AlerisLife to Transition 116 Communities Managed by Five Star Senior Living to 7 Different Operators

AlerisLife is selling all assets, including its 17 owned communities, and expects to complete a full wind-down of its business and operations in the first half of 2026.

Diversified Healthcare Trust (Nasdaq: DHC) has announced that it has entered agreements with AlerisLife and seven different operators to transition the management of 116 of DHC’s senior living communities managed by Five Star Senior Living, the operating division of AlerisLife. The transition of these management agreements will occur in tranches beginning in September and is expected to be completed by year end. AlerisLife is also selling all its assets, including its 17 owned communities, and expects to complete a full wind-down of its business and operations in the first half of 2026. In connection with the sale of AlerisLife’s assets and after repayment of debt and payment of estimated wind-down costs, DHC expects to receive estimated net proceeds of between $25 million to $40 million for its 34% interest in AlerisLife. DHC plans to use these net proceeds to reduce leverage and for other general business purposes, including reinvestment in its SHOP segment.

Transaction Highlights

AlerisLife engaged a third party investment banking firm to explore opportunities to monetize its owned communities and its DHC management agreements. A marketing process commenced in April 2025, and, after outreach to more than 300 potential counterparties and a competitive bidding process, AlerisLife and DHC selected seven operators to purchase the management agreements for the 116 DHC communities.

The closing of these transactions is expected to improve the operating performance of DHC’s SHOP communities, strengthen DHC’s balance sheet and deliver other meaningful benefits, including the following:

• The sale of the DHC management agreements to a diversified pool of operators, which provides for the concentration of operations in certain key geographic markets, is expected to unlock operational efficiencies, drive cost savings and position DHC’s SHOP segment for accelerated revenue and NOI growth opportunities;

• The investment being made by the operators to purchase the management agreements, as well as resulting changes to the terms of the management agreements to be more performance based, are expected to further align the interests of DHC and the operators, help achieve improved operating results and strengthen opportunities for the long term success of DHC’s SHOP communities; and

• As a 34% owner of AlerisLife, the net proceeds that DHC expects to receive upon completion of the wind-down of AlerisLife will be immediately accretive to DHC.

  
  

Chris Bilotto, President and Chief Executive Officer of DHC, made the following statement:

“Executing on these transactions marks an important milestone in being able to optimize our SHOP segment performance. By expanding our base of high-quality operators, improving concentration in key markets and partnering with groups that are making meaningful investments for our management agreements, we expect to enhance performance in our SHOP segment and increase returns for our shareholders. These transactions are also expected to allow us to build on the momentum from the improved performance of the Five Star managed communities over the past few years, further strengthen our asset base and drive enhanced NOI growth across our SHOP communities.

We extend our gratitude to the AlerisLife team members, under the leadership of Jeff Leer, for the remarkable accomplishments achieved over the past several years. The team’s dedication and focus have been the driving force behind the improved performance of the Five Star managed communities, enabling us to create lasting value.”

The sales of the DHC management agreements are expected to close beginning in the third quarter of 2025, subject to customary closing conditions and lender and regulatory approvals where required.