Diversified Healthcare Trust (Nasdaq: DHC) is in the process of selling 32 communities in its senior housing operation portfolio (SHOP), the company’s leaders said during a third-quarter 2024 earnings call Tuesday.

The communities total 2,422 units, and three are under agreement or letter of intent to change hands, according to President and CEO Chris Bilotto. Another 29 communities are “in various stages of marketing,” he said during Tuesday’s call.

An uptick in labor expenses, along with “muted” occupancy growth for the portfolio, resulted in net operating income (NOI) of $27.4 million for the quarter. Though that represented a 32.6% increase over the portfolio’s NOI in the third quarter of 2023, it fell short of the company’s 2Q24 NOI, according to management.

“These communities generated negative NOI of $2 million, with occupancy of 75.2%, and we are assuming a valuation range from $55,000 to $65,000 per unit,” Bilotto said. “The decreased range of per unit value from our prior call is due to the additional communities selected for sale, which includes smaller unit counts, negative NOI and that are generally located in more tertiary markets.”

He added that taking the properties from the DHC portfolio will help the company focus its CapEx efforts into communities that generate higher ROI, “creating positive earnings momentum for our remaining portfolio.”

“In fact, removing the 32 SHOP assets that we are in the process of selling would improve our third-quarter NOI margin by 170 basis-points and occupancy by 50 basis-points,” Bilotto said.

The REIT is also in the process of selling 25 properties outside of its SHOP segment for gross proceeds of $333 million. That includes selling 18 triple-net leased senior living communities to Brookdale Senior Living (NYSE: BKD).

DHC has already transitioned 13 communities to new operators, and the company currently has 20 renovation projects scheduled for completion by the year’s end, he added.

Overall, DHC faces $440 million of maturities coming due in June 2025. The company is “actively engaged” with agencies to refinance its debt.

“Given the size of the financing and a more thorough understanding of the overall execution and timeline with the agencies, we have broadened our strategy to include financing of smaller tranches, tapping diversified financing sources from institutional real estate lenders along with the agencies,” Bilotto said.

The company’s stock dipped 19.6% Tuesday, ending the trading day at $2.83 per share.