B.Riley analyst Bryan Maher lowered the price target on Diversified Healthcare Trust (NASDAQ: DHC) to $5.00 (from $6.00) while maintaining a Buy rating.

The analyst comments "There was a lot to unpack in Diversified Healthcare Trusts (DHC) 3Q24 results. The REIT reported an earnings miss that was partially impacted by Hurricane Helene (late-September) and a fire (insurance deductible) at one senior housing (SHOP) community. These one-time items, totaling ~$2.5M, were not backed out of DHC's earnings. While this does not minimize what we consider otherwise soft SHOP NOI results, we believe investors should be cognizant of this as we build out the SHOP NOI recovery into 2025-2026. Unfortunately, Hurricane Milton (early-October) will also impact 4Q24 results, along with some SHOP NOI margin headwind carryover. That said, management is working to reduce the drag on SHOP results through the additional sale of 32 underperforming communities (2,422 units) that collectively delivered negative $2.0M of NOI in 3Q24. These properties will likely be sold in 1H25 for between $135.0M and $155.0M. This is in addition to the 18 communities (876 units) being sold to Brookdale for $135.0M ($154.1K/unit). Importantly, the additional SHOP sales will not only materially reduce future capex spending, but should also deliver an uplift to the overall remaining SHOP portfolio NOI. Another issue that we believe negatively impacted DHC shares on Tuesday was the announcement that instead of doing a large ($500.0M) GSE/Agency debt financing to take out the remaining June 2025 9.75% notes ($440.0M), the REIT will instead execute several smaller debt issuances, albeit on materially similar terms. This made a simple story slightly more complex, although we should end up at the same place by YE25. We believe these issuances, along with asset sales and $261.4M of current cash, should easily address the 2025-2026 maturities. DHC remains in the early innings of a multi-year SHOP recovery, and we reiterate our Buy on the shares. However, our PT goes from $6 to $5 (13.0x 2025E EBITDA), on the refinancing changes and near-term SHOP NOI softness."