Diversified Transitions 8 Five Star Communities to Cedarhurst Senior Living

Diversified Healthcare Trust (Nasdaq: DHC) is nearing completion of its plan to transition 108 communities managed by Five Star Senior Living (Nasdaq: FVE) by the end of 2021.

The Newton, Massachusetts-based real estate investment trust (REIT) on Tuesday announced it entered into a new management agreement with Cedarhurst Senior Living for seven assisted living facilities and one memory care community, all in Illinois. The portfolio toals 486 units.

Since Diversified announced its intent to transition the Five Star communities in April, it has transitioned nearly 78% of the portfolio and expects the transitions to be complete by the end of the year, the company said in a statement.

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Transitioning the communities allows Five Star, also based in Newton, to drive growth through its larger senior housing communities, standalone active adult and independent living properties, repositioning nearly 1,500 skilled nursing beds for other uses, and Ageility, its rehabilitation and wellness service line.

The company aims to restructure its service lines to better meet the future needs of the incoming generation of older adults. The repositioning agreement with Diversified is the first step in this strategy, Five Star CEO Katie Potter said during the company’s Q2 2021 earnings call earlier this month.

In July, the REIT announced new management agreements with Naperville, Illinois-based Charter Senior Living; Roswell, Georgia-based Phoenix Senior Living; and Alpharetta, Georgia-based Oaks Senior Living. The agreements encompass 66 communities, or 61%, of the portfolio.

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Oaks Senior Living CEO Alex Salabarria confirmed to Senior Housing News at the time that the company assumed management of 26 communities in Georgia and South Carolina, all to be rebranded under the Oaks banner.

Another operator, Stellar Senior Living, assumed management of 10 communities in Colorado, Texas, and Wyoming.

Based in St. Louis, Cedarhurst is the operating arm of The Dover Companies, a fully integrated real estate firm. Dover Companies CFO Stephen Wertman told SHN in August 2020 that Cedarhurst planned to add nine communities to its portfolio by the end of 2021.

The firm has 53 communities across nine states, six communities under development in Illinois, Indiana, Kansas, and Kentucky, with plans to develop five new communities a year starting in 2022, Dover Companies CEO Joshua Jennings said during a SHN Capital Quarterly webinar series appearance in May.

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