1 unchanged sentence
The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and with our Annual Report.
−Removed: We are a REIT that was organized under Maryland law and which owns medical office and life science properties, senior living communities and other healthcare related properties throughout the United States.
−Removed: As of September 30, 2021, we owned 392 properties located in 36 states and Washington, D.C., including one life science property owned in a joint venture arrangement in which we own a 55% equity interest.
−Removed: At September 30, 2021, the gross book value of our real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations and less impairment write downs, was $8.2 billion.
+Added: We are a REIT that is organized under Maryland law and which owns medical office and life science properties, senior living communities and other healthcare related properties throughout the United States.
+Added: As of March 31, 2022, we wholly owned 378 properties, including seven closed senior living communities, located in 36 states and Washington, D.C.
+Added: At March 31, 2022, the gross book value of our real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations and less impairment write downs, was $6.8 billion.
+Added: As of March 31, 2022, we owned a 20% equity interest in each of two unconsolidated joint ventures that own medical office and life science properties located in five states with an aggregate of approximately 2.2 million rentable square feet that was 98% leased with an average (by annualized rental income) remaining lease term of 6.6 years.
Our business is focused on healthcare related properties, including medical office and life science properties, senior living communities, wellness centers and other medical and healthcare related properties.
2 unchanged sentences
Our senior living community operators also experienced disruptions, including limitations on in-person tours and new admissions, and experienced challenges in attracting new residents to their communities in addition to experiencing increased expenses due to increased labor costs, including higher health benefits costs, and increased costs and consumption of supplies, including personal protective equipment.
−Removed: There will be lasting impacts of the COVID-19 pandemic, even as states and municipalities have eased and may further ease restrictions.
−Removed: Our tenants and their businesses may become increasingly negatively impacted, which may result in our tenants seeking assistance from us regarding their rent obligations owed to us, their being unable or unwilling to pay us rent, their ceasing to pay us rent and their ceasing to continue as going concerns.
−Removed: We are closely monitoring the impacts of the COVID-19 pandemic on all aspects of our business, including, but not limited to, labor availability and cost pressures from supply chain disruptions and commodity price inflation in our SHOP segment.
−Removed: With respect to our SHOP segment, we expect that our senior living community managers will be operating our communities at lower average occupancy with higher operating expenses per resident as a result of the COVID-19 pandemic, which will likely lead to decreased returns to us.
−Removed: Our managers continue to follow federal, state and local health department guidelines and their own infection prevention protocols but we expect to see additional cases of COVID-19 in our senior living communities.
−Removed: Throughout the first quarter of 2021, Five Star coordinated multiple COVID-19 vaccination clinics at all senior living communities in our SHOP segment for residents and staff.
−Removed: As previously disclosed, all of the communities in our SHOP segment have completed vaccination clinics and are accepting new residents.
−Removed: On September 13, 2021, Five Star reported full compliance with its previously announced requirement that all of its team members at our communities managed by Five Star be fully vaccinated.
−Removed: We also believe that we and our managers, operators and impacted tenants have and may continue to benefit from provisions of the CARES Act, signed into law in March 2020 and further supplemented by the Consolidated Appropriations Act, 2021, or other federal or state relief programs allowing them to continue or resume business activity.
−Removed: During the nine months ended September 30, 2021, we recognized $19.0 million in interest and other income in our condensed consolidated statement of comprehensive income (loss) related to funds received under the CARES Act.
+Added: We are closely monitoring the impacts of the COVID-19 pandemic and the current inflationary market conditions on all aspects of our business, including, but not limited to, labor availability, wage inflation and cost pressures from supply chain disruptions and commodity price inflation in our SHOP segment.
+Added: We expect to continue to have elevated labor costs on a per resident basis.
We believe that we are well positioned to weather the present disruptions facing the real estate industry and, in particular, the real estate healthcare industry, including senior living.
3 unchanged sentences
As a result of these uncertainties, we are unable to determine what the ultimate impacts will be on our, our tenants', our managers', our operators' and other stakeholders' businesses, operations, financial results and financial position.
−Removed: For further information and risks relating to the COVID-19 pandemic and its aftermath on us and our business, see Part I, Item 1, “Business—COVID-19 Pandemic” and Part I, Item 1A, “Risk Factors” in our Annual Report.
−Removed: 2021 Amendments to our Management Arrangements with Five Star
−Removed: On June 9, 2021, we and Five Star amended our management arrangements.
−Removed: The principal changes to the management arrangements include:
−Removed: • that Five Star is cooperating with us in transitioning 108 of our senior living communities with approximately 7,500 living units to other third party managers without our payment of any termination fee to Five Star;
−Removed: • that we no longer have the right to sell up to an additional $682 million of senior living communities currently managed by Five Star and terminate Five Star's management of those communities without our payment of a fee to Five Star upon sale;
−Removed: • that Five Star is continuing to manage 120 of our senior living communities with approximately 18,000 living units, and that the skilled nursing units in all of our continuing care retirement communities that Five Star is continuing to manage, which then included approximately 1,500 living units, have been closed and are in the process of being evaluated and repositioned;
−Removed: • that beginning in 2025, we will have the right to terminate up to 10% of the senior living communities that Five Star is continuing to manage, based on total revenues per year for failure to meet 80% of a target EBITDA for the applicable period;
−Removed: • that the incentive fee that Five Star may earn in any calendar year for the senior living communities that Five Star is continuing to manage is no longer subject to a cap and that any senior living communities that are undergoing a major renovation or repositioning are excluded from the calculation of the incentive fee;
−Removed: • that RMR LLC will oversee any major renovation or repositioning activities at the senior living communities that Five Star is continuing to manage;
−Removed: • that the term of our management agreements with Five Star for our senior living communities that Five Star is continuing to manage was extended by two years to December 31, 2036.
−Removed: Pursuant to these changes, we and Five Star entered into the Master Management Agreement for the senior living communities that Five Star is continuing to manage and interim management agreements for the senior living communities that we and Five Star agreed to transition to new operators.
−Removed: These agreements replaced our prior management and omnibus agreements with Five Star.
−Removed: In addition, Five Star delivered to us a related amended and restated guaranty agreement pursuant to which Five Star is continuing to guarantee the payment and performance of each of its applicable subsidiary's obligations under the applicable management agreements.
−Removed: As of September 30, 2021, we transitioned 69 of the 108 senior living communities containing 4,755 living units to new third party managers.
−Removed: From September 30, 2021 to November 3, 2021, we completed the transition of 30 senior living communities containing 1,845 living units to new third party managers.
−Removed: As of November 3, 2021, we have entered into agreements to transition eight of the remaining nine senior living communities to be transitioned containing 819 living units to new third party managers.
−Removed: We expect to complete the transition of 107 senior living communities from Five Star by December 31, 2021 and we currently intend to close the remaining senior living community that we and Five Star agreed to transition and are assessing opportunities to redevelop that community.
−Removed: We lease our senior living communities that have been transitioned to new managers to our TRSs.
−Removed: We have incurred and expect to continue to incur costs related to retention and other transition costs for these communities.
−Removed: For the three and nine months ended September 30, 2021, we recorded $3.1 million and $15.0 million, respectively, of these costs to acquisition and certain other transaction related costs in our condensed consolidated statements of comprehensive income (loss).
−Removed: Pursuant to the terms of the management agreements with the new third party managers, the terms are generally as follows:
−Removed: the new third party managers will receive a management fee equal to 5% to 6% of the gross revenues realized at the applicable senior living communities plus reimbursement for direct costs and expenses related to such communities.
−Removed: These agreements generally also provide for the new third party managers to earn a minimum base fee for a portion of the term of the agreement.
−Removed: Additionally, the new third party managers have the ability to earn incentive fees equal to 15% to 25% of the amount by which EBITDA of the communities exceeds the target EBITDA.
−Removed: The new third party managers can also earn a construction supervision fee ranging between 3% and 5% of construction costs.
−Removed: The initial terms of the management agreements with the new third party managers are generally five years, subject to automatic extensions of successive terms of two years each unless earlier terminated or timely notice of nonrenewal is delivered.
−Removed: The management agreements with the new third party managers also generally provide us with the right to terminate the management agreements for communities that do not earn 70% to 80% of the target EBITDA for such communities, after an agreed upon stabilized period.
−Removed: The following table presents a breakout of communities that Five Star is continuing to manage and communities that we are in the process of transitioning from Five Star to other third party managers (dollars in thousands):
−Removed: As of and For the Three Months Ended
−Removed: September 30, 2021 As of and For the Nine Months Ended
−Removed: September 30, 2021
−Removed: Five Star Retained Communities Operator Transition Communities Total Five Star Retained Communities Operator Transition Communities Total
−Removed: Communities 120 107 227 120 107 227
−Removed: Number of units (1)
−Removed: 17,899 7,419 25,318 17,899 7,419 25,318
−Removed: Occupancy 73.4 % 66.8 % 71.4 % 73.0 % 66.5 % 71.1 %
−Removed: Residents fees and services $ 158,509 $ 76,635 $ 235,144 $ 512,480 $ 224,755 $ 737,235
−Removed: $ 7,481 $ (4,227) $ 3,254 $ 30,530 $ (10,943) $ 19,587
−Removed: (1) Excludes skilled nursing units that have been closed or are being closed and repositioned.
−Removed: (2) Our definition of NOI and our reconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”
−Removed: See Notes 9 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding our management arrangements with Five Star.
+Added: For further information and risks relating to the COVID-19 pandemic and its aftermath on us and our business, see Part I, Item 1, "Business" and Part I, Item 1A, "Risk Factors" in our Annual Report.
PORTFOLIO OVERVIEW
The following tables present an overview of our portfolio (dollars in thousands, except investment per square foot or unit data):
−Removed: As of September 30, 2021 Number
+Added: As of March 31, 2022 Number
of Properties Square Feet or Number of Units Gross Book Value of Real Estate Assets (1)
7 unchanged sentences
SHOP 234 25,088 units 4,190,563 61.7 % $ 167,035 245,448 79.0 % 153 0.4 %
−Removed: Other triple net leased senior living communities 29 2,327 units 250,273 3.0 % $ 107,552 6,239 1.9 % 6,239 8.7 %
+Added: Triple net leased senior living communities 30 2,424 units 252,906 3.7 % $ 104,334 6,470 2.1 % 6,470 15.4 %
Wellness centers 10 812,000 sq.
1 unchanged sentence
Total 378 $ 6,792,335 100.0 % $ 310,733 100.0 % $ 41,991 100.0 %
−Removed: As of and For the Three Months Ended September 30,
+Added: As of and For the Three Months Ended March 31,
Office Portfolio (5)
1 unchanged sentence
SHOP 73.0 % 69.5 %
−Removed: Other triple net leased senior living communities (6)(7)
+Added: Triple net leased senior living communities (6)(7)
80.1 % 76.4 %
Wellness centers (7)
+Added: 100.0 % 100.0 %
(1) Represents gross book value of real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations and less impairment write downs, if any.
−Removed: (2) Represents gross book value of real estate assets divided by number of rentable square feet or living units, as applicable, at September 30, 2021.
+Added: (2) Represents gross book value of real estate assets divided by number of rentable square feet or living units, as applicable, at March 31, 2022.
(3) We calculate our NOI on a consolidated basis and by reportable segment.
2 unchanged sentences
A small percentage of our medical office and life science property leases are full-service leases where we receive fixed rent from our tenants and no reimbursement for our property operating costs.
−Removed: (5) Medical office and life science property occupancy data is as of September 30, 2021 and 2020 and includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants and (iii) space being fitted out for occupancy.
+Added: (5) Medical office and life science property occupancy data is as of March 31, 2022 and 2021 and includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants and (iii) space being fitted out for occupancy.
(6) Excludes data for periods prior to our ownership of certain properties, data for properties sold or classified as held for sale, if any, and data for which there was a transfer of operations during the periods presented.
−Removed: (7) Operating data for other triple net leased senior living communities leased to third party operators and wellness centers are presented based upon the operating results provided by our tenants for the three months ended June 30, 2021 and 2020, or the most recent prior period for which tenant operating results are made available to us.
+Added: (7) Operating data for triple net leased senior living communities leased to third party operators and wellness centers are presented based upon the operating results provided by our tenants for the three months ended December 31, 2021 and 2020, or the most recent prior period for which tenant operating results are made available to us.
We have not independently verified tenant operating data.
−Removed: During the three and nine months ended September 30, 2021, we entered into new and renewal leases at our medical office and life science properties in our Office Portfolio segment as summarized in the following tables (dollars and square feet in thousands, except per square foot amounts):
−Removed: Three Months Ended September 30, 2021
+Added: During the three months ended March 31, 2022, we entered into new and renewal leases at our medical office and life science properties in our Office Portfolio segment as summarized in the following table (dollars and square feet in thousands, except per square foot amounts):
+Added: Three Months Ended March 31, 2022
New Leases Renewals Total
8 unchanged sentences
$ 9.52 $ 3.62 $ 8.45
−Removed: Nine Months Ended September 30, 2021
−Removed: New Leases Renewals Total
−Removed: Square feet leased during the period 318 898 1,216
−Removed: Weighted average rental rate change (by rentable square feet) 25.2 % 8.7 % 14.3 %
−Removed: Weighted average lease term (years) (1)
−Removed: Total leasing costs and concession commitments (2)
−Removed: $ 53,086 $ 30,446 $ 83,532
−Removed: Total leasing costs and concession commitments per square foot (2)
−Removed: $ 167.18 $ 33.86 $ 68.65
−Removed: Total leasing costs and concession commitments per square foot per year (2)
−Removed: $ 16.50 $ 3.92 $ 7.46
−Removed: (1) Weighted based on annualized rental income pursuant to existing leases as of September 30, 2021, including straight line rent adjustments and estimated recurring expense reimbursements, and excluding lease value amortization.
+Added: (1) Weighted based on annualized rental income pursuant to existing leases as of March 31, 2022, including straight line rent adjustments and estimated recurring expense reimbursements, and excluding lease value amortization.
(2) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.
Lease Expiration Schedules
−Removed: As of September 30, 2021, lease expirations at our medical office and life science properties in our Office Portfolio segment are as follows (dollars in thousands):
+Added: As of March 31, 2022, lease expirations at our medical office and life science properties in our Office Portfolio segment are as follows (dollars in thousands):
Year Number of Tenants Square Feet Leased Percent of Total Cumulative Percent of Total Annualized Rental Income (1)
12 unchanged sentences
Weighted average remaining lease term (in years) 5.3 5.8
−Removed: (1) Annualized rental income is based on rents pursuant to existing leases as of September 30, 2021, including straight line rent adjustments and estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our medical office and life science properties.
−Removed: Annualized rental income also includes 100% of rental income as reported under GAAP from the life science property owned in a joint venture arrangement in which we own a 55% equity interest.
−Removed: Lease expiration data for our other triple net leased senior living communities leased to third party operators and wellness centers has not been provided because there were no changes to the lease expiration schedules from those reported in our Annual Report, except for the renewal of leases with the tenant of six of our wellness centers for a five year term expiring in 2028.
+Added: (1) Annualized rental income is based on rents pursuant to existing leases as of March 31, 2022, including straight line rent adjustments and estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our medical office and life science properties.
+Added: Lease expiration data for our triple net leased senior living communities leased to third party operators and wellness centers has not been provided because there were no changes to the lease expiration schedules from those reported in our Annual Report, except for the transfer of operations of one senior living community previously managed by Five Star under our TRS structure to a third party operator in January 2022 for a 10 year lease term expiring in 2031.
RESULTS OF OPERATIONS (dollars and square feet in thousands, unless otherwise noted)
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Our SHOP segment consists of managed senior living communities that provide short term and long term residential living and, in some instances, care and other services for residents where we pay fees to managers to operate the communities.
−Removed: We also report “non-segment” operations, which consists of triple net leased senior living communities that are leased to operators from which we receive rents, and wellness centers, which we do not consider to be sufficiently material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
−Removed: The following table summarizes the results of operations of each of our segments for the three and nine months ended September 30, 2021 and 2020:
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
+Added: We also report “non-segment” operations, consisting of triple net leased senior living communities and wellness centers that are leased to third party operators from which we receive rents, which we do not consider to be sufficiently material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
+Added: The following table summarizes the results of operations of each of our segments for the three months ended March 31, 2022 and 2021:
+Added: Three Months Ended March 31,
Office Portfolio $ 54,997 $ 93,323
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The following sections analyze and discuss the results of operations of each of our segments for the periods presented.
−Removed: Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020 (dollars and square feet in thousands, except average monthly rate):
−Removed: Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the three months ended September 30, 2021 to the three months ended September 30, 2020.
+Added: Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021 (dollars and square feet in thousands, except average monthly rate):
+Added: Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the three months ended March 31, 2022 to the three months ended March 31, 2021.
Our definition of NOI and our reconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”
−Removed: Three Months Ended September 30,
+Added: Three Months Ended March 31,
2022 2021 $ Change % Change
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Impairment of assets — (174) 174 (100.0) %
−Removed: Gain (loss) on sale of properties 200 (211) 411 (194.8) %
−Removed: Gains and losses on equity securities, net (14,755) 12,510 (27,265) (217.9) %
−Removed: Interest and other income 976 134 842 nm
+Added: Gain (loss) on sale of properties 327,794 (122) 327,916 nm
+Added: Losses on equity securities, net (8,553) (8,339) (214) 2.6 %
+Added: Interest and other income 395 2,835 (2,440) (86.1) %
Interest expense
(57,131) (60,091) 2,960 (4.9) %
−Removed: Loss from continuing operations before income tax expense (87,409) (105,423) 18,014 (17.1) %
−Removed: Income tax expense (595) (365) (230) 63.0 %
−Removed: Net loss (88,004) (105,788) 17,784 (16.8) %
+Added: Loss on modification or early extinguishment of debt (483) (2,040) 1,557 (76.3) %
+Added: Income (loss) from continuing operations before income tax expense and equity in earnings of investees 238,541 (65,945) 304,486 nm
+Added: Income tax expense (1,472) (238) (1,234) nm
+Added: Equity in earnings of investees 3,354 — 3,354 nm
+Added: Net income (loss) 240,423 (66,183) 306,606 nm
Net income attributable to noncontrolling interest — (1,322) 1,322 (100.0) %
−Removed: Net loss attributable to common shareholders $ (89,343) $ (106,888) $ 17,545 (16.4) %
+Added: Net income (loss) attributable to common shareholders $ 240,423 $ (67,505) $ 307,928 nm
nm - not meaningful
2 unchanged sentences
All Properties
−Removed: As of September 30, As of September 30,
+Added: As of March 31, As of March 31,
2022 2021 2022 2021
4 unchanged sentences
92.5 % 92.8 % 89.3 % 92.3 %
−Removed: (1) Consists of medical office and life science properties that we have owned and which have been in service continuously since July 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest;
−Removed: excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
+Added: (1) Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2021;
+Added: excludes properties classified as held for sale or out of service undergoing redevelopment, if any, and medical office and life science properties owned by unconsolidated joint ventures in each of which we own an equity interest.
(2) Prior periods exclude space remeasurements made subsequent to those periods.
−Removed: (3) Medical office and life science property occupancy includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants, and (iii) space being fitted out for occupancy.
−Removed: Comparable property occupancy excludes out of service assets undergoing redevelopment.
−Removed: Three Months Ended September 30,
+Added: (3) All property occupancy for medical office and life science properties includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants, and (iii) space being fitted out for occupancy.
+Added: Comparable property occupancy excludes out of service assets undergoing redevelopment and medical office and life science properties owned by unconsolidated joint ventures in each of which we own an equity interest.
+Added: Three Months Ended March 31,
Comparable (1)
5 unchanged sentences
NOI $ 28,560 $ 28,949 $ (389) (1.3) % $ 2,990 $ 33,081 $ 31,550 $ 62,030 $ (30,480) (49.1) %
−Removed: (1) Consists of medical office and life science properties that we have owned and which have been in service continuously since July 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest;
−Removed: excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
+Added: (1) Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2021;
+Added: excludes properties classified as held for sale or out of service undergoing redevelopment, if any, and medical office and life science properties owned by unconsolidated joint ventures in each of which we own an equity interest.
Rental income.
−Removed: Rental income decreased primarily due to our disposition of 11 properties since July 1, 2020 and assets being taken out of service and/or undergoing redevelopment, partially offset by an increase in rental income at our comparable properties.
−Removed: Rental income increased at our comparable properties primarily due to higher average rents achieved from our new and renewal leasing activity and increased parking revenue at certain of our comparable properties as states and municipalities have eased restrictions related to the COVID-19 pandemic and tenants' employees have increasingly returned to the office and commercial activity has increased, partially offset by decreases in occupancy and tax escalation income at certain of our comparable properties.
+Added: Rental income decreased primarily due to the deconsolidation of 11 medical office and life science properties currently owned by unconsolidated joint ventures in each of which we own a 20% equity interest and our disposition of five properties since January 1, 2021 and assets being taken out of service and/or undergoing redevelopment, partially offset by an increase in rental income at our comparable properties.
+Added: Rental income increased at our comparable properties primarily due to higher average rents achieved from our new and renewal leasing activity and increased parking revenue at certain of our comparable properties as certain states and municipalities have eased restrictions related to the COVID-19 pandemic, tenants' employees have increasingly returned to the office and commercial activity has increased, partially offset by decreases in tax escalation income and other property operating expense reimbursements at certain of our comparable properties.
Property operating expenses.
Property operating expenses consist of real estate taxes, utility expenses, insurance, management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these properties.
−Removed: The decrease in property operating expenses is primarily due to our disposition of 11 properties since July 1, 2020 and a decrease in property operating expenses at our comparable properties.
−Removed: Property operating expenses at our comparable properties decreased primarily due to certain repairs that occurred in the 2020 period and decreases in other direct costs at certain of our comparable properties.
+Added: The decrease in property operating expenses is primarily due to the deconsolidation of 11 medical office and life science properties currently owned by unconsolidated joint ventures in each of which we own a 20% equity interest and our disposition of five properties since January 1, 2021 and assets being taken out of service and/or undergoing redevelopment, partially offset by an increase in property operating expenses at our comparable properties.
+Added: Property operating expenses at our comparable properties increased primarily due to increases in utility expenses, landscaping expenses and other direct costs, partially offset by decreases in real estate taxes at certain of our comparable properties.
Net operating income.
3 unchanged sentences
As of and For the Three Months As of and For the Three Months
−Removed: Ended September 30, Ended September 30,
+Added: Ended March 31, Ended March 31,
2022 2021 2022 2021
4 unchanged sentences
$ 4,084 $ 4,051 $ 4,472 $ 4,623
−Removed: (1) Consists of senior living communities that we have owned and which have been operated by the same operator continuously since July 1, 2020;
+Added: (1) Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2021;
excludes communities classified as held for sale or closed, if any.
(2) Average monthly rate is calculated by taking the average daily rate, which is defined as total residents fees and services divided by occupied units during the period, and multiplying it by 30 days.
−Removed: Three Months Ended September 30,
+Added: Three Months Ended March 31,
Comparable (1)
5 unchanged sentences
NOI $ 9,485 $ 10,357 $ (872) (8.4) % $ (9,332) $ (6,489) $ 153 $ 3,868 $ (3,715) (96.0) %
−Removed: (1) Consists of senior living communities that we have owned and which have been operated by the same operator continuously since July 1, 2020;
+Added: (1) Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2021;
excludes communities classified as held for sale or closed, if any.
2 unchanged sentences
We recognize these revenues as services are provided and related fees are accrued.
−Removed: Residents fees and services decreased primarily due to our disposition of six properties since July 1, 2020 and decreases in occupancy primarily due to the continued impact of the COVID-19 pandemic at both comparable and non-comparable properties for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, along with decreases in average monthly rates at certain of our comparable properties.
−Removed: Additionally, residents fees and services at our comparable properties decreased due to the closure of skilled nursing units during the three months ended June 30, 2021.
+Added: Residents fees and services decreased primarily due to the closure of skilled nursing units at certain of our comparable properties during the three months ended June 30, 2021.
+Added: Additionally, residents fees and services decreased due to our closure of one property since January 1, 2021.
+Added: Decreases to residents fees and services were partially offset by increases in occupancy and average monthly rate at certain of our comparable properties.
Property operating expenses.
Property operating expenses consist of real estate taxes, utility expenses, insurance, salaries and benefit costs of property level personnel, repairs and maintenance expense, management fees, cleaning expense and other direct costs of operating these communities.
−Removed: Property operating expenses decreased primarily due to our disposition of six properties since
−Removed: July 1, 2020 and a decrease in property operating expenses at our comparable properties.
−Removed: Property operating expenses at our comparable properties decreased primarily due to decreases in costs associated with staffing and dietary expenses primarily due to reduced occupancy at our comparable properties as a result of the continued impact of the COVID-19 pandemic and the closure of skilled nursing units during the three months ended June 30, 2021.
+Added: Property operating expenses decreased primarily due to the closure of skilled nursing units at certain of our comparable properties during the three months ended June 30, 2021.
+Added: Additionally, property operating expenses decreased due to our closure of one property since January 1, 2021.
+Added: Decreases to property operating expenses were partially offset by increased labor costs on a per resident basis for both permanent and agency labor.
+Added: We expect to continue to have elevated labor costs on a per resident basis.
Net operating income.
3 unchanged sentences
All Properties
−Removed: As of and For the Three Months Ended September 30, As of and For the Three Months Ended September 30,
+Added: As of and For the Three Months Ended March 31, As of and For the Three Months Ended March 31,
2022 2021 2022 2021
Total properties:
−Removed: Other triple net leased senior living communities 29 29 29 32
+Added: Triple net leased senior living communities 29 29 30 29
Wellness centers 10 10 10 10
Rent coverage:
−Removed: Other triple net leased senior living communities (3)
+Added: Triple net leased senior living communities (3)
1.21 x 1.48 x 1.21 x 1.48 x
2 unchanged sentences
(1) Non-segment operations consists of all of our other operations, including certain senior living communities leased to third party operators and wellness centers, which segment we do not consider to be sufficiently material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
−Removed: (2) Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since July 1, 2020;
+Added: (2) Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2021;
excludes properties classified as held for sale, if any.
−Removed: (3) All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended June 30, 2021 and 2020 or the most recent prior period for which tenant operating results are available to us.
+Added: (3) All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended December 31, 2021 and 2020 or the most recent prior period for which tenant operating results are available to us.
Rent coverage is calculated using the operating cash flows from our triple net lease tenants' operations of our properties, before subordinated charges, if any, divided by triple net lease minimum rents payable to us.
We have not independently verified tenant operating data.
−Removed: Excludes data for historical periods prior to our ownership of certain properties, as well as data for properties sold or classified as held for sale, if any, during the periods presented.
−Removed: Three Months Ended September 30,
+Added: Excludes data for historical periods prior to our ownership of certain properties, as well as data for properties sold or classified as held for sale, if any, or for which there was a transfer of operations during the periods presented.
+Added: Three Months Ended March 31,
Comparable (1)
4 unchanged sentences
NOI $ 10,092 $ 9,435 $ 657 7.0 % $ 196 $ — $ 10,288 $ 9,435 $ 853 9.0 %
−Removed: (1) Consists of properties that we have owned and which have been leased to the same operator continuously since July 1, 2020;
+Added: (1) Consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2021;
excludes properties classified as held for sale, if any.
Rental income.
−Removed: Rental income decreased primarily due to the sale of three senior living communities leased to private operators since July 1, 2020, partially offset by an increase in rental income at our comparable properties and increased rents resulting from our purchase of improvements at our comparable properties since July 1, 2020.
−Removed: Rental income increased at our comparable properties primarily due to higher cash rents received from a tenant of six of our wellness centers during the 2021 period, partially offset by lease renewals with tenants of certain of our wellness centers at lower average rental rates.
−Removed: As a result of the COVID-19 pandemic, in 2020 many of our wellness centers had been ordered closed by state or local executive orders.
−Removed: We have elected to recognize rental income from a tenant of six of our wellness centers as rent payments are received.
+Added: Rental income increased primarily due to an increase in rental income at our comparable properties, the transfer of one senior living community we own from managed senior living communities to triple net leased senior living communities, and increased rents resulting from our purchase of improvements at our comparable properties since January 1, 2021.
+Added: Rental income increased at our comparable properties primarily due to higher cash rents received from a tenant that previously defaulted under leases for six of our wellness centers during the three months ended March 31, 2022.
+Added: We have elected to recognize rental income from this previously defaulted tenant as rent payments are received.
+Added: In February 2022, the leases for these six wellness centers were amended and a portion of the rent due to us was deferred.
Net operating income.
1 unchanged sentence
Consolidated :
−Removed: References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended September 30, 2021, compared to the three months ended September 30, 2020.
+Added: References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended March 31, 2022, compared to the three months ended March 31, 2021.
Depreciation and amortization expense.
−Removed: Depreciation and amortization expense increased primarily due to the purchase of capital improvements at certain of our properties since July 1, 2020, partially offset by our disposition of 20 properties, certain
−Removed: depreciable leasing related assets becoming fully depreciated and certain of our acquired resident agreements becoming fully amortized since July 1, 2020.
+Added: Depreciation and amortization expense decreased primarily due to the deconsolidation of 11 medical office and life science properties owned by unconsolidated joint ventures in each of which we own a 20% equity interest, our disposition of five properties and certain depreciable assets becoming fully depreciated since January 1, 2021.
+Added: Decreases to depreciation and amortization expense were partially offset by the purchase of capital improvements at certain of our properties since January 1, 2021.
General and administrative expense .
−Removed: General and administrative expense consists of fees paid to RMR LLC under our business management agreement, legal and accounting fees, fees and expenses of our Trustees, equity compensation expense and other costs relating to our status as a publicly traded company.
−Removed: General and administrative expense increased primarily due to an increase in our base business management fees expense as a result of higher consolidated indebtedness during the three months ended September 30, 2021 compared to the three months ended September 30, 2020.
+Added: General and administrative expense consists of fees paid to RMR under our business management agreement, legal and accounting fees, fees and expenses of our Trustees, equity compensation expense and other costs relating to our status as a publicly traded company.
+Added: General and administrative expense decreased primarily due to a decrease in our base business management fees expense as a result of lower consolidated indebtedness and lower trading prices for our common shares during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
Acquisition and certain other transaction related costs.
−Removed: For the three months ended September 30, 2021, acquisition and certain other transaction related costs primarily represent costs incurred in connection with costs related to the transition of certain senior living communities to new third party managers and the Master Management Agreement.
−Removed: For the three months ended September 30, 2020, acquisition and certain other transaction related costs primarily represent costs incurred in connection with the 2020 restructuring of our business arrangements with Five Star, or the 2020 Restructuring Transaction.
−Removed: For information regarding the Master Management Agreement or the 2020 Restructuring Transaction, see Note 9 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
+Added: For the three months ended March 31, 2022, acquisition and certain other transaction related costs primarily represent costs related to the transition of certain senior living communities to new third party managers.
Impairment of assets.
1 unchanged sentence
Gain (loss) on sale of properties.
−Removed: Gain (loss) on sale of properties is the net result of our sale of certain of our properties during the three months ended September 30, 2021 and 2020.
+Added: Gain (loss) on sale of properties is the net result of our sale of certain of our properties during the three months ended March 31, 2022 and 2021.
+Added: The gain on sale of properties during the three months ended March 31, 2022 reflects our sale of 10 medical office and life science properties to our 10 medical office and life science properties joint venture in which we retained a 20% equity interest.
For further information regarding gain (loss) on sale of properties, see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.
−Removed: Gains and losses on equity securities, net.
−Removed: Gains and losses on equity securities, net, represent the net unrealized gains and losses to adjust our investment in Five Star to its fair value.
−Removed: For further information regarding our investment in Five Star, see Note 5 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
−Removed: Interest and other income.
−Removed: The increase in interest and other income is primarily due to $786 of funds we received from the U.S.
−Removed: government pursuant to the CARES Act during the three months ended September 30, 2021.
−Removed: Interest expense.
−Removed: Interest expense increased primarily due to our issuance in February 2021 of $500,000 aggregate principal amount of our 4.375% senior notes due 2031 and an increase in average borrowings under our revolving credit facility.
−Removed: This increase was partially offset by our prepayment in February 2021 of our $200,000 term loan and our redemption in June 2021 of all $300,000 of our 6.75% senior notes due 2021.
−Removed: Income tax expense .
−Removed: Income tax expense is the result of operating income we earned in certain jurisdictions where we are subject to state income taxes.
−Removed: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020 (dollars and square feet in thousands, except average monthly rate):
−Removed: Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the nine months ended September 30, 2021 to the nine months ended September 30, 2020.
−Removed: Our definition of NOI and our reconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”
−Removed: Nine Months Ended September 30,
−Removed: 2021 2020 $ Change % Change
−Removed: NOI by segment:
−Removed: Office Portfolio $ 182,647 $ 191,468 $ (8,821) (4.6) %
−Removed: SHOP 16,830 89,071 (72,241) (81.1) %
−Removed: Non-Segment 28,908 32,428 (3,520) (10.9) %
−Removed: Total NOI 228,385 312,967 (84,582) (27.0) %
−Removed: Depreciation and amortization 202,743 204,466 (1,723) (0.8) %
−Removed: General and administrative 25,538 23,132 2,406 10.4 %
−Removed: Acquisition and certain other transaction related costs 15,179 803 14,376 nm
−Removed: Impairment of assets (174) 106,611 (106,785) (100.2) %
−Removed: Gain on sale of properties 30,838 2,403 28,435 nm
−Removed: Gains and losses on equity securities, net (26,943) 14,541 (41,484) (285.3) %
−Removed: Interest and other income 19,849 8,008 11,841 147.9 %
−Removed: Interest expense
−Removed: (192,241) (143,715) (48,526) 33.8 %
−Removed: Gain on lease termination
−Removed: — 22,896 (22,896) (100.0) %
−Removed: Loss on early extinguishment of debt (2,410) (427) (1,983) nm
−Removed: Loss from continuing operations before income tax expense (185,808) (118,339) (67,469) 57.0 %
−Removed: Income tax expense (1,024) (1,048) 24 (2.3) %
−Removed: Net loss (186,832) (119,387) (67,445) 56.5 %
−Removed: Net income attributable to noncontrolling interest (4,238) (3,838) (400) 10.4 %
−Removed: Net loss attributable to common shareholders $ (191,070) $ (123,225) $ (67,845) 55.1 %
−Removed: nm - not meaningful
−Removed: Office Portfolio :
−Removed: Comparable Properties (1)
−Removed: All Properties
−Removed: As of September 30, As of September 30,
−Removed: 2021 2020 2021 2020
−Removed: Total buildings 112 112 118 126
−Removed: Total square feet (2)
−Removed: 10,512 10,507 10,927 11,573
−Removed: Occupancy (3)
−Removed: 92.7 % 93.2 % 91.3 % 91.3 %
−Removed: (1) Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest;
−Removed: excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
−Removed: (2) Prior periods exclude space remeasurements made subsequent to those periods.
−Removed: (3) Medical office and life science property occupancy includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants, and (iii) space being fitted out for occupancy.
−Removed: Comparable property occupancy excludes out of service assets undergoing redevelopment.
−Removed: Nine Months Ended September 30,
−Removed: Comparable (1)
−Removed: Non-Comparable
−Removed: Properties Results Properties Results Consolidated Properties Results
−Removed: 2021 2020 Change Change 2021 2020 2021 2020 Change Change
−Removed: Rental income $ 272,479 $ 271,466 $ 1,013 0.4 % $ 5,168 $ 17,049 $ 277,647 $ 288,515 $ (10,868) (3.8) %
−Removed: Property operating expenses (92,172) (91,566) 606 0.7 % (2,828) (5,481) (95,000) (97,047) (2,047) (2.1) %
−Removed: NOI $ 180,307 $ 179,900 $ 407 0.2 % $ 2,340 $ 11,568 $ 182,647 $ 191,468 $ (8,821) (4.6) %
−Removed: (1) Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest;
−Removed: excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
−Removed: Rental income.
−Removed: Rental income decreased primarily due to our disposition of 20 properties since January 1, 2020 and assets being taken out of service and/or undergoing redevelopment, partially offset by an increase in rental income at our comparable properties.
−Removed: Rental income increased at our comparable properties primarily due to higher average rents achieved from our new and renewal leasing activity and increased parking revenue at certain of our comparable properties as states and municipalities have eased restrictions related to the COVID-19 pandemic and tenants' employees have increasingly returned to the office and commercial activity has increased, partially offset by decreases in occupancy and tax escalation income at certain of our comparable properties.
−Removed: Property operating expenses.
−Removed: The decrease in property operating expenses is primarily due to our disposition of 20 properties since January 1, 2020, partially offset by an increase in property operating expenses at our comparable properties.
−Removed: Property operating expenses at our comparable properties increased primarily due to increases in utility expenses, landscaping expenses and other direct costs, partially offset by decreases in real estate taxes at certain of our comparable properties.
−Removed: Net operating income.
−Removed: The change in NOI reflects the net changes in rental income and property operating expenses described above.
−Removed: Comparable Properties (1)
−Removed: All Properties
−Removed: As of and For the Nine Months Ended September 30, As of and For the Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
−Removed: Total properties 159 159 235 239
−Removed: Number of units 20,669 20,669 25,424 28,232
−Removed: Occupancy 72.1 % 81.7 % 70.6 % 78.9 %
−Removed: Average monthly rate (2)
−Removed: $ 4,084 $ 4,071 $ 4,389 $ 4,526
−Removed: (1) Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2020;
−Removed: excludes communities classified as held for sale or closed, if any.
−Removed: (2) Average monthly rate is calculated by taking the average daily rate, which is defined as total residents fees and services divided by occupied units during the period, and multiplying it by 30 days.
−Removed: Nine Months Ended September 30,
−Removed: Comparable (1)
−Removed: Non-Comparable
−Removed: Properties Results Properties Results Consolidated Properties Results
−Removed: 2021 2020 Change Change 2021 2020 2021 2020 Change Change
−Removed: Residents fees and services $ 590,534 $ 712,981 $ (122,447) (17.2) % $ 149,392 $ 213,193 $ 739,926 $ 926,174 $ (186,248) (20.1) %
−Removed: Property operating expenses (565,516) (620,597) (55,081) (8.9) % (157,580) (216,506) (723,096) (837,103) (114,007) (13.6) %
−Removed: NOI $ 25,018 $ 92,384 $ (67,366) (72.9) % $ (8,188) $ (3,313) $ 16,830 $ 89,071 $ (72,241) (81.1) %
−Removed: (1) Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2020;
−Removed: excludes communities classified as held for sale or closed, if any.
−Removed: Residents fees and services.
−Removed: Residents fees and services decreased primarily due to our disposition of nine properties since January 1, 2020 and decreases in occupancy primarily due to the continued impact of the COVID-19 pandemic at both comparable
−Removed: and non-comparable properties for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, partially offset by increases in average monthly rates at certain of our comparable properties.
−Removed: Additionally, residents fees and services at our comparable properties decreased due to the closure of skilled nursing units during the nine months ended September 30, 2021.
−Removed: Property operating expenses.
−Removed: Property operating expenses decreased primarily due to our disposition of nine properties since January 1, 2020 and a decrease in property operating expenses at our comparable properties.
−Removed: Property operating expenses at our comparable properties decreased primarily due to decreases in costs associated with staffing and dietary expenses primarily due to reduced occupancy at our comparable properties as a result of the continued impact of the COVID-19 pandemic and the closure of skilled nursing units during the nine months ended September 30, 2021.
−Removed: Net operating income.
−Removed: The change in NOI reflects the net changes in residents fees and services and property operating expenses described above.
−Removed: Non-Segment (1) :
−Removed: Comparable Properties (2)
−Removed: All Properties
−Removed: As of and For the Nine Months Ended September 30, As of and For the Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
−Removed: Total properties:
−Removed: Other triple net leased senior living communities 29 29 29 32
−Removed: Wellness centers 10 10 10 10
−Removed: Rent coverage:
−Removed: Other triple net leased senior living communities (3)
−Removed: 1.27 x 1.63 x 1.27 x 1.63 x
−Removed: Wellness centers (3)
−Removed: 1.17 x 1.30 x 1.17 x 1.30 x
−Removed: (1) Non-segment operations consists of all of our other operations, including certain senior living communities leased to third party operators and wellness centers, which segment we do not consider to be sufficiently material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
−Removed: (2) Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2020;
−Removed: excludes properties classified as held for sale, if any.
−Removed: (3) All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended June 30, 2021 and 2020 or the most recent prior period for which tenant operating results are available to us.
−Removed: Rent coverage is calculated using the operating cash flows from our triple net lease tenants' operations of our properties, before subordinated charges, if any, divided by triple net lease minimum rents payable to us.
−Removed: We have not independently verified tenant operating data.
−Removed: Excludes data for historical periods prior to our ownership of certain properties, as well as data for properties sold or classified as held for sale, if any, during the periods presented.
−Removed: Nine Months Ended September 30,
−Removed: Comparable (1)
−Removed: Non-Comparable
−Removed: Properties Results Properties Results Consolidated Properties Results
−Removed: 2021 2020 Change Change 2021 2020 2021 2020 Change Change
−Removed: Rental income $ 28,909 $ 29,549 $ (640) (2.2) % $ (1) $ 2,879 $ 28,908 $ 32,428 $ (3,520) (10.9) %
−Removed: NOI $ 28,909 $ 29,549 $ (640) (2.2) % $ (1) $ 2,879 $ 28,908 $ 32,428 $ (3,520) (10.9) %
−Removed: (1) Consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2020;
−Removed: excludes properties classified as held for sale, if any.
−Removed: Rental income.
−Removed: Rental income decreased primarily due to the sale of three senior living communities leased to private operators since January 1, 2020 and a decrease in rental income at our comparable properties, partially offset by increased rents resulting from our purchase of improvements at our comparable properties since January 1, 2020.
−Removed: Rental income decreased at our comparable properties primarily due to lease renewals with tenants of certain of our wellness centers at lower average rental rates, partially offset by a tenant default under leases for six of our wellness centers during the 2020 period.
−Removed: As a result of the COVID-19 pandemic, in 2020 many of our wellness centers had been ordered closed by state or local executive orders.
−Removed: We have elected to recognize rental income from a tenant of six of our wellness centers as rent payments are received.
−Removed: Net operating income.
−Removed: The change in NOI reflects the net changes in rental income described above.
−Removed: Consolidated :
−Removed: References to changes in the income and expense categories below relate to the comparison of consolidated results for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020.
−Removed: Depreciation and amortization expense.
−Removed: Depreciation and amortization expense decreased primarily due to our disposition of 32 properties, certain depreciable leasing related assets becoming fully depreciated and certain of our acquired resident agreements becoming fully amortized since January 1, 2020, partially offset by the purchase of capital improvements at certain of our properties since January 1, 2020.
−Removed: General and administrative expense .
−Removed: General and administrative expense increased primarily due to an increase in our base business management fees expense as a result of higher consolidated indebtedness during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.
−Removed: Acquisition and certain other transaction related costs.
−Removed: For the nine months ended September 30, 2021, acquisition and certain other transaction related costs primarily represent costs related to the transition of certain senior living communities to new third party managers and costs incurred in connection with the Master Management Agreement.
−Removed: For the nine months ended September 30, 2020, acquisition and certain other transaction related costs primarily represent costs incurred in connection with the 2020 Restructuring Transaction.
−Removed: For information regarding the Master Management Agreement or the 2020 Restructuring Transaction, see Note 9 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
−Removed: Impairment of assets.
−Removed: For information about our asset impairment charges, see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.
−Removed: Gain on sale of properties.
−Removed: Gain on sale of properties is the net result of our sale of certain of our properties during the nine months ended September 30, 2021 and 2020.
−Removed: For further information regarding gain on sale of properties, see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.
−Removed: Gains and losses on equity securities, net.
−Removed: Gains and losses on equity securities, net, represent the net unrealized gains and losses to adjust our investment in Five Star to its fair value.
−Removed: For further information regarding our investment in Five Star, see Note 5 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
+Added: Losses on equity securities, net.
+Added: Losses on equity securities, net, represent the net unrealized losses to adjust our investment in AlerisLife to its fair value.
+Added: For further information regarding our investment in AlerisLife, see Note 5 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest and other income.
−Removed: The increase in interest and other income is primarily due to $18,967 of funds we received from the U.S.
−Removed: government pursuant to the CARES Act during the nine months ended September 30, 2021 compared to $7,346 received during the nine months ended September 30, 2020.
+Added: The decrease in interest and other income is primarily due to $199 of funds we received from the U.S.
+Added: government pursuant to the CARES Act during the three months ended March 31, 2022 compared to $2,433 received during the three months ended March 31, 2021.
Interest expense.
−Removed: Interest expense increased primarily due to our issuance in June 2020 of $1,000,000 aggregate principal amount of our 9.75% senior notes due 2025, our issuance in February 2021 of $500,000 aggregate principal amount of our 4.375% senior notes due 2031 and an increase in average borrowings under our revolving credit facility.
−Removed: This increase was partially offset by our redemption in April 2020 of all $200,000 of our 6.75% senior notes due 2020, our prepayment in June 2020 of our $250,000 term loan, our prepayment in February 2021 of our $200,000 term loan and our redemption in June 2021 of all $300,000 of our 6.75% senior notes due 2021.
−Removed: Gain on lease termination.
−Removed: Gain on lease termination represents the gain recognized in connection with the 2020 Restructuring Transaction.
−Removed: For information regarding the 2020 Restructuring Transaction, see Note 9 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
−Removed: Loss on early extinguishment of debt.
−Removed: We recorded a loss on early extinguishment of debt in connection with the amendments to our credit and term loan agreements, our prepayment of our $200,000 term loan and our redemption of all $300,000 of our 6.75% senior notes due 2021 during the nine months ended September 30, 2021.
−Removed: We recorded a loss on early extinguishment of debt in connection with our prepayment of our $250,000 term loan and mortgage notes during the nine months ended September 30, 2020.
+Added: Interest expense decreased primarily due to the deconsolidation of the debt secured by one life science property owned by our Boston life science property joint venture in which we own a 20% equity interest.
+Added: Additionally, interest expense decreased due to our redemption in June 2021 of all $300,000 of our 6.75% senior notes due 2021 and our prepayment in February 2021 of our $200,000 term loan.
+Added: These decreases were partially offset by an increase in average borrowings under our revolving credit facility and our issuance in February 2021 of $500,000 aggregate principal amount of our 4.375% senior notes due 2031 and an increase in the interest rate premium under our revolving credit facility.
+Added: Loss on modification or early extinguishment of debt.
+Added: We recorded a loss on modification or early extinguishment of debt in connection with the amendment to our credit agreement during the three months ended March 31, 2022.
+Added: We also recorded a loss in connection with the amendments to our credit agreement and the agreement governing our previously existing $200,000 term loan and our prepayment of our $200,000 term loan during the three months ended March 31, 2021.
Income tax expense .
Income tax expense is the result of operating income we earned in certain jurisdictions where we are subject to state income taxes.
+Added: Equity in earnings of investees.
+Added: Equity in earnings of investees is the change in the fair value of our investments in our joint ventures.
Non-GAAP Financial Measures (dollars in thousands, except per share amounts)
−Removed: We present certain "non-GAAP financial measures" within the meaning of applicable rules of the Securities and Exchange Commission, or SEC, including funds from operations attributable to common shareholders, or FFO attributable to common shareholders, normalized funds from operations attributable to common shareholders, or Normalized FFO attributable to common shareholders, and NOI for the three and nine months ended September 30, 2021 and 2020.
+Added: We present certain "non-GAAP financial measures" within the meaning of applicable rules of the Securities and Exchange Commission, or SEC, including funds from operations attributable to common shareholders, or FFO attributable to common shareholders, normalized funds from operations attributable to common shareholders, or Normalized FFO attributable to common shareholders, and NOI for the three months ended March 31, 2022 and 2021.
These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) or net income (loss) attributable to common shareholders as indicators of our operating performance or as measures of our liquidity.
4 unchanged sentences
We calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders as shown below.
−Removed: FFO attributable to common shareholders is calculated on the basis defined by the National Association of Real Estate Investment Trusts, which is net income (loss) attributable to common shareholders, calculated in accordance with GAAP, excluding any gain or loss on sale of properties, loss on impairment of real estate assets and gains or losses on equity securities, net, if any, including adjustments to reflect our proportionate share of FFO of our equity method investment in Five Star, plus real estate depreciation and amortization and minus FFO adjustments attributable to noncontrolling interest, as well as certain other adjustments currently not applicable to us.
−Removed: In calculating Normalized FFO attributable to common shareholders, we adjust for the items shown below.
+Added: FFO attributable to common shareholders is calculated on the basis defined by the National Association of Real Estate Investment Trusts, which is net income (loss) attributable to common shareholders, calculated in accordance with GAAP, excluding any gain or loss on sale of properties, equity in earnings or losses of unconsolidated joint ventures, loss on impairment of real estate assets, gains or losses on equity securities, net, if any, including adjustments to reflect our proportionate share of FFO of our equity method investment in AlerisLife and our proportionate share of FFO from our unconsolidated joint ventures, plus real estate depreciation and amortization of consolidated properties and minus FFO adjustments attributable to noncontrolling interest, as well as certain other adjustments currently not applicable to us.
+Added: In calculating Normalized FFO attributable to common shareholders, we adjust for the items shown below including similar adjustments for our unconsolidated joint ventures, if any.
FFO attributable to common shareholders and Normalized FFO attributable to common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders.
1 unchanged sentence
O ther real estate companies and REITs may calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders differently than we do.
−Removed: Our calculations of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three and nine months ended September 30, 2021 and 2020 and reconciliations of net income (loss) attributable to common shareholders, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders appear in the following table.
+Added: Our calculations of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three months ended March 31, 2022 and 2021 and reconciliations of net income (loss) attributable to common shareholders, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders appear in the following table.
This table also provides a comparison of distributions to shareholders, FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and net income (loss) attributable to common shareholders per share for these periods.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
−Removed: Net loss attributable to common shareholders $ (89,343) $ (106,888) $ (191,070) $ (123,225)
+Added: Three Months Ended March 31,
+Added: Net income (loss) attributable to common shareholders $ 240,423 $ (67,505)
Depreciation and amortization 57,259 66,153
1 unchanged sentence
Impairment of assets — (174)
−Removed: Losses (gains) on equity securities, net 14,755 (12,510) 26,943 (14,541)
+Added: Losses on equity securities, net 8,553 8,339
FFO adjustments attributable to noncontrolling interest — (5,273)
+Added: Equity in earnings of unconsolidated joint ventures (3,354) —
+Added: Share of FFO from unconsolidated joint ventures 3,675 —
Adjustments to reflect our share of FFO attributable to an equity method investment (1,932) 2,036
1 unchanged sentence
Acquisition and certain other transaction related costs 928 —
−Removed: Costs and payment obligations related to compliance assessment at one of our senior living communities — 6,172 — 6,172
−Removed: Gain on lease termination — — — (22,896)
−Removed: Loss on early extinguishment of debt — — 2,410 427
+Added: Loss on modification or early extinguishment of debt 483 2,040
Adjustments to reflect our share of Normalized FFO attributable to an equity method investment (142) 85
3 unchanged sentences
Per common share data (basic and diluted):
−Removed: Net loss attributable to common shareholders $ (0.38) $ (0.45) $ (0.80) $ (0.52)
+Added: Net income (loss) attributable to common shareholders $ 1.01 $ (0.28)
FFO attributable to common shareholders $ (0.10) $ 0.02
9 unchanged sentences
The calculation of NOI by reportable segment is included above in this Item 2.
−Removed: The following table includes the reconciliation of net income (loss) to NOI for the three and nine months ended September 30, 2021 and 2020, respectively.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
+Added: The following table includes the reconciliation of net income (loss) to NOI for the three months ended March 31, 2022 and 2021.
+Added: Three Months Ended March 31,
Reconciliation of Net Income (Loss) to NOI:
−Removed: Net loss $ (88,004) $ (105,788) $ (186,832) $ (119,387)
+Added: Net income (loss) $ 240,423 $ (66,183)
+Added: Equity in earnings of investees (3,354) —
Income tax expense 1,472 238
−Removed: Loss from continuing operations before income tax expense (87,409) (105,423) (185,808) (118,339)
−Removed: Loss on early extinguishment of debt — — 2,410 427
−Removed: Gain on lease termination — — — (22,896)
+Added: Income (loss) from continuing operations before income tax expense and equity in earnings of investees 238,541 (65,945)
+Added: Loss on modification or early extinguishment of debt 483 2,040
Interest expense 57,131 60,091
Interest and other income (395) (2,835)
−Removed: Losses (gains) on equity securities, net 14,755 (12,510) 26,943 (14,541)
+Added: Losses on equity securities, net 8,553 8,339
(Gain) loss on sale of properties (327,794) 122
13 unchanged sentences
• our ability to receive rents from our tenants, including in light of the COVID-19 pandemic and its impact on our tenants' businesses;
−Removed: • our ability to maintain or increase the occupancy of, and the rental rates at, our properties or reduce the extent of the declines in occupancy and rental rates in response to the COVID-19 pandemic and current economic conditions, particularly at our senior living communities;
−Removed: • our ability to control operating expenses and capital expenses at our properties, including increased operating expenses that we may incur in response to the COVID-19 pandemic;
−Removed: • our managers' abilities to manage our managed senior living communities, including throughout the COVID-19 pandemic, to maintain or increase our returns and to reduce the extent of the declines in our returns.
−Removed: We continue to carefully monitor the developments of the COVID-19 pandemic and the resulting economic conditions and their impact on our tenants, managers, operators and other stakeholders, including at our senior living communities.
−Removed: In February 2021, we issued $500.0 million aggregate principal amount of 4.375% senior notes due 2031.
−Removed: We used net proceeds from this offering to prepay in full our $200.0 million term loan and used the remaining net proceeds and cash on hand to redeem all of our outstanding 6.75% senior notes due 2021 for a redemption price equal to the principal amount of $300.0 million plus accrued and unpaid interest of $10.1 million in June 2021, when these notes became redeemable with no prepayment premium.
−Removed: In addition, on March 31, 2021, we borrowed $800.0 million under our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility in light of continued uncertainties related to the COVID-19 pandemic.
−Removed: Although we have taken steps to enhance our ability to maintain sufficient liquidity, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic may cause further increased pressure on our ability to satisfy financial and other covenants.
+Added: • our ability to maintain or increase the occupancy of, and the rental rates at, our properties, particularly at our senior living communities;
+Added: • our and our managers' abilities to control operating expenses and capital expenses at our properties, including increased operating expenses that we may incur in response to inflation, supply chain challenges or in response to the COVID-19 pandemic;
+Added: • our managers' abilities to maintain or increase our returns from our managed senior living communities.
+Added: In March 2021, we borrowed $800.0 million under our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility in light of continued uncertainties related to the COVID-19 pandemic.
+Added: In February 2022, we repaid $100.0 million of this borrowing to reduce the borrowing capacity under our revolving credit facility to $700.0 million pursuant to the February 2022 amendment to our credit agreement.
+Added: In addition, in February 2022, we exercised our option to extend the maturity date of our revolving credit facility by one year to January 2024.
+Added: Pursuant to our credit agreement, the borrowing capacity under our revolving credit facility will be reduced to $586.4 million as of January 2023 and as such, further repayment of our revolving credit facility may be required.
+Added: Although we have taken steps to enhance our ability to maintain sufficient liquidity, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic, inflation or other economic, market or industry conditions may cause further increased pressure on our ability to satisfy financial and other covenants.
We may fail to satisfy covenants and conditions under our credit agreement or fail to satisfy our public debt covenants.
−Removed: As of September 30, 2021, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our revolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic continued to adversely impact our operations.
−Removed: We are not allowed to incur additional debt while this ratio is below 1.5x on a pro forma basis.
−Removed: For additional responses and measures taken relating to the COVID-19 pandemic, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our Annual Report and Note 4 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
−Removed: During the nine months ended September 30, 2021, we sold five properties for an aggregate sales price of $104.5 million, excluding closing costs.
−Removed: The measures we have taken to enhance our ability to maintain sufficient liquidity may not sufficiently offset the decrease in cash flows from operations and capital investments we make, particularly during the COVID-19 pandemic, in which case our liquidity would be negatively impacted.
+Added: As of March 31, 2022, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our revolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic continued to adversely impact our operations.
+Added: We are unable to incur additional debt until this ratio is at or above 1.5x on a pro forma basis.
+Added: For additional responses and measures taken relating to the COVID-19 pandemic, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our Annual Report.
+Added: In January 2022, we entered into a joint venture with two unrelated third party institutional investors for 10 medical office and life science properties we owned for aggregate proceeds, before closing costs and other adjustments, of $653.3 million.
+Added: The investors acquired 41% and 39% equity interests in the joint venture and we retained a 20% equity interest in the joint venture.
+Added: The investment amounts are based upon a property valuation of approximately $702.5 million, less approximately $456.6 million of secured debt on the properties incurred by this joint venture.
+Added: The net proceeds of $643.9 million, which include working capital prorations and formation costs, are included in restricted cash in our condensed consolidated balance sheet as of March 31, 2022 pursuant to the terms of our credit agreement.
+Added: Effective as of the date of the sale, we deconsolidated these properties and we account for this joint venture using the equity method of accounting under the fair value option.
+Added: The measures we have taken to enhance our ability to maintain sufficient liquidity may not sufficiently offset the decrease in cash flows from operations and capital investments we make, in which case our liquidity would be negatively impacted.
The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows (dollars in thousands):
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Cash and cash equivalents and restricted cash at beginning of period $ 1,016,945 $ 90,849
6 unchanged sentences
We generally receive minimum rents from our tenants monthly or quarterly, we receive residents fees and services revenues, net of expenses, from our managed senior living communities monthly and we receive percentage rents from certain of our senior living community tenants monthly, quarterly or annually.
−Removed: The change in cash (used in) provided by operating activities for the nine months ended September 30, 2021 compared to the prior period was primarily due to the continued impact of the COVID-19 pandemic on the senior living communities in our SHOP segment, along with reduced NOI as a result of dispositions of properties during 2020 and 2021.
−Removed: As it relates to our SHOP segment, in September 2021, we paid approximately $22.2 million of payroll taxes reimbursed to Five Star pursuant to our management agreements with Five Star that were deferred as allowed under the CARES Act as previously disclosed.
−Removed: As noted elsewhere in this Quarterly Report on Form 10-Q, we expect that the transition of the management of the 107 senior living communities from Five Star to other third party managers will be completed by December 31, 2021 and we currently intend to close the remaining senior living community that we and Five Star agreed to transition and are assessing opportunities to redevelop that community.
−Removed: We have incurred and expect to continue to incur costs related to retention and other transition costs for these communities.
−Removed: For the three and nine months ended September 30, 2021, we recorded $3.1 million and $15.0 million, respectively, of these costs to acquisition and certain other transaction related costs in our condensed consolidated statements of comprehensive income (loss).
−Removed: As noted elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, the COVID-19 pandemic has had a substantial adverse impact on our industries.
−Removed: Depending on the duration and severity of this pandemic and the resulting economic conditions, our tenants', managers' and operators' businesses may become significantly adversely affected, which may result in our tenants failing to pay rent to us or not renewing their leases upon expiration and in our senior living community managers realizing decreased returns from our senior living communities.
−Removed: Specifically as it relates to our SHOP segment, we face and may continue to face issues with labor availability and cost pressures from supply chain disruptions and commodity
−Removed: price inflation.
−Removed: As of November 1, 2021, we granted requests for certain of our tenants to defer rent payments totaling $1.8 million.
−Removed: As of September 30, 2021, we recognized an increase in our accounts receivable balance related to these deferred rent payments of $0.1 million.
−Removed: These tenants are obligated to pay, in most cases, the deferred rents in 12 equal monthly installments, which payments have commenced.
−Removed: For the three months ended September 30, 2021, we collected approximately 99% of our contractual rents due from tenants in our Office Portfolio segment.
−Removed: While these deferred amounts have not negatively impacted our results of operations, the deferred rents have temporarily reduced our operating cash flows.
−Removed: We are handling requests from our tenants for relief on an individual basis.
+Added: The change in cash (used in) provided by operating activities for the three months ended March 31, 2022 compared to the prior period was primarily due to the continued impact of the COVID-19 pandemic and wage inflation in the senior living communities in our SHOP segment, along with reduced NOI as a result of the deconsolidation of joint venture properties during 2021 and 2022 and dispositions of properties during 2021.
+Added: Additionally, we had increased working capital needs in 2022 as compared to 2021, specifically related to our senior living communities.
+Added: We also paid more interest on our debt in 2022 as compared to 2021.
+Added: As noted elsewhere in this Quarterly Report on Form 10-Q, the transition of the management of the 107 senior living communities from Five Star to other third party managers was completed as of December 31, 2021 and we have closed the remaining senior living community that we and Five Star agreed to transition and are assessing opportunities to redevelop that property.
+Added: Specifically as it relates to our SHOP segment, we face and may continue to face issues with labor availability and wage inflation along with cost pressures from supply chain disruptions and commodity price inflation.
Our Investing Liquidity and Resources
−Removed: The decrease in cash used in investing activities for the nine months ended September 30, 2021 compared to the prior period was primarily due to higher proceeds from the sale of real estate properties in the 2021 period compared to the 2020 period, partially offset by an increase in real estate improvements in the 2021 period compared to the 2020 period.
+Added: The change in cash provided by (used in) investing activities for the three months ended March 31, 2022 compared to the prior period was primarily due to proceeds from our sale of 10 medical office and life science properties to our 10 medical office and life science properties joint venture in which we retained a 20% equity interest, partially offset by less proceeds from the sale of real estate properties and an increase in real estate improvements in the 2022 period compared to the 2021 period.
The following is a summary of capital expenditures, development, redevelopment and other activities for the periods presented (dollars in thousands):
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
+Added: Three Months Ended March 31,
Office Portfolio segment capital expenditures:
2 unchanged sentences
Building improvements (2)
−Removed: 3,332 4,990 9,945 11,363
SHOP segment fixed assets and capital improvements 20,328 22,530
3 unchanged sentences
Development, redevelopment and other activities - SHOP segment (3)
−Removed: 2,217 4,927 13,654 19,926
Total development, redevelopment and other activities $ 32,731 $ 18,810
2 unchanged sentences
(3) Development, redevelopment and other activities generally include capital expenditures that reposition a property or result in new sources of revenue.
−Removed: During the three and nine months ended September 30, 2021, we invested $0.3 million and $1.1 million, respectively, in revenue producing capital improvements at certain of our triple net leased senior living communities leased to private operators, and, as a result, annual rent payable to us increased pursuant to the terms of the applicable leases.
−Removed: We used cash on hand to fund these purchases.
−Removed: These capital improvement amounts are not included in the table above.
−Removed: We plan to continue investing capital in our senior living communities, including redevelopment projects, to better position these communities in their respective markets in order to increase our returns in future years.
−Removed: Our ability to make capital investments is currently limited to $350.0 million per year pursuant to our credit agreement through the Amendment Period.
−Removed: As of September 30, 2021, we have estimated unspent leasing related obligations at our triple net leased senior living communities and our medical office and life science properties of approximately $64.6 million, of which we expect to spend approximately $45.7 million during the next 12 months.
−Removed: We expect to fund these obligations using operating cash flows we generate as rental income from our leased properties, residents fees and services revenues from our managed communities, cash on hand and proceeds from the disposition of certain properties.
−Removed: Our redevelopment in San Diego, CA has been substantially completed and we expect to incur additional leasing costs in 2021 to lease the remaining available space.
−Removed: During the nine months ended September 30, 2021, we entered into five leases
−Removed: with a weighted (by annualized rental income) average lease term of approximately 11 years at a weighted average rental rate that is approximately 22% higher than the prior rental rate for the same space at this San Diego, CA property.
−Removed: As of November 1, 2021, we have executed new leases for 100% of the leasable square footage at this property.
−Removed: We are currently in the process of redeveloping two properties in our Office Portfolio located in Lexington, MA and Tempe, AZ.
−Removed: Our redevelopments in Lexington, MA and Tempe, AZ are currently expected to be completed in the second quarter of 2022.
+Added: We plan to continue investing capital in our properties, including redevelopment projects, to better position these properties in their respective markets in order to increase our returns in future years.
+Added: In 2022, we expect to incur capital expenditures in excess of 2021 levels, up to the $400.0 million limit allowed pursuant to our credit agreement.
+Added: As of March 31, 2022, we had estimated unspent leasing related obligations at our triple net leased senior living communities and our medical office and life science properties of approximately $62.5 million, of which we expect to spend approximately $44.7 million during the next 12 months.
+Added: We expect to fund these obligations using operating cash flows we generate as rental income from our leased properties, residents fees and services revenues from our managed communities, cash on hand, proceeds from the contributions of certain of our properties to investors in our joint ventures and proceeds from the disposition of certain properties.
+Added: We are currently in the process of redeveloping five properties in our Office Portfolio.
+Added: Our redevelopments in Lexington, MA, Decatur, GA and Tempe, AZ are currently expected to be completed in the second half of 2022.
+Added: Our redevelopments at our properties in Irving, TX and Washington, D.C.
+Added: are expected to be completed in 2023 and 2025, respectively.
We have entered into a new ten year lease for the entire building at the Lexington, MA property at a rental rate that is 46% higher than the prior rental rate for the same space.
−Removed: Additionally, as of November 1, 2021, we have signed a letter of intent for the entire building at our redevelopment undergoing in Tempe, AZ.
−Removed: We are also currently reviewing strategic alternatives at properties in our Office Portfolio located in Silver Springs, MD and in Decatur, GA, including opportunities to redevelop these properties.
+Added: Additionally, in January 2022, we entered into a new 11 year lease for the entire building at the Tempe, AZ property at a rental rate that is 20% higher than the prior rental rate for the same space.
+Added: We are also currently reviewing strategic alternatives at a property in our Office Portfolio located in Silver Springs, MD, including opportunities to redevelop this property.
+Added: We continue to assess opportunities to redevelop other properties in our portfolio.
These redevelopment projects may require significant capital expenditures and time to complete.
−Removed: We have continued to progress on our redevelopments during 2021 and continue to assess opportunities to redevelop other properties in our portfolio.
−Removed: As noted above, our ability to make capital investments is currently limited pursuant to our credit agreement through the Amendment Period.
−Removed: Additionally, due to supply chain disruptions, the capital investments we plan to make may be delayed or require more capital than we expect.
+Added: As noted above, our ability to make capital investments is currently limited pursuant to our credit agreement.
+Added: Additionally, due to supply chain disruptions and inflation, the capital investments we plan to make may be delayed or cost more than we expect.
For further information regarding our acquisitions and dispositions, see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Our Financing Liquidity and Resources
−Removed: The change in cash provided by (used in) financing activities for the nine months ended September 30, 2021 compared to the prior period was primarily due to increased net borrowings under our revolving credit facility, net proceeds from our issuance in February 2021 of $500.0 million aggregate principal amount of our 4.375% senior notes, decreased term loan repayment amounts in the 2021 period compared to the 2020 period, and a reduction in distributions paid to our shareholders in the 2021 period, partially offset by increased senior unsecured notes repayment amounts in the 2021 period compared to the 2020 period and net proceeds from our issuance in June 2020 of $1.0 billion aggregate principal amount of our 9.75% senior notes.
−Removed: As of September 30, 2021, we had $794.7 million of cash and cash equivalents and were fully drawn under our revolving credit facility.
+Added: The change in cash (used in) provided by financing activities for the three months ended March 31, 2022 compared to the prior period was primarily due to repayments of borrowings under our revolving credit facility in the 2022 period compared to our full drawdown of our revolving credit facility and net proceeds from our issuance in February 2021 of $500.0 million aggregate principal amount of our 4.375% senior notes in the 2021 period, partially offset by our repayment in February 2021 of our $200.0 million term loan.
+Added: Additionally, we did not pay distributions during the 2022 period related to our noncontrolling interest in our Boston life science property joint venture that we deconsolidated in 2021.
+Added: As of March 31, 2022, we had $732.1 million of cash and cash equivalents and were fully drawn under our revolving credit facility.
We typically use cash balances, borrowings under our revolving credit facility, net proceeds from offerings of debt or equity securities, net proceeds from the disposition of assets and the cash flows from our operations to fund our operations, debt repayments, distributions, property acquisitions, investments, capital expenditures and other general business purposes.
In order to fund investments and to meet cash needs that may result from timing differences between our receipt of rents and our desire or need to make distributions or pay operating or capital expenses, we maintain a revolving credit facility.
−Removed: As of September 30, 2021, the maturity date of our revolving credit facility was January 2022.
−Removed: In October 2021, we exercised our option to extend the maturity date of our revolving credit facility by one year to January 2023.
−Removed: Subject to the payment of an extension fee and meeting other conditions, we have an additional option to extend the maturity date of the facility by one year to January 2024.
+Added: The maturity date of our revolving credit facility is January 15, 2024.
Our revolving credit facility generally provides that we can borrow, repay and re-borrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity.
−Removed: At September 30, 2021, our revolving credit facility required interest to be paid on borrowings at the annual rate of 2.9%, plus a facility fee of 30 basis points per annum on the total amount of lending commitments under the facility.
+Added: At March 31, 2022, our revolving credit facility required interest to be paid on borrowings at the annual rate of 3.0%, plus a facility fee of 30 basis points per annum on the total amount of lending commitments under the facility.
The interest rate premium and facility fee are each subject to adjustment based upon changes to our credit ratings.
On March 31, 2021, we borrowed $800.0 million under our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility in light of continued uncertainties related to the COVID-19 pandemic.
−Removed: As of September 30, 2021 and November 1, 2021, we were fully drawn under our revolving credit facility.
−Removed: In January 2021, we and our lenders amended our credit and term loan agreements in order to provide us with certain flexibility in light of continued uncertainties related to the COVID-19 pandemic.
−Removed: Pursuant to the amendments:
−Removed: • certain of the financial covenants under our credit and term loan agreements, including covenants that require us to maintain certain financial ratios, have been waived through the Amendment Period;
−Removed: • the revolving credit facility commitments have been reduced from $1.0 billion to $800.0 million;
−Removed: • we pledged certain equity interests of subsidiaries owning properties to secure our obligations under our credit and term loan agreements and agreed to provide, and as of September 2021 had provided, first mortgage liens on 61 medical office and life science properties with an aggregate gross book value of real estate assets of $1.0 billion as of
−Removed: September 30, 2021 to secure our obligations, which pledges and/or mortgage liens may be removed or new ones may be added during the Amendment Period based on outstanding debt amounts, among other things;
+Added: In February 2022, we repaid $100.0 million of this borrowing to reduce the borrowing capacity under our revolving credit facility to $700.0 million pursuant to the February 2022 amendment to our credit agreement.
+Added: Pursuant to our credit agreement, the borrowing capacity under our revolving credit facility will be reduced to $586.4 million as of January 2023 and as such, further repayment of our revolving credit facility may be required.
+Added: Also in February 2022, we exercised our option to extend the maturity date of our revolving credit facility by one year to January 2024.
+Added: As of March 31, 2022 and April 29, 2022, we were fully drawn under our revolving credit facility.
+Added: In February 2022, we and our lenders amended our credit agreement.
+Added: Pursuant to the amendment:
+Added: • the waiver of the fixed charge coverage ratio covenant included in our credit agreement has been extended through December 31, 2022;
+Added: • the revolving credit facility commitments have been reduced from $800.0 million to $700.0 million;
• we have the ability to fund $400.0 million of capital expenditures per year and we are restricted in our ability to acquire real property as defined in our credit agreement;
−Removed: • the interest rate premium over LIBOR under our revolving credit facility and term loan increased by 30 basis points;
+Added: • the interest rate premium under our revolving credit facility increased by 15 basis points;
• certain covenants and restrictions on distributions to common shareholders, share repurchases, capital expenditures, acquiring additional properties and incurring additional indebtedness (in each case subject to various exceptions), and the minimum liquidity requirement of $200.0 million will remain in place during the Amendment Period.
−Removed: • we are generally required to apply the net cash proceeds from the disposition of assets, capital markets transactions, and debt financings to the repayment of any amounts outstanding under our revolving credit facility.
−Removed: In September 2021, we and our lenders further amended our credit agreement.
−Removed: Among other things, the amendment sets forth the mechanics for establishing a replacement benchmark rate under our revolving credit facility at such time as LIBOR is no longer available to calculate interest payable on amounts outstanding thereunder.
Generally, when significant amounts are outstanding under our revolving credit facility, or as the maturities of our indebtedness approach, we intend to explore refinancing alternatives.
3 unchanged sentences
We may also assume debt in connection with our acquisitions of properties or place new debt on properties we own.
−Removed: During the nine months ended September 30, 2021, we paid quarterly cash distributions to our shareholders totaling approximately $7.2 million using existing cash balances.
−Removed: On October 14, 2021, we declared a quarterly distribution payable to common shareholders of record on October 25, 2021 in the amount of $0.01 per share, or approximately $2.4 million.
−Removed: We expect to pay this distribution on or about November 18, 2021 using cash on hand.
−Removed: For further information regarding the distribution we paid during 2021, see Note 7 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
+Added: During the three months ended March 31, 2022, we paid a quarterly cash distribution to our shareholders totaling approximately $2.4 million using existing cash balances.
+Added: On April 14, 2022, we declared a quarterly distribution payable to common shareholders of record on April 25, 2022 in the amount of $0.01 per share, or approximately $2.4 million.
+Added: We expect to pay this distribution on or about May 19, 2022 using cash on hand.
+Added: For further information regarding the distribution we paid
+Added: during 2022, see Note 7 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
We believe we will have access to various types of financings, including debt or equity offerings, to fund our future acquisitions and to pay our debts and other obligations as they become due, subject to limitations on debt offerings in agreements governing our debt.
−Removed: Our ability to complete, and the costs associated with, future debt transactions depends primarily upon credit market conditions and our then creditworthiness.
+Added: Our ability to complete, and the costs associated with, future debt or equity transactions depends primarily upon credit market conditions and our then creditworthiness.
We have no control over market conditions.
−Removed: Our credit and debt ratings, which were recently downgraded, depend upon evaluations by credit rating agencies of our business practices and plans, including our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes.
+Added: Our credit and debt ratings, which were most recently downgraded in February 2022, depend upon evaluations by credit rating agencies of our business practices and plans, including our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes.
Similarly, our ability to raise equity capital in the future will depend primarily upon equity capital market conditions and our ability to conduct our business to maintain and grow our operating cash flows.
1 unchanged sentence
It is uncertain what the duration and severity of the COVID-19 pandemic and its economic impact will be.
−Removed: A protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic may have various negative consequences including a decline in financing availability and increased costs for financing.
+Added: A protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic, inflation or other economic, market or industry conditions may have various negative consequences including a decline in financing availability and increased costs for financing.
Further, those conditions could also disrupt capital markets and limit our access to financing from public sources, particularly if the global financial markets experience significant disruptions.
−Removed: In February 2021, we issued $500.0 million aggregate principal amount of our 4.375% senior notes due 2031 in an underwritten public offering.
−Removed: These notes are guaranteed by all of our subsidiaries, except for certain excluded subsidiaries, including pledged subsidiaries under our credit agreement.
−Removed: We used the net proceeds from this offering to prepay in full our $200.0 million term loan which was scheduled to mature in September 2022.
−Removed: In June 2021, we used the remaining net proceeds from this offering and cash on hand to redeem all of our outstanding 6.75% senior notes due 2021 for a redemption price equal to the principal amount of $300.0 million plus accrued and unpaid interest of $10.1 million, when these notes became redeemable with no prepayment premium.
−Removed: Our next significant debt maturity does not occur until $250.0 million of our senior notes mature in May 2024.
−Removed: In February 2021, Moody's Investors Service downgraded our senior unsecured debt rating from Ba2 to B1 and our 9.75% senior notes due 2025 rating from Ba1 to Ba3 and assigned a Ba3 rating to our 4.375% senior notes due 2031, and Standard & Poor's Ratings Services downgraded our senior unsecured debt rating from BB to BB- and our 9.75% senior notes due 2025 rating from BB+ to BB and assigned a BB rating to our 4.375% senior notes due 2031.
+Added: In April 2022, we prepaid a mortgage note secured by one of our medical office properties with an outstanding principal balance of approximately $10.9 million, a maturity date in July 2022 and an annual interest rate of 6.28%.
+Added: We prepaid this mortgage using cash on hand.
+Added: Our next significant debt maturity does not occur until our revolving credit facility becomes due in January 2024.
+Added: In February 2022, Moody's Investors Service downgraded our senior unsecured debt rating from B1 to B3, our 9.75% senior notes due 2025 rating from Ba3 to B2 and our 4.375% senior notes due 2031 rating from Ba3 to B2.
For further information regarding our outstanding debt, see Note 4 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
1 unchanged sentence
Our plans for particular properties and other strategic considerations may cause us to change our acquisition and disposition strategies, and we may do so at any time and without shareholder approval.
−Removed: Further, those plans may be further impacted by the COVID-19 pandemic.
+Added: Further, those plans may be further impacted by the COVID-19 pandemic, inflation or other economic, market or industry conditions.
Debt Covenants
−Removed: Our principal debt obligations at September 30, 2021 were:
+Added: Our principal debt obligations at March 31, 2022 were:
(1) outstanding borrowings under our $700.0 million revolving credit facility;
(2) $2.9 billion outstanding principal amount of senior unsecured notes;
−Removed: and (3) $683.0 million aggregate principal amount of mortgage notes (excluding premiums, discounts and net debt issuance costs) secured by seven properties.
+Added: and (3) $62.0 million aggregate principal amount of mortgage notes (excluding premiums, discounts and net debt issuance costs) secured by six properties.
For further information regarding our indebtedness, see Note 4 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Our senior unsecured notes are governed by our senior unsecured notes indentures and their supplements.
−Removed: Our credit agreement and our senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, as defined, which includes RMR LLC ceasing to act as our business and property manager.
+Added: Our credit agreement and our senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, as defined, which includes RMR ceasing to act as our business and property manager.
Our senior unsecured notes indentures and their supplements and our credit agreement also contain covenants that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts and require us to maintain various financial ratios, and our credit agreement contains covenants that restrict our ability to make distributions to our shareholders in certain circumstances.
−Removed: As of September 30, 2021, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our revolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic continued to adversely impact our operations.
−Removed: We are not allowed to incur additional debt while this ratio is below 1.5x on a pro forma basis, and as such, prior to falling below the 1.5x incurrence requirement, we borrowed $800.0 million under our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility in light of continued uncertainties related to the COVID-19 pandemic.
+Added: As of March 31, 2022, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our revolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic, inflation and other economic, market or industry conditions continued to adversely impact our operations.
+Added: We are unable to incur additional debt until this ratio is at or above 1.5x on a pro forma basis, and as such, prior to falling below the 1.5x incurrence requirement, we borrowed $800.0 million under our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility.
The proceeds from this borrowing may be used for general business purposes.
−Removed: As of September 30, 2021, we believe we were in compliance with all of the other covenants under our senior unsecured notes indentures and their supplements, our credit agreement and our other debt obligations.
−Removed: Although we have taken steps to enhance our ability to maintain sufficient liquidity, as noted elsewhere in this Quarterly Report on Form 10-Q, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic may cause increased pressure on our ability to satisfy financial and other covenants.
+Added: In February 2022, we repaid $100.0 million of this borrowing to reduce the borrowing
+Added: capacity under our revolving credit facility to $700.0 million pursuant to the February 2022 amendment to our credit agreement.
+Added: As of March 31, 2022, we believe we were in compliance with all of the other covenants under our senior unsecured notes indentures and their supplements, our credit agreement and our other debt obligations.
+Added: Although we have taken steps to enhance our ability to maintain sufficient liquidity, as noted elsewhere in this Quarterly Report on Form 10-Q, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic, inflation and other economic, market or industry conditions may cause increased pressure on our ability to satisfy financial and other covenants.
Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions.
If our operating results and financial condition are significantly negatively impacted by the economic conditions or otherwise, we may fail to satisfy covenants and conditions under our credit agreement or fail to satisfy our public debt covenants.
−Removed: Further, if we believe we would not be able to satisfy our financial or other covenants, we would seek waivers, amendments, or in the case of our public debt covenants, draw upon any undrawn amounts if again available from our revolving credit facility prior to any covenant violation, consistent with our previous approach in March 2021, which may lead to increased costs and interest rates, additional restrictive covenants or other lender protections.
−Removed: We can provide no assurance that we would be able to obtain these waivers or amendments or repay the related debt facilities when due, which would lead to an event of default or potential acceleration of amounts due on our outstanding debt.
+Added: Further, if we believe we will not be able to satisfy our financial or other covenants, we will seek waivers, amendments, or in the case of our public debt covenants, borrow any undrawn amounts which may become available under our revolving credit facility prior to any covenant violation, consistent with our approach in March 2021, which may lead to increased costs and interest rates, additional restrictive covenants or other lender protections.
+Added: We cannot assure that we would be able to obtain these waivers or amendments or repay the related debt facilities when due, or that there will be any amounts available to borrow under our revolving credit facility, which may result in an event of default under the agreements governing our debt or the potential acceleration of our outstanding debt.
Neither our senior unsecured notes indentures and their supplements, nor our credit agreement, contain provisions for acceleration which could be triggered by our debt ratings.
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Accordingly, following our debt ratings downgrades, our interest expense and related costs under our credit agreement has increased.
−Removed: See "—Our Financing Liquidity and Resources" above for information regarding recent downgrades of our issuer credit rating and senior unsecured debt rating that resulted in a change in the interest rate premiums under our revolving credit facility and term loan.
−Removed: Our senior unsecured notes indentures and their supplements contain cross default provisions to any other debts of more than $20.0 million ($50.0 million or more in the case of our senior unsecured notes indentures and supplements entered in
−Removed: February 2016, February 2018, June 2020 and February 2021).
+Added: See "—Our Financing Liquidity and Resources" above for information regarding recent downgrades of our issuer credit rating and senior unsecured debt rating that resulted in a change in the interest rate premiums under our revolving credit facility.
+Added: Our senior unsecured notes indentures and their supplements contain cross default provisions to any other debts of more than $20.0 million ($50.0 million or more in the case of our senior unsecured notes indentures and supplements entered in February 2016, February 2018, June 2020 and February 2021).
Similarly, our credit agreement has cross default provisions to other indebtedness that is recourse of $25.0 million or more and indebtedness that is non-recourse of $75.0 million or more.
−Removed: The loan agreements governing the aggregate $620.0 million secured debt financing on the property owned by our joint venture contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default.
+Added: The loan agreements governing the aggregate $620.0 million secured debt financing related to our Boston life science property joint venture contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default.
+Added: We no longer include this $620.0 million of secured debt financing in our condensed consolidated balance sheet following the deconsolidation of the net assets of this joint venture;
+Added: however, we continue to provide certain guaranties on this debt.
+Added: The debt secured by the properties included in our 10 medical office and life science properties joint venture in which we own a 20% equity interest is guaranteed by this joint venture.
Supplemental Guarantor Information
−Removed: In March 2020, the SEC released Release No.
−Removed: 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities, or Release 33-10762.
−Removed: Release 33-10762 amended the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rules 3-10 and 3-16, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities if certain conditions are met.
On May 28, 2020, we issued $1.0 billion of our 9.75% senior notes due 2025.
On February 3, 2021, we issued $500.0 million of our 4.375% senior notes due 2031.
−Removed: As of September 30, 2021, all $1.0 billion of our 9.75% senior notes due 2025 and all $500.0 million of our 4.375% senior notes due 2031 were fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for certain excluded subsidiaries, including pledged subsidiaries under our credit agreement.
+Added: As of March 31, 2022, all $1.0 billion of our 9.75% senior notes due 2025 and all $500.0 million of our 4.375% senior notes due 2031 were fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for certain excluded subsidiaries, including pledged subsidiaries under our credit agreement.
The notes and the guarantees are effectively subordinated to all of our and the subsidiary guarantors' secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.
−Removed: Our remaining $1.35 billion of senior unsecured notes do not have the benefit of any guarantees as of September 30, 2021.
+Added: Our remaining $1.35 billion of senior unsecured notes do not have the benefit of any guarantees as of March 31, 2022.
A subsidiary guarantor's guarantee of our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, as applicable, and all other obligations of such subsidiary guarantor under the indenture governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and the indenture under certain circumstances, including on or after the date (a) the notes have an investment grade rating from two rating agencies and one of such investment grade ratings is a mid-BBB investment grade rating and (b) no default or event of default has occurred and is continuing under the indenture.
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The rights of holders of our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, as applicable, to benefit from any of the assets of our non-guarantor subsidiaries are subject to the prior satisfaction of claims of those subsidiaries' creditors and any preferred equity holders.
−Removed: As a result, our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031 and the respective guarantees are structurally subordinated to all indebtedness, guarantees and other liabilities of our subsidiaries that do not guarantee our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, including guarantees of other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.
+Added: As a result, our 9.75% senior notes due
+Added: 2025 and our 4.375% senior notes due 2031 and the respective guarantees are structurally subordinated to all indebtedness, guarantees and other liabilities of our subsidiaries that do not guarantee our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, including guarantees of other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.
The following tables present summarized financial information for guarantor entities and issuer, on a combined basis after eliminating (i) intercompany transactions and balances among the guarantor entities and (ii) equity in earnings from, and any investments in, any subsidiary that is a non-guarantor (dollars in thousands):
−Removed: As of September 30, 2021 As of December 31, 2020
+Added: March 31, 2022 December 31, 2021
Real estate properties, net $ 3,831,645 $ 3,822,547
4 unchanged sentences
Total liabilities $ 3,792,229 $ 3,873,117
−Removed: Nine Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2022
Revenues $ 271,060
2 unchanged sentences
Net loss (96,104)
−Removed: Net loss attributable to DHC (261,375)
Related Person Transactions
−Removed: We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., Five Star and others related to them.
+Added: We have relationships and historical and continuing transactions with RMR, RMR Inc., AlerisLife (including Five Star) and others related to them.
For further information about these and other such relationships and related person transactions, see Notes 9, 10 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our Annual Report, our definitive Proxy Statement for our 2022 Annual Meeting of Shareholders and our other filings with the SEC.
In addition, see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships.
−Removed: We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.
+Added: We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.
Impact of Government Reimbursement
−Removed: For the nine months ended September 30, 2021, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and a small amount of our NOI was generated from properties where a majority of the revenues are derived from Medicare and Medicaid payments.
+Added: For the three months ended March 31, 2022, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and a small amount of our NOI was generated from properties where a majority of the revenues are derived from Medicare and Medicaid payments.
Nonetheless, we own, and our tenants, managers and operators operate, facilities in many states that participate in federal and state healthcare payment programs, including the federal Medicare and state Medicaid programs and other federal and state healthcare payment programs.
Also, some of our medical office and life science property tenants participate in federal Medicare and state Medicaid programs and other government healthcare payment programs.
−Removed: Under the CARES Act, HHS established a Provider Relief Fund as noted elsewhere in this Quarterly Report on Form 10-Q.
−Removed: We have recognized $18,967 as other income with respect to our SHOP segment for the nine months ended September 30, 2021.
+Added: During the three months ended March 31, 2022, we recognized $0.2 million in interest and other income in our condensed consolidated statement of comprehensive income (loss) related to funds received under the CARES Act.
For more information regarding the government healthcare funding and regulation of our business, please see the section captioned “Business—Government Regulation and Reimbursement” in our Annual Report and the section captioned “Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Government Reimbursement” in our Annual Report.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.