $4,000,000 equivalent to a 15% return of a $27,000,000 investment, bringing the highlights of the medical office and life science portfolio. We ended the second quarter with 101 medical office and life science that's consisting of 8.4 million square feet, with the same SOAR occupancy of 87.4% and a weighted average lease term of 5.4 years. So, the lease approximately 101,000 square feet at weighted average rents that were 12.1% higher than prior rents for the same space, which represents the four consecutive quarters of double-digit positive rent low-offs.
Speaker Change: Stabilized following the completion of 2025, we estimate incremental NOI of $4 million equivalent to a 15% return on the $27 million.
Speaker Change: Turning to the highlights for the medical office and life Science portfolio.
Chris Bilotto: We ended the second quarter with 101 medical offices and life science assets consisting of 8.4 million square feet with same store occupancy of 87.4% and a weighted average lease term of 5.4 years. Notably, we lease approximately 101,000 square feet at weighted average rents that were 12.1% higher than prior rents for the same space, which represents a four-two-segative-quarter double-digit positive direct rollout. The quarter over quarter decrease to same property occupancy is primarily driven by a previously communicated known vacant with a tenant in St. Louis, Missouri, totaling 220,000 square feet.
Speaker Change: We ended the second quarter was 101 medical office and life science assets, consisting of $8 4 million square feet same store occupancy of 87, 4%.
Speaker Change: Weighted average lease term of five four years, notably we leased approximately 101000 square feet.
Speaker Change: Average rents that were $12, 1% higher than prior rents for the same space, which represents the fourth consecutive quarter of double digit positive.
Christopher Bilotto: The quarter over quarter decreased the same property occupancy, which is primarily driven by a previously communicated known vacate with a tenant in St. Louis, Missouri, totaling 220,000 square feet. We continued to prioritize leasing initiatives, engaging with tenants early for renewal and through a proactive asset management of our properties. Our current leasing pipeline includes nearly 800,000 square feet of new and renewal leasing activity, with over 200,000 square feet of potential new absorption. So, if we went to quarter end, we successfully negotiated, or in advanced stages of negotiation for 135,000 square feet, more than half of which is new absorption.
Speaker Change: The quarter over quarter decrease in same property occupancy is primarily driven by our previously communicated known vacate with a tenant in St. Louis, Missouri totaling 220000 square feet.
Chris Bilotto: We continue to prioritize leasing initiatives, engaging with tenants early for renewal, and through proactive asset management of our properties. Our current leasing pipeline includes nearly 800,000 square feet of new and renewable leasing activity with over 200,000 square feet of potential new absorption. Subsequent to quarter end, we successfully negotiated, or are in advanced stages of negotiation, for $135,000 per fee, more than half of which is in absorption. Also, in our medical office and life science segment, we sold one vacant property during the quarter located in Irving, Texas for $4.2 million.
Speaker Change: We continued to prioritize leasing initiatives engaging with tenants earliest for renewal and through proactive asset management of our properties.
Speaker Change: Our current leasing pipeline includes nearly 800000 square feet of new and renewal leasing activity with over 200000 square feet of potential new absorption.
Speaker Change: When the quarter end, we successfully negotiated or in advanced stages of negotiation for 135000 square feet more than half of which is in the absorption.
Christopher Bilotto: Also, within our medical office and life science segment, we sold one vacant property during the quarter located in Irving, Texas, for 4.2 million dollars. Along the quarter close in July, we sold two medical office properties located in Buffalo Grove, Illinois, and Egan, Minnesota, with proceeds of $21.3 million at two properties of their time. He is there, Illinois, for 12 months. In the office. Collectively, these properties represent 537,000 square feet with occupancy of 35% and quarterly and a wide 156,000. Lastly, we have an issue in marketing efforts for a 186,000 square foot life science campus into early life.
Speaker Change: Also within our medical office and life Science segment, we sold one vacant property during the current quarter are located in Irving, Texas for $4.2 million.
Chris Bilotto: Along the quarter close, in July, we sold two medical office properties located in Buffalo Grove, Illinois and Eagan, Minnesota, with proceeds totaling $21.3 million at two properties under a signed PSA or LOI for $12 million. Collectively, these properties represent 537,000 sq. ft., with occupancy at 35%, and quarterly NRY of $156,000. Lastly, we have initiated marketing efforts for our 186,000 square foot life science campus in Torrey Pines. While early in the process, we believe there are varying strategic outcomes given our view of the demand profile for both buyers and tenants within the market.
Speaker Change: During the quarter close in July we sold two medical office properties located in Buffalo Grove, Illinois, and Eagan, Minnesota with proceeds totaling $21 $3 million at two properties under signed hit their LOI for $12 million.
Speaker Change: Collectively these properties represent 537000 square feet of occupancy at 35% and quarterly NOI of $156000.
Speaker Change: Lastly, we have initiated marketing efforts for our 186000 square foot life Science campus in Torrey Pines.
Christopher Bilotto: While early in the process, we believe there are varying strategic outcomes given our view of the demand profile for both hires and tenants within the market. We look forward to providing more updates in future quarters. Overall, we are pleased with the progress on the discussed initiative underway for each of our shop and M.O.V. life science segments.
Speaker Change: The process. We believe there are various strategic outcome, given our view on the demand profile for both buyers and tenants in the market.
Chris Bilotto: We look forward to providing more updates in the future quarter. Overall, we are pleased with the progress on the discussed initiatives underway for each of our SHOP and MOV Lifesign segments and look forward to providing updates on our progress in the upcoming quarters. Now I'd like to turn the call over to Matt. Thank you, Chris, and good afternoon, everyone.
Speaker Change: Look forward to providing more updates in future quarters.
Overall, we are pleased with the progress although discuss initiatives underway for each of our shop and it'll be in life Science segment.
Christopher Bilotto: I look forward to providing updates on our progress in the upcoming quarters.
Speaker Change: Look forward to providing updates on our progress in the upcoming quarters I would like to turn the call over to Matt.
Matthew Brown: Now I would like to turn this call over to Matt. Thank you, Chris. Good afternoon, everyone. Normalize FFO for the second quarter was $6.8 million or $0.03 cents per share. On a sequential quarter basis, normalize FFO increased by 2 cents per share, mainly driven by improvements in shop N.O.I. Adjusted EBITDA RE grew by $4.8 million sequentially or 7.5%, which resulted in leverage declining 60 basis points from the first quarter. Our consolidated same property cash basis N.O.I. was $68.8 million, representing an 8.7% year-over-year improvement and a 7.4% sequential quarter improvement. The improvements were mainly driven by our shop segment, which saw N.O.I.
Matt Brown: Thank you, Chris, and good afternoon, everyone. Normalized FFO for the second quarter was $6.8 million, or $0.03 per share. On a sequential quarter basis, normalized FFO increased by $0.02 per share, mainly driven by improvements in shop NLI. Adjusted EBITDA RE grew by $4.8 million sequentially, or 7.5%, which resulted in leverage declining 60 basis points from the first quarter. Our Consolidated Same Property Cash Basis NOI was $68.8 million, representing an 8.7% year-over-year improvement and a 7.4% sequential quarter improvement.
Matt: Thank you, Chris and good afternoon, everyone.
Matt: Normalized <unk> for the second quarter was $6 $8 million or <unk> <unk> per share on a sequential quarter basis normalized <unk> increased by two cents per share mainly driven by improvements in that line.
Matt: Adjusted EBITDA R E grew by $4 $8 million sequentially, or seven 5%, which resulted in leverage declining 60 basis points from the first quarter.
Matt: Our consolidated same property cash basis, NOI was $68 $8 million, representing an eight 7% year over year improvement and a seven 4% sequential quarter improvement.
Matt Brown: The improvements were mainly driven by our shop segment, which saw NOI growth of 27% year-over-year and 17% sequentially. Highlights include occupancy increases of 160 basis points year-over-year and 20 basis points sequentially. Average monthly rates increased 6% year over year. Expenses decreased 1.4% sequentially, driven by a 32% decline in contract labor and a 10% decline in utilities.
Matt: Improvements were mainly driven by our shop segment, which saw NOI growth of 27% year over year and 17% sequentially highlights include occupancy increases of 160 basis points year over year, and 20 basis points sequentially.
Matthew Brown: growth of 27% year-over-year and 17% sequentially. Highlights include occupancy increases of 160 basis points year-over-year and 20 basis points sequentially. Average monthly rate increased 6% year-over-year. Expenses decreased 1.4% sequentially, driven by a 32% decline in contract labor and a 10% decline in utilities. These highlights contributed to N.O.I. margin growth of 150 basis points, both a year-over-year and sequentially.
Matt: Average monthly rate increased 6% year over year.
Matt: Expenses decreased one 4% sequentially driven by a 32% decline in contract labor and a 10% decline in utilities.
Matt Brown: These highlights contributed to NOI margin growth of 150 basis points, both year-over-year and sequentially. As it relates to our Senior Living Portfolio, I wanted to highlight that we have added two new pages in our earnings presentation to provide additional information, including NOI by Manager, Stats by Market, and NOI by CBSA. Turning to liquidity financing strategies and CapEx, we ended the quarter with $266 million in unrestricted cash. In May, we completed the first of two financing strategies for the year by issuing an interest-only $120 million mortgage with a fixed interest rate of 6.86% for a term of 10 years, which was secured by eight medical office and life science properties.
Matt: These highlights contributor to NOI margin growth of 150 basis points, both year over year and sequentially.
Matthew Brown: As it relates to our senior living portfolio, I want to highlight that we have added two new pages in our earnings presentation to provide additional information, including N.O.I. by manager, stats by market, and N.O.I. by CBSAs.
Matt: As it relates to our senior living portfolio I wanted to highlight that we have added two new pages in our earnings presentation to provide additional information, including NOI by manager stats by market and NOI by C. B S. A's.
Matthew Brown: Turning to liquidity, financing strategies, and capex. We ended the quarter with $266 million in unrestricted cash. In May, we completed the first of two financing strategies for the year by issuing an interest-only $120 million mortgage, with a fixed interest rate of 6.86% and a term of 10 years, which was secured by eight medical office and life science properties. We used half of the proceeds to redeem $60 million of our 9.75% notes due in June 2025, with the balance used for increased liquidity. Our other 2024 financing strategy is the issue-secure-extraint debt with select shop communities that we have discussed previously.
Matt: Turning to liquidity and financing strategies and Capex, we ended the quarter with $266 million in unrestricted cash in.
Speaker Change: In May we completed the first of two financing strategies for the year by issuing an interest only $120 million mortgage with a fixed interest rate of 686% and a term of 10 years, which was secured by eight medical office and life Science properties.
Matt Brown: We used half of the proceeds to redeem $60 million of our 9.75% notes due in June 2025, with the balance used for increased liquidity. Our other 2024 financing strategy is to issue secured fixed-rate debt with select shop communities that we have discussed previously. We are having meaningful conversations as we work through the due diligence process, and we currently expect to complete this financing in the fall. Proceeds from this financing will be used to redeem the remaining $440 million balance of the 9.75% notes due in June 2025, and we expect this refinancing to be accretive to earnings.
Speaker Change: We use half of the proceeds to redeem $60 million of our 975% notes due in June 2025, with the balance used for increased liquidity.
Speaker Change: Our other 2020 for financing strategy is to issue secured fixed rate debt with select shop communities that we have discussed previously.
Matthew Brown: We are having meaningful conversations as we work through the due diligence process, and we currently expect to complete this financing in the fall. Proceeds from this financing will be used to redeem the remaining $440 million balance of the 9.75% notes due in June 2025, and we expect this refinancing to be a creative earnings. Since the beginning of the year, we have sold four properties for aggregate proceeds of $29.1 million, have one property under agreement to sell for $5.5 million, and have four properties under LOI for $22.2 million. We spent $41 million on CAPEX in the second quarter, including $27 million in our shop segment.
Speaker Change: We are having meaningful conversations as we worked through the due diligence process and we currently expect to complete this financing in the fall proceeds from this financing will be used to redeem the remaining $440 million balance of the 975% notes due in June 2025, and we expect this refinancing to be accretive to earnings.
Matt Brown: Since the beginning of the year, we have sold four properties for aggregate proceeds of $29.1 million, have one property under agreement to sell for $5.5 million, and have four properties under LOI for $22.2 million. We spent $41 million on CapEx in the second quarter, including $27 million in our shop segment. Based on year-to-date investment activity, our total CapEx guidance for 2024 is reduced to $200 million to $220 million, which includes lowering the range of Shrop CapEx to $130 million to $150 million.
Since the beginning of the year, we have sold four properties for aggregate proceeds of 21 $29 $1 million have one property under agreement to sell for $5 $5 million and have four properties under LOI for $22 $2 million.
Speaker Change: We spent $41 million on capex in the second quarter, including $27 million in our shop segment based on year to date investment activity. Our total capex guidance for 2024 is reduced to $200 million to $220 million, which includes lowering the range of shop capex to $130 million to $150 million.
Matthew Brown: Based on year-to-date investment activity, our total CAPEX guidance for 2024 is reduced to $200 to $220 million, which includes lowering the range of shop CAPEX to $130 to $150 million. This reduction is mainly driven by the timing of certain projects being pushed to 2025 and pausing certain projects related to communities we are evaluating for transition or sale. Turning into our shop outlook, we reaffirm our full-year NOI guidance of $120 to $140 million. We expect third quarter shop and NOI guidance to range from $31 to $36 million. In summary, second quarter results demonstrate good progress against our full-year objectives.
Matt Brown: This reduction is mainly driven by the timing of certain projects being pushed to 2025 and paused certain projects related to communities we are evaluating for transition or sale. Turning to our Shop Outlook, we reaffirm our full-year NOI guidance of $120 to $140 million. We expect third quarter shop NOI guidance to range from $31 to $36 million. In summary, the second quarter results demonstrate good progress against our full year objective. Anchored by the strength of its underlying portfolio, DHC is well positioned to grow NOI and reduce leverage while continuing to prudently invest in its portfolio. That concludes our prepared remarks. Operator, please open the line for questions.
Speaker Change: This reduction is mainly driven by timing of certain projects being pushed to 2025 and pausing certain projects related to the communities. We are evaluating for transition ourselves.
Speaker Change: Turning to truck shop outlook, we reaffirm our full year NOI guidance of $120 million to $140 million, we expect third quarter shop, NOI guidance to range from 31% to $36 million.
Speaker Change: In summary, second quarter results demonstrate good progress against our full year objectives anchored by the strength of our underlying portfolio DHT is well positioned to grow NOI and reduce leverage while continuing to prudently invest in our portfolio.
Matthew Brown: Anchored by the strength of our underlying portfolio, DHC has well-positioned to grow NOI and reduce leverage while continuing to crudently invest in our portfolio.
Unknown Executive: That concludes our prepared remarks. Operator, please open the line for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.
Speaker Change: That concludes our prepared remarks, operator, please open the line for questions.
Speaker Change: Thank you David.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star and then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. The first question comes from Bryan Maher with B. Reilly FBR. Please go ahead.
Speaker Change: We'll now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: But anytime you have a question has been addressed and you would like to withdraw your question. Please press Star then two.
Brian Mayer: The first question comes from Brian Mayer with VRILI FBR. Please go ahead. Thank you and good afternoon. Just a few for me today on the medical office building. You are in the market selling some low occupancy or maybe vacant. Should we then expect in our model that the balance of the portfolio one would suspect occupancy to move higher on a total basis and close in on the same-store basis? My guess is mid to high 80s. Is that a proper assumption? It is. As we talked about, those properties that we are currently marketing have very low occupancy; selectively, to your point, some vacant, some with moderate occupancy.
Speaker Change: The first question comes from Bryan Mayer.
Speaker Change: B Riley FBR. Please go ahead.
Bryan Maher: Thank you and good afternoon. Just a few for me today.
Bryan Mayer: Thank you and good afternoon, just a few from me today.
Speaker Change: On the medical office building, so you're in the market selling some they've got low occupancy or may be baking.
Matt Brown: On the medical office buildings, so you're in the market selling some; they've got low occupancy or maybe vacant. Should we then expect in our model that the balance of the portfolio, one would suspect, occupancy to move higher on a total basis and close in on the same store basis in, you know, my guess is kind of the mid to high 80s. Is that a proper assumption?
Bryan Mayer: Should we then expect in our model that the balance of the portfolio one would suspect occupancy to move higher on a total basis and closed in on the same store basis. In you know my guess is it's kind of mid to high <unk> is that a proper assumption.
Matt Brown: It is, you know, as we talked about, those properties that we're currently marketing have very low occupancy selectively, to your point, some vacant, some with kind of moderate occupancy. So yes, I think selling those assets is going to kind of push up NOI organically in the mid-80s, you know, kind of a range of probably 200 basis points of that is probably the right metric, assuming we can close those this year. But I think where we are today with highlighting some of those under the LOI, I think we have some good visibility into a handful of those transactions happening by the year.
Speaker Change: It is you know as we've talked about.
Speaker Change: Those properties that were currently market marketing have very low occupancy selectively to your point some vacant somewhat kind of moderate occupancies. So yes.
Unknown Executive: So yes, I think selling those assets is going to push up and on why organically in the mid-80s, kind of a range of probably 200 basis points of that is probably kind of the right metric. Assuming we can close those this year, but I think where we are today with highlighting some of those under LNY, I think we have some good visibility of the handful of those transactions happening by your end. And given the sharp decline in interest rates, A, today and B, the last month in general, if you had to price the GSE agency debt, let's just say today or this week or next week, I think in the past we've talked about 7%, maybe just slightly below 7%, but that was a couple of few months ago.
Speaker Change: I think selling those assets is going to kind of push out, but I don't why organically in the mid eighties, you know kind of a range of probably 200 basis points of that is probably kind of the right metric.
Speaker Change: Assuming we can close this year, but I think where we are today with highlighting some of those under LOI I think we have some good visibility into a handful of those transactions are happening by Iraq.
Matt Brown: Okay, and given the sharp decline in interest rates, A, today and B, the last month in general, if you had to price the GSE agency debt, let's just say today or this week or next week, you know, I think in the past, we've talked about 7%, maybe just slightly below 7%. But you know, that was a couple of months ago. Where do you think that that might shake out today?
Speaker Change: Okay, and given the sharp decline in interest rates, a today and be the last month in general if you had to price. The GSE agency that let's just say today or this week or next week, you know I think in the past we've talked about 7%, maybe just slightly below 7%, but yeah that was a couple of few months ago.
Unknown Executive: Where do you think that that might shake out today? Hey Brian, it's a good question. We would estimate that to be closer to six to six and a half percent if we are pricing today. On the CNBS front, we found it interesting that you did the 120 million in the second quarter. Should we expect any more of that, or are you going to just rely on the GSE? And if you rely on more of that, again, what might price thing be in today's market? Yeah, the CNBS financing was the first of two initiatives, so right now we're not in the market looking at doing additional CNBS financing.
Speaker Change: Where do you think that that might shake out today.
Matt Brown: Hey Bryan, it's a good question. We would estimate that to be closer to six to six and a half percent if we were pricing today.
Speaker Change: Hey, Brian It's a good question, we would estimate that to be closer to six to six 5%. If we were pricing today.
Matt Brown: Okay, we should move quickly. On the CMBS front, we found it interesting that you did $120 million in the second quarter. Should we expect any more of that, or are you going to just rely on the GSE? And if you rely on more of that, again, what might pricing be in today's market?
Speaker Change: Okay, and you should move quickly.
Speaker Change: [laughter] on the C. M. B S. Friday, we found it interesting that you did the $120 million in the second quarter should we expect any more of that or are you going to just rely on the GSE and if you rely on board at again, what what might pricing be in today's market.
Matt Brown: Yeah, we're the CMBS financing was the first of two initiatives. So right now, we're not in the market looking at doing additional CMBS financing; we are purely focused on the GSE financing.
Speaker Change: Yes.
Speaker Change: The C N B S financing was the first of two initiatives. So right now we're not in the market looking at doing additional.
Unknown Executive: We are purely focused on the GSE financing. Okay, and you know, I find it interesting your shop assets for sales. You know, I think you said 1100 units for 80 to 90, 80 to 100 million. How many properties would that be? The total properties that we have three properties that are in advance stages, but they're signed all along. And then we have another five communities that are getting ready to kick off the marketing. Okay, and given where the market's been pricing your shop portfolio for the past couple of years, I mean, you know, I kind of come up with somewhere in the low to mid 80s per key for negative NOI properties with low occupancy.
Speaker Change: See MBS financing, we are purely focused on the GSE financing.
Matt Brown: Okay. And, you know, I found it interesting your shop assets for sale. You know, I think you said 1100 units for 80 to 90 million, 80 to 100 million. How many properties would that be?
Speaker Change: Okay, and you know I found it interesting your shop assets for sales.
Speaker Change: I think you said 11 100 units for 80 to 90 million 80 to 100 million.
Speaker Change: How many properties would that be.
Matt Brown: The total property, so we have three properties that are in advanced stages, that have signed LOIs. And then we have another five communities that are getting ready to kick off the market.
Speaker Change: The total property. So we have three properties that are in advanced stages of your signed LOI.
Speaker Change: And then we have another five communities that are getting ready to kick off our marketing.
Matt Brown: Okay, and given where the market's been pricing your shop portfolio for the past couple of years, I mean, you know, I kind of come up with somewhere in the low to mid 80s per key for negative NOI properties with low occupancy. I mean, that seems to be kind of a win, don't you, don't you think?
Speaker Change: Okay, and given where the market's been pricing your shop portfolio for the past couple of years. I mean, you know I kind of come up with somewhere in the low to mid eighties perky for negative NOI properties with low occupancy I mean that seems to be kind of a win don't eat don't you think.
Unknown Executive: I mean, that seems to be kind of a win, don't you think? Absolutely, I think that, you know, we've talked about in scenario is how some of the negative drag of these communities. I think it's masking some of the upside potential with the better performing communities. And so, you know, while we, you know, want to be able to kind of continue to improve communities and push additional values, being in a position today in this scenario where we can achieve kind of those rates and those price for unit is a positive and a win. Okay, and just just two more for me.
Matt Brown: Absolutely. I think that, you know, we've talked about in scenarios how some of the negative drag with these communities is masking some of the upside potential with the better performing communities. And so, you know, while we want to be able to kind of continue to improve communities and push additional values, being in a position today in this scenario where we can achieve kind of those rates and those prices per unit is a positive and a win.
Speaker Change: Absolutely I think that you know we've talked about in some of our ideas as how some of the negative drag of these communities.
Speaker Change: It is masking some of the upside potential with a better performing communities and so you know.
Speaker Change: While we you know.
Speaker Change: Wanna be able to kind of continue to improve communities and push additional value being in a position today in this scenario, where we can achieve kind of those rates and those price per unit.
Speaker Change: It's a positive and a win.
Bryan Maher: Okay, and. Just two more for me.
Speaker Change: Okay and.
Matt Brown: Can you drill down a little bit? I didn't quite catch Brian's commentary. I think you said there was an asset for sale there. Can you give me a little more color on that?
Speaker Change: Just two more for me can you drill down a little bit I didn't quite catch.
Unknown Executive: Can you drill down a little bit? It ain't quite catch my commentary. I think you said an asset for sale there. Can you give me a little more color on that? Yeah, so we have a life science property and toy pines about 186,000 square feet. You know, the reference there is that, you know, we talked about properties we're considering or marketing, and that's one of them. And so, you know, given kind of that outside of the ones that are in active stages, you know, that's kind of the one new entry for the quarter. So we're out there early earnings with that asset.
Speaker Change: In your commentary I think you said an asset for sale. There can you give me a little more color on on that.
Matt Brown: Yeah, so we have a life science property in Torrey Pines, about 186,000 square feet. The reference there is that, you know, we talked about properties we're considering or marketing, and that's one of them. And so, you know, given kind of that outside of the ones that are in active stages, you know, that's kind of the one new entry for the quarter. So we're in the early innings with that asset. And I think there's a lot of opportunity to unpack with different strategies and scenarios, but nonetheless, it's something that we're looking at.
Speaker Change: Yeah. So we have a life science property in Torrey Pines about 186000 square feet.
You know the reference there is that you know we talked about our properties, we're considering or marketing and that's one of them and so give them kind of outside of the ones that are inactive stage as you know that's kind of the one new entry.
Speaker Change: So we're at the early innings with that asset and I think there's a lot of opportunity to unpack with different strategies and scenario, but nonetheless, it's something that we're looking at.
Unknown Executive: And I think there's a lot of opportunity to unpack with different strategies and scenarios, but nonetheless, it's something that we're looking at. Is that the one? So I think that you did some significant renovation and toy pines over the last couple of years. I think, correct me if I'm wrong, it's a couple of few buildings. Is this the one building that happens to be vacant, but yet is freshly renovated? Is that the one you're talking about? It is. Yeah, this is a three-building campus. Two of the three buildings are fully occupied. One building is fully vacant.
Matt Brown: Is that the one, so I think that you did some significant renovation in Torrey Pines over the last couple of years. I think, correct me if I'm wrong, it's a couple of buildings. Is this the one building that happens to be vacant but is freshly renovated? Is that the one you're talking about?
Speaker Change: Is that different ones. So I think you did some significant renovation and Torrey pines over the last couple of years, I think and correct me if I'm wrong. It's a couple a few buildings is this the one building that happens to be vacant, but yet is freshly renovated as that's the one you're talking about.
Matt Brown: It is. Yeah, this is a three-building campus. Two of the three buildings are fully occupied, and one building is fully vacant.
Speaker Change: It is yeah. This is a three building campus.
Speaker Change: Two of the three buildings are fully occupied.
Matt Brown: So, you know, right now that campus is, you know, collectively just shy of 50% occupied. And so, you know, we've invested in the property. There's a lot of demand kind of within that sub market. And so it just seems an opportune time to kind of test the waters just to see where the investor appetite would be for what we consider to be a great location and a good investment.
Speaker Change: One building is fully baked yet so you know right right now that campuses.
Unknown Executive: So, you know, right now that campus is, you know, collectively just shy at 50% occupied. And so, you know, we've invested in the property. There's a lot of demand, kind of within that sub market. And so it just seems an opportune time to kind of test the waters just to see where the investor appetite would be for what we consider to be a great location and a good app. Okay, thanks. Just last for me, appreciate you reaffirming your four-year shop and a wide guidance. It seems like, well, at least relative to our model, that occupancy has been running a little bit lighter than expectation, but rates have been a little bit higher than expectations with margins in line.
Speaker Change: Collectively just shy of 50% occupied and so you.
Speaker Change: You know we've invested in the property are there's a lot of them.
Man kind of was in that sub market and so it just seems an opportune time to kind of test the waters just to see.
Speaker Change: What are the investor appetite would be for what we consider to be a great location and a good asset.
Matt Brown: Okay, thanks. Just last for me, I appreciate you reaffirming your four-year SHOP-NOI guidance. It seems like, well, at least relative to our model, that occupancy has been running a little bit lighter than expected, but rates have been a little bit higher than expectations with margins in line. Is there anything going on there that we need to know about relative to the mix between OCK and rate?
Speaker Change: Okay. Thanks, and just last for me I. Appreciate you reaffirming your full year of shop NOI guidance. It seems like well at least relative to our model that occupancy has been running a little bit lighter than expectation, but rates have been a little bit higher than expectations with margins in.
Speaker Change: In line is there anything going on there that we need to know about relative to the mix between op and rate.
Matt Brown: Now, you know, for six months, we're slightly behind where we wanted to be, but we have been telling the market that we expect a lot of growth to happen in the second half of the year. And the preliminary results we're seeing for July move-ins are positive. So we're standing behind the guidance we laid out previously. Okay, thank you very much.
Speaker Change: No.
Speaker Change: For six months, we're slightly behind where we wanted to be but we have been telling the market that we expect a lot of the growth to happen in the second half of the year.
Unknown Executive: So we're slightly behind where we wanted to be, but we have been telling the market that we expect a lot of the growth to happen in the second half of the year, and the preliminary results we're seeing for July movements are positive. So we're standing behind the guidance we laid out previously. Okay, thank you very much. Okay.
Speaker Change: And the preliminary results, we're seeing for July move ins is positive.
Speaker Change: So we're standing behind the guidance, we laid out previously.
Speaker Change: Okay. Thank you very much.
Speaker Change: Okay.
Justin: Once again, if you have a question, please press star and one. An expression comes from Justin: how speak with RBC Capital Markets? Please go ahead. Yeah, thanks. Just one from me. Can you find some color on the shop performance? I know you highlighted that, and a wide growth will, most of the wide growth will occur in the back half of the year. But were you surprised by the flatish sequential occupancy gain in the quarter? So on the NLI growth, I just want to clarify, you know, year over year, we had 27% NLI growth in that portfolio, and sequentially from Q1, NLI growth is 17%.
Operator: Once again, if you have a question, please press star then 1. The next question comes from Justin Hasbeek with RBC Capital Markets. Please go ahead.
Speaker Change: Once again, if you have a question. Please press Star then one.
Justin Hasbeek: Yeah, thanks. Just one from me.
Speaker Change: Your next question comes from Justin <unk> with RBC capital markets.
Speaker Change: Please go ahead.
Justin Hasbeek: Can you provide some color on the shop performance? I know you highlighted that NOI growth will, most of the NOI growth will occur in the back half of the year. But were you surprised by the flattish sequential occupancy gain in the quarter? So on the NOI growth, I just want to clarify, you know,
Justin: Yeah. Thanks, just one for me can you provide some color on the shop performance I know you highlighted that NOI growth will most of that NOI growth will occur in the back half of the year, but were you surprised by the flattish second sequential occupancy gain in the quarter.
Matt Brown: So on the NOI growth, I just want to clarify, you know, year over year, we had 27% NOI growth in that portfolio and sequentially from Q1, NOI growth was 17%. You're right that occupancy was essentially muted from Q1 to Q2, but as I just responded to Bryan and his question, you know, we're seeing good activity and move-ins in July. And we've always said we expect a lot of that growth to happen in the second half of the year.
So on the on the NOI growth I, just want to clarify you know year over year, we had 27% NOI growth in that portfolio and sequentially from Q1, NOI growth of 17% Youre right that occupancy as of Sept was essentially muted from Q1 to Q2.
Unknown Executive: You're right that occupancy was essentially muted from Q1 to Q2, but as I just responded to Brian and his question, you know, we're seeing good activity and movements in July. And we've always said we expect a lot of that growth to happen in the second half of the year. Thank you.
Speaker Change: As I just responded to Brian and his question were seeing good activity and move ins in July and we've always said, we expect a lot of that growth to happen in the second half of the year.
Speaker Change: Thank you.
Unknown Executive: This concludes the session and answer session.
Chris Bilotto: This concludes the question and answer session. I would like to turn the conference back over to Chris Bilotto for any closing remarks. Please go ahead.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Chris Blotto for any closing remarks. Please go ahead.
Christopher Bilotto: I would like to turn the conference back over to Chris Bellotto for any closing remarks. Please go ahead. Thank you for joining her call today, and we look forward to talking to future conferences.
Chris Bilotto: Thank you for joining our call today. We look forward to talking at future conferences.
Chris Blotto: Thank you for joining our call today, and we look forward to talking to a future conferences.
Unknown Executive: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day. Thank you.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Speaker Change: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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Kevin Brady: Kevin Brady, Matthew Brown, Bryan Maher, Aaron David, Matthew Brown, Bryan Maher, Aaron Hecht, Jennifer Francis, Christopher Bilotto.