What changed in this filing

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Item 1. Financial Statements

2025-05-05 compared with 2024-11-04 · 362 added, 305 removed, 353 unchanged (65% of the section changed)

3 unchanged sentences

(dollars in thousands, except share data)

September 30, December 31,

March 31, December 31,

Real estate properties:

12 unchanged sentences

Total assets $ 4,995,843 $ 5,137,005

Liabilities and Shareholders' Equity

Liabilities and Equity

Senior secured notes, net $ 581,873 $ 826,974

6 unchanged sentences

Commitments and contingencies

Shareholders' equity:

Common shares of beneficial interest, $ .01 par value:

2 unchanged sentences

Cumulative net income 1,399,037 1,408,023

Cumulative other comprehensive income 8 —

Cumulative other comprehensive income (loss) 4 ( 17 )

Cumulative distributions ( 4,074,302 ) ( 4,071,889 )

Total shareholders' equity 2,048,404 2,336,891

Total liabilities and shareholders' equity $ 5,285,196 $ 5,446,136

Total equity 1,948,051 1,958,843

Total liabilities and equity $ 4,995,843 $ 5,137,005

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Rental income $ 58,558 $ 62,650

8 unchanged sentences

Gain (loss) on sale of properties 110,140 ( 5,874 )

Gains on equity securities, net — — — 8,126

Gain on insurance recoveries 7,522 —

Interest and other income 2,099 2,237

Interest expense (including net amortization of debt discounts, premiums and issuance costs of $ 26,188 , $ 2,293 , $ 76,642 and $ 6,616 , respectively)

Interest expense (including net amortization of debt discounts, premiums, issuance costs and interest rate cap of $ 26,087 and $ 24,863 , respectively)

( 57,831 ) ( 57,576 )

Loss on modification or early extinguishment of debt ( 29,071 ) —

Loss before income tax expense and equity in net earnings (losses) of investees ( 99,068 ) ( 65,445 ) ( 272,422 ) ( 192,766 )

Loss before income taxes and equity in net earnings of investees ( 10,424 ) ( 87,970 )

Income tax expense ( 49 ) ( 187 )

Equity in net earnings (losses) of investees 527 ( 145 ) ( 9,882 ) 2,137

Equity in net earnings of investees 1,487 1,898

Net loss $ ( 8,986 ) $ ( 86,259 )

Other comprehensive income:

Equity in unrealized gains of an investee 34 — 8 —

Other comprehensive income 34 — 8 —

Other comprehensive income (loss):

Equity in unrealized gains (losses) of an investee 27 ( 4 )

Unrealized loss on derivative ( 6 ) —

Other comprehensive income (loss) 21 ( 4 )

Comprehensive loss $ ( 8,965 ) $ ( 86,263 )

9 unchanged sentences

Capital Cumulative

Net Income Cumulative Other Comprehensive Loss Cumulative Distributions Total Shareholders' Equity

Net Income Cumulative Other Comprehensive Income (Loss) Cumulative Distributions Total Equity

Balance at December 31, 2024:

1 unchanged sentence

Net loss — — — ( 8,986 ) — — ( 8,986 )

Equity in unrealized losses of an investee — — — — ( 4 ) — ( 4 )

Distributions — — — — — ( 2,404 ) ( 2,404 )

Share grants — — 558 — — — 558

Share repurchases ( 30,176 ) ( 1 ) ( 78 ) — — — ( 79 )

Balance at March 31, 2024:

240,393,722 2,404 4,618,950 1,692,019 ( 4 ) ( 4,064,666 ) 2,248,703

Net loss — — — ( 97,861 ) — — ( 97,861 )

Equity in unrealized losses of an investee — — — — ( 22 ) — ( 22 )

Other comprehensive income — — — — 21 — 21

Distributions — — — — — ( 2,413 ) ( 2,413 )

2 unchanged sentences

Share forfeitures ( 35,431 ) — ( 13 ) — — — ( 13 )

Balance at June 30, 2024:

240,619,470 2,406 4,619,846 1,594,158 ( 26 ) ( 4,067,070 ) 2,149,314

Net loss — — — ( 98,689 ) — — ( 98,689 )

Equity in unrealized gains of an investee — — — — 34 — 34

Distributions — — — — — ( 2,406 ) ( 2,406 )

Share grants 881,767 9 923 — — — 932

Share repurchases ( 219,864 ) ( 2 ) ( 779 ) — — — ( 781 )

Balance at September 30, 2024:

Balance at March 31, 2025:

241,267,819 $ 2,413 $ 4,620,899 $ 1,399,037 $ 4 $ ( 4,074,302 ) $ 1,948,051

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DIVERSIFIED HEALTHCARE TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)

(dollars in thousands)

Shares Common

Shares Additional

Capital Cumulative

Net Income Cumulative Other Comprehensive Loss Cumulative Distributions Total Shareholders' Equity

Balance at December 31, 2023:

1 unchanged sentence

Net loss — — — ( 86,259 ) — — ( 86,259 )

Other comprehensive loss — — — — ( 4 ) — ( 4 )

Distributions — — — — — ( 2,404 ) ( 2,404 )

1 unchanged sentence

Share repurchases ( 30,176 ) ( 1 ) ( 78 ) — — — ( 79 )

Share forfeitures ( 6,400 ) — ( 1 ) — — — ( 1 )

Balance at March 31, 2024:

240,393,722 $ 2,404 $ 4,618,950 $ 1,692,019 $ ( 4 ) $ ( 4,064,666 ) $ 2,248,703

Net loss — — — ( 72,571 ) — — ( 72,571 )

Distributions — — — — — ( 2,397 ) ( 2,397 )

Share grants 140,000 1 567 — — — 568

Share repurchases ( 24,513 ) — ( 27 ) — — — ( 27 )

Share forfeitures ( 5,600 ) — ( 3 ) — — — ( 3 )

Balance at June 30, 2023:

239,792,354 2,398 4,617,831 1,946,621 — ( 4,057,461 ) 2,509,389

Net loss — — — ( 65,779 ) — — ( 65,779 )

Distributions — — — — — ( 2,398 ) ( 2,398 )

Share grants 820,000 8 662 — — — 670

Share repurchases ( 151,405 ) ( 1 ) ( 352 ) — — — ( 353 )

Share forfeitures ( 3,400 ) — ( 3 ) — — — ( 3 )

Balance at September 30, 2023:

240,457,549 $ 2,405 $ 4,618,138 $ 1,880,842 $ — $ ( 4,059,859 ) $ 2,441,526

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ ( 8,986 ) $ ( 86,259 )

Adjustments to reconcile net loss to cash provided by operating activities:

Adjustments to reconcile net loss to cash (used in) provided by operating activities:

Depreciation and amortization 68,325 70,133

Net amortization of debt discounts, premiums and issuance costs 76,642 6,616

Net amortization of debt discounts, premiums, issuance costs and interest rate cap 26,087 24,863

Payment of accreted interest on senior secured notes

Straight line rental income ( 455 ) ( 291 )

2 unchanged sentences

Impairment of assets 38,472 12,142

Loss (gain) on sale of properties 18,976 ( 1,233 )

Gains on equity securities, net — ( 8,126 )

(Gain) loss on sale of properties ( 110,140 ) 5,874

Gain on insurance recoveries ( 7,522 ) —

Other non-cash adjustments, net ( 351 ) ( 385 )

Unconsolidated joint venture distributions — 1,231

Equity in net losses (earnings) of investees 9,882 ( 2,137 )

Equity in net earnings of investees ( 1,487 ) ( 1,898 )

Change in assets and liabilities:

3 unchanged sentences

Other liabilities ( 5,521 ) ( 7,173 )

Net cash provided by operating activities 94,028 17,692

Net cash (used in) provided by operating activities ( 3,243 ) 28,602

Cash flows from investing activities:

2 unchanged sentences

Investment in AlerisLife Inc.

Equity method investment distribution 17,000 —

Contributions to unconsolidated joint ventures ( 5,800 ) —

Proceeds from insurance recoveries 1,308 —

Proceeds from AlerisLife Inc.

tender offer — 14,006

Net cash used in investing activities ( 120,882 ) ( 150,846 )

Net cash provided by (used in) investing activities 291,093 ( 58,839 )

Cash flows from financing activities:

Proceeds from mortgage notes payable 140,000 —

Repayments of borrowings on credit facility — ( 250,000 )

Redemption of senior unsecured notes ( 60,000 ) —

Redemption of senior secured notes ( 238,555 ) —

Repayment of other debt ( 840 ) ( 822 )

Early extinguishment of debt settled in cash ( 25,903 ) —

Payment of debt issuance costs ( 3,332 ) ( 5,257 )

1 unchanged sentence

Distributions to shareholders ( 2,413 ) ( 2,404 )

Net cash provided by (used in) financing activities 41,293 ( 276,043 )

Net cash used in financing activities ( 131,049 ) ( 8,561 )

Increase (decrease) in cash and cash equivalents and restricted cash 156,801 ( 38,798 )

5 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental cash flow information:

Interest paid (1)

$ 68,177 $ 31,809

Income taxes paid $ — $ —

1 unchanged sentence

Real estate improvements accrued, not paid $ 14,383 $ 17,369

(1) Includes $ 34,700 of accreted interest paid during the three months ended March 31, 2025 on our senior secured notes due 2026.

Supplemental disclosure of cash and cash equivalents and restricted cash:

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within our condensed consolidated balance sheets to the amount shown in our condensed consolidated statements of cash flows:

As of September 30,

As of March 31,

Cash and cash equivalents $ 302,577 $ 207,123

7 unchanged sentences

Basis of Presentation

The accompanying condensed consolidated financial statements of Diversified Healthcare Trust and its subsidiaries, or we, us, or our, are unaudited.

The accompanying condensed consolidated financial statements of Diversified Healthcare Trust and its subsidiaries, or DHC, we, us, or our, are unaudited.

Certain information and disclosures required by U.S.

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Recent Accounting Pronouncements

On November 27, 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , or ASU No.

2023-07, which requires public entities to:

(i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the Chief Operating Decision Maker, or the CODM, and included in each reported measure of segment profit or loss;

(ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification Topic 280, Segment Reporting , or ASC 280, in interim periods;

and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures.

Public entities with a single reportable segment must apply all the disclosure requirements of ASU No.

2023-07, as well as all the existing segment disclosures under ASC 280.

The amendments in ASU No.

2023-07 are incremental to the requirements in ASC 280 and do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

2023-07 should be applied retrospectively to all prior periods presented in the financial statements and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We expect to include additional disclosures as a result of the implementation of ASU No.

however, these changes are not expected to have a material effect on our condensed consolidated financial statements.

On December 14, 2023, the FASB issued ASU No.

On December 14, 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No.

2023-09, Income Taxes (Topic 740):

6 unchanged sentences

however, these changes are not expected to have a material effect on our condensed consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statements Expenses , or ASU No.

2024-03, which requires public entities to disclose specific expense categories such as employee compensation, depreciation and intangible asset amortization.

These details must be presented in a tabular format in the notes to condensed consolidated financial statements for both interim and annual reporting periods.

ASU 2024-03 is required to be applied prospectively but can be applied retrospectively, and is effective for the first annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the impact that ASU 2024-03 will have on our condensed consolidated financial statements.

Real Estate and Other Investments

As of March 31, 2025, we owned 343 properties located in 34 states and Washington, D.C., including 11 properties classified as held for sale and two closed senior living communities, and we owned an equity interest in each of two unconsolidated joint ventures that own medical office and life science properties located in five states.

Dispositions:

The table below represents the sale prices, excluding closing costs, of our dispositions for the three months ended March 31, 2025.

We do not believe these sales represent a strategic shift in our business.

As a result, the results of operations

DIVERSIFIED HEALTHCARE TRUST

1 unchanged sentence

(dollar amounts in thousands, except per share data or as otherwise stated)

Real Estate and Other Investments

As of September 30, 2024, we owned 368 properties located in 36 states and Washington, D.C., including 25 properties classified as held for sale and three closed senior living communities, and we owned an equity interest in each of two unconsolidated joint ventures that own medical office and life science properties located in five states.

Acquisitions and Dispositions:

We did not acquire any properties during the nine months ended September 30, 2024.

During the nine months ended September 30, 2024, we sold four properties for an aggregate sales price of $ 29,075 , excluding closing costs, as presented in the table below.

The sales of these properties do not represent a significant disposition and we do not believe these sales represent a strategic shift in our business.

As a result, the results of operations for these properties are included in continuing operations through the date of sale of such properties in our condensed consolidated statements of comprehensive income (loss).

Date of Sale Location Type of Property Number of Properties Sales Price (1)

(Loss) Gain on Sale

March 2024 Arizona Medical Office 1 $ 3,600 $ ( 5,874 )

June 2024 Texas Medical Office 1 4,200 ( 13,213 )

July 2024 Illinois and Minnesota Medical Office 2 21,275 111

for these properties are included in continuing operations through the date of sale of such properties in our condensed consolidated statements of comprehensive income (loss).

Date of Sale State Type of Property Number of Properties Sales Price Gain on Sale

January 2025 Delaware Senior Living (SHOP) 1 $ 2,900 $ 1,263

January 2025 California Life Science (1)

3 159,025 9,723

(1) Sales price excludes closing costs.

As of September 30, 2024, we had 25 properties classified as held for sale in our condensed consolidated balance sheet as follows:

February 2025 Arizona Life Science 1 16,800 65

February 2025 Various Senior Living (1)

18 135,000 97,560

March 2025 Connecticut Medical Office (1)

1 7,100 1,529

24 $ 320,825 $ 110,140

(1) We used aggregate net proceeds of $ 299,158 from the sales of these properties to partially redeem our outstanding senior secured notes due 2026.

As of March 31, 2025, we had 11 properties classified as held for sale in our condensed consolidated balance sheet as follows:

Segment Number of Properties Real Estate Properties, Net

Medical Office and Life Science (1)

Non-Segment (1)

(1) Represents 18 triple net leased senior living communities.

Subsequent to September 30, 2024, we sold one of these properties for a sales price of $ 6,600 , excluding closing costs.

As of November 4, 2024, we had 28 properties under agreements or letters of intent to sell for an aggregate sales price of $ 348,080 , excluding closing costs.

If these sales are completed, approximately $ 302,100 of the proceeds are required to be used to partially redeem our outstanding senior secured notes due 2026.

SHOP 5 45,813

All Other 1 2,240

(1) The net proceeds from the sale of one of these properties are required to be used to partially redeem our outstanding senior secured notes due 2026, if the sale of that property is completed.

We expect to sell that property during the fourth quarter of 2025 for a sales price of $ 6,500 , excluding closing costs.

Subsequent to March 31, 2025, we sold one property for a sales price of $ 11,150 , excluding closing costs.

As of May 2, 2025, we had 19 properties under agreements or letters of intent to sell for an aggregate sales price of $ 115,773 , excluding closing costs.

The net proceeds from the sales of two of these properties, which have an expected aggregate sales price of $ 13,118 , excluding closing costs, are required to be used to partially redeem our outstanding senior secured notes due 2026, if the sales of such properties are completed.

We may not complete the sales of any or all of the properties we currently plan to sell.

4 unchanged sentences

The future cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates.

If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the asset to its estimated fair value.

During the three months ended March 31, 2025, we recorded impairment charges of $ 38,472 to adjust the carrying value of four medical office properties to their estimated fair value.

These properties were classified as held for sale in our condensed consolidated balance sheet as of March 31, 2025.

DIVERSIFIED HEALTHCARE TRUST

1 unchanged sentence

(dollar amounts in thousands, except per share data or as otherwise stated)

sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the asset to its estimated fair value.

During the nine months ended September 30, 2024, we recorded impairment charges of $ 27,173 related to one medical office property and one life science property that were classified as held for sale as of September 30, 2024.

We also recorded impairment charges of $ 14,545 related to two medical office properties that were sold in 2024.

Investments and Capital Expenditures:

The following is a summary of capital expenditures, development, redevelopment and other activities for the periods presented:

Three Months Ended March 31,

Medical Office and Life Science Portfolio capital expenditures:

Lease related costs (1)

$ 3,847 $ 6,029

Building improvements (2)

Recurring capital expenditures - Medical Office and Life Science Portfolio 5,371 6,948

Wellness centers lease related costs (1)

SHOP fixed assets and capital improvements 21,115 10,091

Total recurring capital expenditures $ 26,486 $ 23,962

Development, redevelopment and other activities - Medical Office and Life Science Portfolio (3)

Development, redevelopment and other activities - SHOP (3)

Total development, redevelopment and other activities $ 5,568 $ 1,902

Capital expenditures by segment:

Medical Office and Life Science Portfolio $ 5,371 $ 7,661

SHOP 26,683 11,280

All Other - wellness centers

Total capital expenditures $ 32,054 $ 25,864

(1) Includes capital expenditures to improve tenants' space or amounts paid directly to tenants to improve their space and other leasing related costs, such as brokerage commissions and tenant inducements.

(2) Includes capital expenditures to replace obsolete building components that extend the useful life of existing assets or other improvements to increase the marketability of the property.

(3) Includes capital expenditures that reposition a property or result in change of use or new sources of revenue.

Equity Method Investments in Unconsolidated Joint Ventures:

As of September 30, 2024, we had equity investments in unconsolidated joint ventures as follows:

Joint Venture DHC Ownership DHC Carrying Value of Investment at September 30, 2024

Number of Properties Location Square Feet

As of March 31, 2025, we had equity investments in unconsolidated joint ventures as follows:

Equity Method Investments in Joint Venture DHC Ownership DHC Carrying Value of Investment at March 31, 2025

Number of Properties State Square Feet

Seaport Innovation LLC 10 % $ 89,870 1 MA 1,134,479

1 unchanged sentence

$ 133,797 11 2,203,242

The following table provides a summary of the mortgage debts of these joint ventures:

Joint Venture Coupon Rate Maturity Date Principal Balance at September 30, 2024 (1)

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

The following table provides a summary of the mortgage debts of these joint ventures as of March 31, 2025:

Joint Venture Coupon Rate Maturity Date Principal Balance (1)

Mortgage Notes Payable (secured by one property in Massachusetts) (2) (3)

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(4) The debt securing these properties is non-recourse to us.

(5) This mortgage loan matures on February 9, 2025 and requires interest to be paid at an annual rate of the one month term secured overnight financing rate, or SOFR, plus a premium of 1.90 %.

This joint venture has also purchased an interest rate cap through February 2025 with a SOFR strike rate equal to 4.48 % and an initial premium of $ 1,200 .

The maturity date of this mortgage loan is subject to two remaining one-year extension options.

(5) The joint venture has one remaining one-year extension option for the maturity date of this mortgage loan, subject to satisfaction of certain conditions, and this mortgage loan requires that interest be paid at an annual rate of the one month term secured overnight financing rate, or SOFR, plus a premium of 1.90 %.

The joint venture has purchased an interest rate cap through February 2026 with a SOFR strike rate equal to 5.74 %.

We account for the unconsolidated joint venture for 10 medical office and life science properties in which we own a 20 % equity interest, or the LSMD JV, and the unconsolidated joint venture for a life science property located in Boston, Massachusetts in which we own a 10 % equity interest, or the Seaport JV, using the equity method of accounting under the fair value option.

We recognized changes in the fair value of our investments in our unconsolidated joint ventures of $ 1,707 and $( 145 ) during the three months ended September 30, 2024 and 2023, respectively, and $( 18,173 ) and $ 2,137 during the nine months ended September 30, 2024 and 2023, respectively.

These amounts are included in equity in net earnings (losses) of investees in our condensed consolidated statements of comprehensive income (loss).

We recognized changes in the fair value of our investments in our unconsolidated joint ventures of $ 1,138 and $ 1,613 during the three months ended March 31, 2025 and 2024, respectively.

These amounts are included in equity in net earnings of investees in our condensed consolidated statements of comprehensive income (loss).

See Note 6 for further information regarding the valuation of our investment in these joint ventures.

Equity Method Investment in AlerisLife:

As of September 30, 2024, we owned approximately 34.0 % of the outstanding common shares of AlerisLife Inc., or AlerisLife.

We account for our 34.0 % non-controlling interest in AlerisLife using the equity method of accounting.

As of September 30, 2024, our investment in AlerisLife had a carrying value of $ 23,758 .

As of March 31, 2025, we owned approximately 34.0 % of the outstanding common shares of AlerisLife Inc., or AlerisLife.

We do not control the activities that are most significant to AlerisLife and, as a result, we account for our non-controlling interest in AlerisLife using the equity method of accounting.

As of March 31, 2025, our investment in AlerisLife had a carrying value of $ 7,965 .

The cost basis of our investment in AlerisLife exceeded our proportionate share of AlerisLife's total stockholders' equity book value on the date of acquisition of our initial interest in AlerisLife, which was February 16, 2024, by an aggregate of $ 29,500 .

As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 21 years, the weighted average remaining useful life of the real estate assets owned by AlerisLife and the intangible contract asset with us as of the date of acquisition.

We recorded amortization of the basis difference of $ 351 and $ 174 for the three months ended March 31, 2025 and 2024, respectively.

We recognized income of $( 2 ) and $ 111 related to our investment in AlerisLife for the three months ended March 31, 2025 and 2024, respectively.

These amounts are included in equity in net earnings of investees in our condensed consolidated statements of comprehensive income (loss).

On February 14, 2025, AlerisLife paid an aggregate cash dividend of $ 50,000 to its stockholders.

Our pro rata share of this cash dividend was $ 17,000 and our basis in the equity method investment in AlerisLife was reduced by such amount.

See Note 11 for further information regarding our investment in AlerisLife.

In September 2022, certain of our managed senior living communities located in Florida experienced hurricane related damage.

We carry comprehensive property, casualty, flood and business interruption insurances which covered our losses at these senior living communities, subject to a deductible.

During the three months ended March 31, 2025, we recognized a gain on insurance recoveries of $ 7,522 as a result of insurance proceeds received for these damaged senior living communities and the closing of the associated claim.

DIVERSIFIED HEALTHCARE TRUST

1 unchanged sentence

(dollar amounts in thousands, except per share data or as otherwise stated)

amortization of the basis difference of $ 351 and $ 877 for the three and nine months ended September 30, 2024, respectively.

We recognized income of $( 1,531 ) and $ 7,414 related to our investment in AlerisLife for the three and nine months ended September 30, 2024, respectively.

These amounts are included in equity in net earnings (losses) of investees in our condensed consolidated statements of comprehensive income (loss).

See Note 11 for further information regarding our investment in AlerisLife.

We are a lessor of medical office and life science properties, senior living communities and other healthcare related properties.

4 unchanged sentences

Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term.

We increased rental income to record revenue on a straight line basis by $ 658 and $ 676 for the three months ended September 30, 2024 and 2023, respectively, and $ 1,605 for the nine months ended September 30, 2024.

We decreased rental income to record revenue on a straight line basis by $ 1,333 for the nine months ended September 30, 2023.

Rents receivable, excluding receivables related to our properties classified as held for sale, if any, include $ 74,088 and $ 75,306 of straight line rent receivables at September 30, 2024 and December 31, 2023, respectively, and are included in other assets, net in our condensed consolidated balance sheets.

We increased rental income to record revenue on a straight line basis by $ 455 and $ 291 for the three months ended March 31, 2025 and 2024, respectively.

Rents receivable, excluding receivables related to our properties classified as held for sale, if any, include $ 69,948 and $ 69,814 of straight line rent receivables at March 31, 2025 and December 31, 2024, respectively, and are included in other assets, net in our condensed consolidated balance sheets.

We do not include in our measurement of our lease receivables certain variable payments, including changes in the index or market based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred.

Such payments totaled $ 11,126 and $ 12,018 for the three months ended September 30, 2024 and 2023, respectively, of which tenant reimbursements totaled $ 11,083 and $ 11,965 , respectively, and $ 34,111 and $ 36,579 for the nine months ended September 30, 2024 and 2023, respectively, of which tenant reimbursements totaled $ 33,953 and $ 36,414 , respectively.

Such payments totaled $ 10,838 and $ 11,350 for the three months ended March 31, 2025 and 2024, respectively, of which tenant reimbursements totaled $ 10,423 and $ 11,284 , respectively.

Right of Use Asset and Lease Liability:

For leases where we are the lessee, we recognize a right of use asset and a lease liability equal to the present value of the minimum lease payments, with rental payments being applied to the lease liability and the right of use asset being amortized over the term of the lease.

The values of the right of use assets and related liabilities representing our future obligation under the respective lease arrangements for which we are the lessee were $ 20,868 and $ 21,254 , respectively, as of September 30, 2024, and $ 23,366 and $ 23,748 , respectively, as of December 31, 2023.

The values of the right of use assets and related liabilities representing our future obligation under the respective lease arrangements for which we are the lessee were $ 19,169 and $ 19,555 , respectively, as of March 31, 2025, and $ 20,025 and $ 20,411 , respectively, as of December 31, 2024.

The right of use assets and related lease liabilities are included within other assets, net and other liabilities , respectively, within our condensed consolidated balance sheets.

1 unchanged sentence

These leases are short term in nature, are cancelable with no fee or do not result in an annual expense in excess of our capitalization policy and, as a result, are not recorded on our condensed consolidated balance sheets.

Our principal debt obligations, excluding any debt obligations of our joint ventures, at September 30, 2024 were:

(1) $ 2,040,000 outstanding principal amount of senior unsecured notes;

(2) $ 940,534 outstanding principal amount of senior secured notes with an aggregate net book value of $ 1,070,598 ;

and (3) $ 127,889 principal amount of mortgage debt secured by nine properties.

The mortgaged properties had an aggregate net book value of $ 205,750 at September 30, 2024.

We also had two properties subject to finance leases that expire in 2026 with lease obligations totaling $ 2,743 at September 30, 2024;

these two properties had an aggregate net book value of $ 21,815 at September 30, 2024.

At March 31, 2025 and December 31, 2024, our outstanding indebtedness consisted of the following:

Senior Unsecured Notes:

Principal Balance as of

Coupon Rate Maturity March 31, 2025 December 31, 2024

Senior unsecured notes (1)(2)

9.750 % June 2025 $ 380,000 $ 380,000

Senior unsecured notes 4.750 % February 2028 500,000 500,000

Senior unsecured notes (1)

4.375 % March 2031 500,000 500,000

Senior unsecured notes 5.625 % August 2042 350,000 350,000

Senior unsecured notes 6.250 % February 2046 250,000 250,000

Total 1,980,000 1,980,000

Unamortized discount ( 2,428 ) ( 2,639 )

Unamortized debt issuance costs ( 19,225 ) ( 20,042 )

Senior unsecured notes, net $ 1,958,347 $ 1,957,319

(1) These notes are fully and unconditionally guaranteed, on a joint, several and unsecured basis, by all of our subsidiaries except certain excluded subsidiaries.

The notes and related guarantees are effectively subordinated to all of our and the subsidiary guarantors' secured indebtedness, respectively, to the extent of the value of the applicable collateral, and are structurally

DIVERSIFIED HEALTHCARE TRUST

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(dollar amounts in thousands, except per share data or as otherwise stated)

Until its repayment in full and termination on December 21, 2023, we had a $ 450,000 credit facility that was fully drawn.

The weighted average annual interest rate for borrowings under our former credit facility was 8.3 % and 7.8 % for the three and nine months ended September 30, 2023, respectively.

In January 2023, we repaid $ 113,627 in outstanding borrowings under our former credit facility and the commitments were reduced to $ 586,373 .

In February 2023, we reduced the commitments from $ 586,373 to $ 450,000 following our repayment of $ 136,373 in outstanding borrowings under our former credit facility.

As a result of the February 2023 reduction in commitments, we recorded a loss on modification or early extinguishment of debt of $ 1,075 for the nine months ended September 30, 2023.

In May 2024, we executed a $ 120,000 fixed rate, interest only mortgage loan secured by eight medical office and life science properties.

This mortgage loan matures in June 2034 and requires that interest be paid at an annual rate of 6.864 %.

In June 2024, we redeemed $ 60,000 of our outstanding 9.75 % senior unsecured notes due 2025 using proceeds from the $ 120,000 mortgage loan executed in May 2024.

As a result of this redemption, we recorded a loss on early extinguishment of debt of $ 209 for the nine months ended September 30, 2024.

As of September 30, 2024, all $ 940,534 of our senior secured notes due 2026 are fully and unconditionally guaranteed, on a joint, several and senior secured basis, by certain of our subsidiaries that own 95 properties, or the Collateral Guarantors, and on a joint, several and unsecured basis, by all our subsidiaries other than the Collateral Guarantors and certain excluded subsidiaries, and all $ 440,000 of our 9.75 % senior notes due 2025 and all $ 500,000 of our 4.375 % senior notes due 2031 were fully and unconditionally guaranteed, on a joint, several and unsecured basis, by all of our subsidiaries except certain excluded subsidiaries.

subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.

(2) In April 2025, we used the net proceeds from the $ 140,000 floating rate mortgage loan executed in March 2025 and cash on hand to partially redeem $ 140,000 of these senior unsecured notes.

Secured and Other Debt:

Properties Securing Principal Balance as of (1)

Net Book Value of Collateral

At March 31, 2025 At December 31, 2024 March 31, 2025 December 31, 2024 Interest

Rate Maturity March 31, 2025 December 31, 2024

Senior secured notes (2)(3)(4)

73 95 $ 641,376 $ 940,534 0.00 % January 2026 $ 870,044 $ 1,064,171

Mortgage note 8 8 120,000 120,000 6.86 % June 2034 188,869 191,186

Mortgage note 1 1 7,044 7,464 6.44 % July 2043 12,986 13,097

Floating rate mortgage loan (5)

14 — 140,000 — 6.82 % March 2028 145,396 —

Finance Leases 2 2 1,918 2,338 7.70 % April 2026 21,244 21,606

Total 98 106 910,338 1,070,336 $ 1,238,539 $ 1,290,060

Unamortized discount (3)

( 53,017 ) ( 101,035 )

Unamortized debt issuance costs ( 15,275 ) ( 15,716 )

Total secured and other debt, net $ 842,046 $ 953,585

(1) The principal balances are the amounts stated in the contracts.

In accordance with GAAP, our carrying values and recorded interest expense may be different because of market conditions at the time we assumed certain of these debts.

(2) These notes are fully and unconditionally guaranteed, on a joint, several and senior secured basis by certain of our subsidiaries that own 73 properties, or the Collateral Guarantors, and on a joint, several and unsecured basis, by all our subsidiaries other than the Collateral Guarantors and certain excluded subsidiaries.

These notes and the guarantees provided by the Collateral Guarantors are secured by a first priority lien on and security interest in each of the collateral properties and 100 % of the equity interests in each of the Collateral Guarantors.

The guarantees provided by all our subsidiaries other than the Collateral Guarantors and certain excluded subsidiaries are effectively subordinated to all of the subsidiary guarantors' secured indebtedness to the extent of the value of the applicable collateral, and the notes and related guarantees are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.

(3) These notes require no cash interest to accrue prior to maturity and will accrete at a rate of 11.25 % per annum compounded semiannually on January 15 and July 15 of each year, such that the accreted value will equal the principal amount at maturity.

The unamortized discount is related to these notes.

(4) We have a one-time option to extend the maturity date of these senior secured notes by one year , to January 15, 2027, subject to satisfaction of certain conditions and payment of an extension fee.

If we exercise this option, interest payments will be due semiannually during the extension period at an initial interest rate of 11.25 % with increases of 50 basis points every 90 days these senior secured notes remain outstanding.

(5) We have two one-year extension options for the maturity date of this loan, subject to satisfaction of certain conditions and payment of an extension fee.

This loan requires that interest be paid at an annual rate of SOFR plus a premium of 2.50 %, with interest-only payments through March 2027, and we have two six-month extension options for the interest-only period, subject to satisfaction of certain conditions.

In connection with this loan, we have purchased an interest rate cap for $ 47 through March 2026 with a SOFR strike rate equal to 4.50 %.

As of March 31, 2025, all $ 641,376 of our senior secured notes due 2026 are fully and unconditionally guaranteed, on a joint, several and senior secured basis, by the Collateral Guarantors, and on a joint, several and unsecured basis, by all our subsidiaries other than the Collateral Guarantors and certain excluded subsidiaries, and all $ 380,000 of our 9.75 % senior notes due 2025 and all $ 500,000 of our 4.375 % senior notes due 2031 were fully and unconditionally guaranteed, on a joint, several and unsecured basis, by all of our subsidiaries except certain excluded subsidiaries.

The notes and related guarantees (other than our senior secured notes and the guarantees provided by the Collateral Guarantors) are effectively subordinated to all of our and the subsidiary guarantors' secured indebtedness, respectively, to the extent of the value of the applicable collateral, and the notes and related guarantees are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.

Our remaining $ 1,100,000 of senior unsecured notes do not have the benefit of any guarantees as of September 30, 2024.

We are currently under agreements or letters of intent to sell 22 of the properties securing our senior secured notes due 2026 for an aggregate sales price of $ 302,100 , excluding closing costs.

If these sales are completed, the proceeds are required to be used to partially redeem our outstanding senior secured notes due 2026.

Our remaining $ 1,100,000 of senior unsecured notes do not have the benefit of any guarantees as of March 31, 2025.

As of May 2, 2025, we are under agreements to sell two additional properties that secure these senior secured notes for an expected aggregate sales price of $ 13,118 , excluding closing costs.

The net proceeds from these sales are required to be used to partially redeem these senior secured notes, if these sales are completed.

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

Our senior secured notes due 2026 and the guarantees provided by the Collateral Guarantors are secured by a first priority lien and security interest in each of the collateral properties and 100 % of the equity interests in each of the Collateral Guarantors.

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The accreted value of these notes will increase at a rate of 11.25 % per annum compounded semiannually on January 15 and July 15 of each year, such that the accreted value will equal the principal amount at maturity.

During the three and nine months ended September 30, 2024, we recognized discount accretion of $ 22,034 and $ 64,133 , respectively, for our senior secured notes due 2026 in interest expense in our condensed consolidated statements of comprehensive income (loss).

We have a one-time option to extend the maturity date of these notes by one year , to January 15, 2027, subject to satisfaction of certain conditions and payment of an extension fee.

Based on the significant number of unencumbered properties in our senior housing operating portfolio, or SHOP, segment and our demonstrated ability to execute debt financings, we believe we will likely be able to obtain additional debt financing that will allow us to satisfy the $ 440,000 outstanding principal amount of our 9.75 % senior unsecured notes due June 2025.

During the three months ended March 31, 2025 and 2024, we recognized discount accretion of $ 22,122 and $ 20,659 , respectively, for our senior secured notes due 2026 in interest expense in our condensed consolidated statements of comprehensive income (loss).

The table below represents our indebtedness repayments, excluding scheduled payments on amortizing debt, for the three months ended March 31, 2025:

Date Debt Instrument Secured Property Count Interest Rate Original Maturity Date Outstanding Principal Balance Repayment Amount Remaining Principal Balance Loss on Modification or Early Extinguishment of Debt

Repayments during the three months ended March 31, 2025:

March 2025 (1)

Senior secured notes 73 — % January 2026 $ 940,534 $ 299,158 $ 641,376 $ 29,071

(1) During the three months ended March 31, 2025, we sold 22 properties that secured our senior secured notes due 2026.

We used aggregate net proceeds of $ 299,158 from the sales of these properties to partially redeem these senior secured notes.

In March 2025, we executed a $ 140,000 floating rate mortgage loan secured by 14 senior living communities in our senior housing operating portfolio, or SHOP, segment.

This mortgage loan matures in March 2028 and requires that interest be paid at an annual rate of SOFR plus a premium of 2.50 %, with interest-only payments through March 2027, and we have two six-month extension options of the interest-only period, subject to satisfaction of certain conditions.

In connection with this mortgage loan, we have purchased an interest rate cap for $ 47 through March 2026 with a SOFR strike rate equal to 4.50 %.

In April 2025, we used the net proceeds from this mortgage loan and cash on hand to partially redeem $ 140,000 of our then outstanding 9.75 % senior unsecured notes due June 2025.

In April 2025, we executed a $ 108,873 fixed rate mortgage loan secured by seven SHOP communities.

This mortgage loan matures in May 2035 and requires that interest be paid at an annual rate of 6.22 %, with interest-only payments through May 2030.

Also in April 2025, we provided notice to the holders of our 9.75 % senior unsecured notes due June 2025 to redeem $ 140,000 of these notes in May 2025 using these loan proceeds and cash on hand.

Additionally, we have executed term sheets with additional lenders for expected aggregate proceeds of $ 94,030 for loans that will be secured by an aggregate of six SHOP communities.

We intend to use these proceeds and cash on hand to fully redeem the remaining outstanding principal amount of our 9.75 % senior unsecured notes due in June 2025, which is our next significant debt maturity.

The closings of the additional loans are subject to conditions;

accordingly, we cannot be sure if we will close such loans for the expected proceeds or at all or that these closings will not be delayed.

Interest on our senior unsecured notes is payable either semi-annually or quarterly in arrears;

however, no principal repayments are due until maturity.

No interest is payable on our senior secured notes, with the full principal amount due at maturity.

Our mortgage note due June 2034 requires monthly interest payments and no principal payment is due until maturity, and our mortgage note due July 2043 requires monthly principal and interest payments.

Payments under our finance leases are due monthly.

We include amortization of finance lease assets in depreciation and amortization expense.

Our senior notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default.

Our senior notes indentures and their supplements 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.

DIVERSIFIED HEALTHCARE TRUST

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Fair Value of Assets and Liabilities

The following table presents certain of our assets that are measured at fair value at September 30, 2024 and December 31, 2023, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

As of September 30, 2024 As of December 31, 2023

The following table presents certain of our assets that are measured at fair value at March 31, 2025 and December 31, 2024, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

As of March 31, 2025 As of December 31, 2024

Description Carrying Value Carrying Value

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$ 43,927 $ 44,910

Interest rate cap (Level 2) (3)

Non-Recurring Fair Value Measurements Assets:

Real estate properties held for sale (Level 2) (4)

$ 20,586 $ 24,074

(1) The 10 % equity interest we own in the Seaport JV is included in investments in unconsolidated joint ventures in our condensed consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs).

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(2) The 20 % equity interest we own in the LSMD JV is included in investments in unconsolidated joint ventures in our condensed consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs).

The significant unobservable inputs used in the fair value analysis are discount rates of between 6.50 % and 8.00 %, exit capitalization rates of between 5.25 % and 7.00 %, holding periods of 10 to 13 years, direct capitalization rates of 5.00 % and market rents.

The significant unobservable inputs used in the fair value analysis are discount rates of between 6.25 % and 8.00 %, exit capitalization rates of between 5.25 % and 7.50 %, holding periods of 10 years and market rents.

The assumptions we made in the fair value analysis are based on the location, type and nature of each property, and current and anticipated market conditions.

See Note 3 for further information regarding this joint venture.

(3) The fair value of our interest rate cap derivative is based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date.

(4) We have assets in our condensed consolidated balance sheets that are measured at fair value on a non-recurring basis.

During the three months ended September 30, 2024, we recorded impairment charges of $ 23,031 to reduce the carrying value of one life science property that is classified as held for sale to its estimated sales price, less estimated costs to sell, of $ 6,286 under an agreement to sell that we have entered into with a third party.

During the three months ended March 31, 2025, we recorded impairment charges of $ 38,472 to reduce the carrying value of four medical office properties that are classified as held for sale to its estimated sales price, less estimated costs to sell, of $ 20,586 under agreements to sell that we have entered into with third parties.

See Note 3 for further information about impairment charges and the properties we have classified as held for sale.

In addition to the assets described in the table above, our financial instruments at September 30, 2024 and December 31, 2023 included cash and cash equivalents, restricted cash, certain other assets, senior unsecured notes, senior secured notes, secured debt and finance leases and certain other unsecured obligations and liabilities.

In addition to the assets described in the table above, our financial instruments at March 31, 2025 and December 31, 2024 included cash and cash equivalents, restricted cash, certain other assets, senior unsecured notes, senior secured notes, secured debt and finance leases and certain other unsecured obligations and liabilities.

The fair values of these financial instruments approximated their carrying values in our condensed consolidated financial statements as of such dates, except as follows:

As of September 30, 2024 As of December 31, 2023

Description Carrying Amount (1)

Estimated Fair Value Carrying Amount (1)

As of March 31, 2025 As of December 31, 2024

Description Carrying Value (1)

Estimated Fair Value Carrying Value (1)

Estimated Fair Value

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$ 2,800,393 $ 2,369,737 $ 2,910,904 $ 2,564,449

$ 2,945,291 $ 2,713,876 $ 2,816,849 $ 2,399,525

(1) Includes unamortized net discounts, premiums and debt issuance costs, if any.

(2) We assumed certain of these secured debts in connection with our acquisition of certain properties.

We recorded the assumed mortgage notes at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage notes to adjust interest expense to the estimated market interest rates as of the date of acquisition.

We estimated the fair values of our two issuances of senior unsecured notes due 2042 and 2046 based on the closing price on The Nasdaq Stock Market LLC, or Nasdaq, as of March 31, 2025 and December 31, 2024 (Level 1 inputs as defined in the fair value hierarchy under GAAP).

We estimated the fair values of our three issuances of senior unsecured notes due 2025,

DIVERSIFIED HEALTHCARE TRUST

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(dollar amounts in thousands, except per share data or as otherwise stated)

We estimated the fair values of our two issuances of senior unsecured notes due 2042 and 2046 based on the closing price on The Nasdaq Stock Market LLC, or Nasdaq, as of September 30, 2024 and December 31, 2023 (Level 1 inputs as defined in the fair value hierarchy under GAAP).

We estimated the fair values of our three issuances of senior unsecured notes due 2025, 2028 and 2031 and our issuance of senior secured notes due 2026 using an average of the bid and ask price on Nasdaq on or about September 30, 2024 and December 31, 2023 (Level 2 inputs as defined in the fair value hierarchy under GAAP).

2028 and 2031 and our issuance of senior secured notes due 2026 using an average of the bid and ask price on Nasdaq on or about March 31, 2025 and December 31, 2024 (Level 2 inputs as defined in the fair value hierarchy under GAAP).

We estimated the fair values of our secured debts by using discounted cash flows analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP).

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Common Share Awards:

On May 31, 2024, in accordance with our Trustee compensation arrangements, we awarded to each of our seven Trustees 37,037 of our common shares, valued at $ 2.43 per share, the closing price of our common shares on Nasdaq on that day .

On September 11, 2024, we awarded under our equity compensation plan an aggregate of 881,767 of our common shares, valued at $ 3.35 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of The RMR Group LLC, or RMR, and certain employees of AlerisLife.

On March 20, 2025, in accordance with our Trustee compensation arrangements, we awarded 33,582 of our common shares in connection with the election of one of our Trustees in March 2025, valued at $ 2.68 per share, the closing price of our common shares on Nasdaq on that day .

Common Share Purchases:

During the three and nine months ended September 30, 2024, we purchased an aggregate of 219,864 and 267,551 of our common shares, respectively, valued at a weighted average share price of $ 3.52 and $ 3.34 , respectively, from our officers and certain other current and former officers and employees of RMR and certain employees of AlerisLife, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the applicable purchase dates.

During the three months ended March 31, 2025, we purchased 2,035 of our common shares, valued at a share price of $ 2.68 , from a former employee of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

We withheld and purchased these common shares at their fair market values based upon the trading price of our common shares at the close of trading on Nasdaq on the purchase date.

Distributions:

During the nine months ended September 30, 2024, we declared and paid quarterly distributions to common shareholders as follows:

During the three months ended March 31, 2025, we paid a quarterly distribution to common shareholders as follows:

Declaration Date Record Date Payment Date Distribution Per Share Total Distributions

January 16, 2025 January 27, 2025 February 20, 2025 $ 0.01 $ 2,413

April 11, 2024 April 22, 2024 May 16, 2024 0.01 2,404

July 11, 2024 July 22, 2024 August 15, 2024 0.01 2,406

$ 0.03 $ 7,214

On October 16, 2024, we declared a quarterly distribution to common shareholders of record on October 28, 2024 of $ 0.01 per share, or approximately $ 2,413 .

We expect to pay this distribution on or about November 14, 2024 using cash on hand.

On April 10, 2025, we declared a quarterly distribution to common shareholders of record on April 22, 2025 of $ 0.01 per share, or approximately $ 2,413 .

We expect to pay this distribution on or about May 15, 2025 using cash on hand.

Segment Reporting

We operate in, and report financial information for, the following two segments:

Medical Office and Life Science Portfolio and SHOP.

We aggregate the operating results of our properties in these two reporting segments based on their similar operating and economic characteristics.

Our operating segments are based on our internal reporting structure and property type and are aligned with how our Chief Operating Decision Maker, or the CODM, reviews the operating results to allocate resources and assess segment performance.

The CODM is our President and Chief Executive Officer.

Our two reportable segments are Medical Office and Life Science Portfolio and SHOP.

Our Medical Office and Life Science Portfolio segment primarily consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties primarily leased to biotech laboratories and other similar tenants.

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 on our behalf.

We also report “non-segment” operations, which consists 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

The significant expense categories and amounts presented below align with the segment-level information that is regularly provided to our CODM.

The CODM reviews operating and financial results, including net income (loss) and its components, to assess performance, allocate resources and guide strategic decisions.

For further information regarding the accounting policies of our reportable segments, see Note 2 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.

The tables below present information about our segments.

DIVERSIFIED HEALTHCARE TRUST

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(dollar amounts in thousands, except per share data or as otherwise stated)

to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.

For the Three Months Ended September 30, 2024

Medical Office and Life Science Portfolio SHOP Non-Segment Consolidated

For the Three Months Ended March 31, 2025

Medical Office and Life Science Portfolio SHOP

Rental income $ 49,763 $ — $ 49,763

Residents fees and services — 328,306 328,306

Total segment revenues 49,763 328,306 378,069

Reconciliation of revenue:

Other revenue (1)

Total revenues 386,864

Property operating expenses 25,074 284,572 51 309,697

Depreciation and amortization 18,773 47,343 2,843 68,959

General and administrative — — 13,933 13,933

Acquisition and certain other transaction related costs

Impairment of assets 23,031 — — 23,031

Total expenses 66,878 331,915 17,158 415,951

Gain on sale of properties 111 — — 111

Interest and other income — — 2,575 2,575

Senior living labor and benefits — 162,404 162,404

Dietary — 20,246 20,246

Utilities 3,602 19,578 23,180

Real estate taxes 5,834 12,070 17,904

Insurance 621 10,313 10,934

Other operating expenses (2)

12,850 66,867 79,717

Interest expense 2,253 66 2,319

Loss before income tax expense and equity in net earnings (losses) of investees ( 16,185 ) ( 19,964 ) ( 62,919 ) ( 99,068 )

Income tax expense — — ( 148 ) ( 148 )

Equity in net earnings (losses) of investees 1,707 — ( 1,180 ) 527

Net loss $ ( 14,478 ) $ ( 19,964 ) $ ( 64,247 ) $ ( 98,689 )

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

For the Nine Months Ended September 30, 2024

Medical Office and Life Science Portfolio SHOP Non-Segment Consolidated

Rental income $ 161,605 $ — $ 25,550 $ 187,155

Residents fees and services — 928,653 — 928,653

Total revenues 161,605 928,653 25,550 1,115,808

Property operating expenses 73,253 847,526 587 921,366

Depreciation and amortization 17,321 48,635 65,956

Other segment items (3)

26,018 ( 8,786 ) 17,232

Segment loss ( 18,736 ) ( 3,087 ) ( 21,823 )

Reconciliation of segment loss:

Other income (1)

General and administrative ( 9,000 )

Acquisition and certain other transaction related costs ( 24 )

— — 2,243 2,243

Impairment of assets 41,718 — — 41,718

Total expenses 173,459 988,702 38,378 1,200,539

Loss on sale of properties ( 18,976 ) — — ( 18,976 )

Gain on sale of properties 97,560

Interest and other income 2,099

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Loss on modification or early extinguishment of debt ( 29,071 )

Loss before income tax expense and equity in net (losses) earnings of investees ( 34,265 ) ( 60,232 ) ( 177,925 ) ( 272,422 )

Income tax expense ( 49 )

Equity in net (losses) earnings of investees ( 18,173 ) — 8,291 ( 9,882 )

Equity in net earnings of an investee 349

Net loss $ ( 8,986 )

As of September 30, 2024

Medical Office and Life Science Portfolio SHOP Non-Segment Consolidated

Total assets $ 1,726,082 $ 3,111,775 $ 447,339 $ 5,285,196

(1) Revenue and net income from our triple net leased wellness centers and senior living communities that are leased to third party operators, which we do not consider to be sufficiently material to constitute a separate reportable segment.

(2) Other operating expenses for each reportable segment include expenses such as management fees, repairs and maintenance, cleaning and other costs incurred in connection with the operation of our properties.

(3) Other segment items for each reportable segment include impairment of assets, gain (loss) on sale of properties, gain (loss) on modification or early extinguishment of debt, equity in net earnings (losses) of investees, interest and other income and gain on insurance recoveries, as applicable.

DIVERSIFIED HEALTHCARE TRUST

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(dollar amounts in thousands, except per share data or as otherwise stated)

For the Three Months Ended September 30, 2023

Medical Office and Life Science Portfolio SHOP Non-Segment Consolidated

For the Three Months Ended March 31, 2024

Medical Office and Life Science Portfolio SHOP Total

Rental income $ 54,149 $ — $ 54,149

Residents fees and services — 308,126 308,126

Total segment revenues 54,149 308,126 362,275

Reconciliation of revenue:

Other revenue (1)

Total revenues 370,776

Property operating expenses 25,784 272,445 203 298,432

Depreciation and amortization 20,175 44,587 2,474 67,236

General and administrative — — 6,954 6,954

Acquisition and certain other transaction related costs

Senior living labor and benefits — 157,881 157,881

Dietary — 20,519 20,519

Utilities 3,409 18,254 21,663

Real estate taxes 7,180 11,463 18,643

Insurance 734 11,207 11,941

Other operating expenses (2)

12,574 64,092 76,666

Impairment of assets 427 729 — 1,156

Total expenses 46,386 317,761 13,307 377,454

Interest and other income — 115 3,128 3,243

Interest expense 222 68 290

Income (loss) before income tax expense and equity in net losses of investees 8,553 ( 24,591 ) ( 49,407 ) ( 65,445 )

Income tax expense — — ( 189 ) ( 189 )

Equity in net losses of investees ( 145 ) — — ( 145 )

Net income (loss) $ 8,408 $ ( 24,591 ) $ ( 49,596 ) $ ( 65,779 )

For the Nine Months Ended September 30, 2023

Medical Office and Life Science Portfolio SHOP Non-Segment Consolidated

Rental income $ 165,448 $ — $ 25,753 $ 191,201

Residents fees and services — 857,572 — 857,572

Total revenues 165,448 857,572 25,753 1,048,773

Property operating expenses 73,237 796,733 770 870,740

Depreciation and amortization 20,740 46,922 67,662

Other segment items (3)

16,403 — 16,403

Segment loss ( 7,113 ) ( 22,280 ) ( 29,393 )

Reconciliation of segment loss:

Other income (1)

General and administrative ( 7,568 )

Acquisition and certain other transaction related costs ( 86 )

— — 9,812 9,812

Impairment of assets 14,034 4,346 — 18,380

Total expenses 150,336 930,970 38,167 1,119,473

Gain on sale of properties — 1,233 — 1,233

Gains on equity securities, net — — 8,126 8,126

Interest and other income 2,237

Interest expense ( 57,286 )

Loss on modification or early extinguishment of debt — — ( 1,075 ) ( 1,075 )

Income (loss) before income tax expense and equity in net earnings of investees 14,768 ( 71,086 ) ( 136,448 ) ( 192,766 )

Income tax expense ( 187 )

Equity in net earnings of investees 2,137 — — 2,137

Net income (loss) $ 16,905 $ ( 71,086 ) $ ( 136,827 ) $ ( 191,008 )

Equity in net earnings of an investee 285

Net loss $ ( 86,259 )

As of March 31, 2025 As of December 31, 2024

Medical Office and Life Science Portfolio $ 1,474,576 $ 1,688,034

SHOP 3,046,342 3,084,101

All Other 474,925 364,870

Total assets $ 4,995,843 $ 5,137,005

(1) See Note 3 for further information regarding additions to long-lived assets.

DIVERSIFIED HEALTHCARE TRUST

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(dollar amounts in thousands, except per share data or as otherwise stated)

As of December 31, 2023

Medical Office and Life Science Portfolio SHOP Non-Segment Consolidated

Total assets $ 1,866,422 $ 3,134,978 $ 444,736 $ 5,446,136

Senior Living Community Management Agreements

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AlerisLife guarantees the payment and performance of each of its applicable subsidiary's obligations under the applicable management agreements.

In connection with ABP Trust’s acquisition of AlerisLife on March 20, 2023, we amended the master management agreement with AlerisLife to eliminate any change of control default or event of default provisions.

See Note 11 for further information regarding ABP Trust's acquisition of AlerisLife.

Our Senior Living Communities Managed by Five Star.

Five Star managed 119 of our senior living communities as of both September 30, 2024 and 2023.

Five Star managed 118 and 119 of our senior living communities as of March 31, 2025 and 2024, respectively.

We lease our senior living communities that are managed by Five Star to our taxable REIT subsidiaries, or TRSs.

We incurred management fees payable to Five Star of $ 10,611 and $ 10,058 for the three months ended September 30, 2024 and 2023, respectively, and $ 31,462 and $ 29,962 for the nine months ended September 30, 2024 and 2023, respectively.

For the three months ended September 30, 2024 and 2023, $ 10,060 and $ 9,457 , respectively, of the total management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 551 and $ 601 , respectively, were capitalized in our condensed consolidated balance sheets.

For the nine months ended September 30, 2024 and 2023, $ 30,053 and $ 27,909 , respectively, of the total management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 1,409 and $ 2,053 , respectively, were capitalized in our condensed consolidated balance sheets.

We incurred management fees payable to Five Star of $ 11,234 and $ 10,407 for the three months ended March 31, 2025 and 2024, respectively.

For the three months ended March 31, 2025 and 2024, $ 10,639 and $ 9,998 , respectively, of the total management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 595 and $ 409 , respectively, were capitalized in our condensed consolidated balance sheets.

The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

We incurred fees of $ 0 and $ 1,213 for the nine months ended September 30, 2024 and 2023, respectively, with respect to rehabilitation services Five Star provided at our senior living communities that are payable by us.

These amounts are included in property operating expenses in our condensed consolidated statements of comprehensive income (loss).

We lease space to Five Star at certain of our senior living communities, which, prior to June 17, 2024, Five Star used to provide certain outpatient rehabilitation and wellness services through the Ageility branded business.

Beginning on June 17, 2024, Five Star subleases this space to a subsidiary of Fox Rehabilitation, which acquired the Ageility branded business from AlerisLife on that date.

Our Senior Living Communities Managed by Other Third Party Managers.

Several other third party managers managed 111 of our senior living communities as of both September 30, 2024 and 2023.

Several other third party managers managed 113 and 111 of our senior living communities as of March 31, 2025 and 2024, respectively.

We lease our senior living communities that are managed by these third party managers to our TRSs.

In March 2024, we terminated our management agreement with one of our third party managers which manages certain of our communities located in Wisconsin and Illinois and transitioned these communities to another third party manager with which we have an existing relationship.

The terms of the management agreement for these communities are generally consistent with the terms of the existing management agreements with our other third party managers.

We paid transition costs, including termination and other fees, of $ 2,042 related to the transition of these communities during the nine months ended September 30, 2024.

We incurred management fees payable to these third party managers of $ 5,858 and $ 5,635 for the three months ended September 30, 2024 and 2023, respectively, and $ 17,341 and $ 16,230 for the nine months ended September 30, 2024 and 2023, respectively.

We incurred management fees payable to these third party managers of $ 6,334 and $ 5,725 for the three months ended March 31, 2025 and 2024, respectively.

Additionally, we incurred incentive management fees to certain of our other third party operators of $ 351 and $ 0 during the three months ended March 31, 2025 and 2024, respectively.

These amounts are included in property operating expenses in our condensed consolidated statements of comprehensive income (loss).

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

The following table presents residents fees and services revenue from all of our managed senior living communities disaggregated by the type of contract and payer:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Revenue from contracts with customers:

2024 2023 2024 2023

Basic housing and support services $ 252,772 $ 243,655

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See Note 11 for further information regarding our relationship, agreements and transactions with RMR.

We recognized net business management fees of $ 11,249 and $ 3,692 for the three months ended September 30, 2024 and 2023, respectively, and $ 19,255 and $ 10,283 for the nine months ended September 30, 2024 and 2023, respectively.

The net business management fees we recognized for both the three and nine months ended September 30, 2024 include $ 6,934 of estimated incentive fees based on our common share total return, as defined in our business management agreement.

Although we recognized estimated incentive fees in accordance with GAAP, the actual amount of annual incentive fees for 2024, if any, will be based on our common share total return as defined in our business management agreement, for the three-year period ending December 31, 2024, and will be payable in January 2025.

We did not incur any incentive fee payable for the year ended December 31, 2023.

We recognize business management and incentive fees, if any, in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

We recognized aggregate net property management and construction supervision fees of $ 1,787 and $ 2,209 for the three months ended September 30, 2024 and 2023, respectively, and $ 5,411 and $ 6,403 for the nine months ended September 30, 2024 and 2023, respectively.

For the three months ended September 30, 2024 and 2023, $ 1,358 and $ 1,363 , respectively, of the total property management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 429 and $ 846 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

For the nine months ended September 30, 2024 and 2023, $ 4,342 and $ 4,226 , respectively, of the total property management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 1,069 and $ 2,177 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

Business Management Agreements with RMR.

Pursuant to our business management agreement and in accordance with GAAP, we accrued estimated incentive management fees during the three months ended March 31, 2025 and 2024.

The actual amount of incentive management fees incurred for 2025, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2025, and will be payable to RMR in January 2026.

We did not incur any incentive management fees for the year ended December 31, 2024.

Expense Reimbursement.

We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR on our behalf.

We are generally not responsible for payment of RMR's employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR's employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR's centralized accounting personnel, our share of RMR's costs for providing our internal audit function, or as otherwise agreed.

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

costs of RMR's centralized accounting personnel, our share of RMR's costs for providing our internal audit function, or as otherwise agreed.

Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR.

We reimbursed RMR $ 4,007 and $ 3,671 for these expenses and costs for the three months ended September 30, 2024 and 2023, respectively, and $ 11,448 and $ 10,765 for the nine months ended September 30, 2024 and 2023, respectively.

These amounts are included in property operating expenses or general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss) for these periods.

For the three months ended March 31, 2025 and 2024, the business management fees, incentive management fees, property management fees and construction supervision fees and expense reimbursements recognized in our condensed consolidated financial statements were as follows:

Three Months Ended March 31,

Financial Statement Line Item 2025 2024

Pursuant to business management agreement:

Business management fees General and administrative expenses (1)

$ 3,809 $ 4,029

Incentive management fees General and administrative expenses 2,407 849

Total $ 6,216 $ 4,878

Pursuant to property management agreement (2) :

Property management fees Property operating expenses $ 1,264 $ 1,538

Construction supervision fees Building and improvements (3)

Total $ 1,490 $ 1,904

Expense Reimbursement:

Property level expenses General and administrative expenses $ 50 $ 82

Property level expenses Property operating expenses 3,741 3,646

Total $ 3,791 $ 3,728

(1) The net business management fees we recognized for the three months ended March 31, 2025 and 2024 reflect a reduction of $ 744 for each of those periods for the amortization of the liability we recorded in connection with our former investment in The RMR Group Inc., or RMR Inc.

(2) The net property management and construction supervision fees we recognized for the three months ended March 31, 2025 and 2024 reflect a reduction of $ 199 for each of those periods for the amortization of the liability we recorded in connection with our former investment in RMR Inc..

(3) Amounts capitalized as building improvements are depreciated over the estimated useful lives of the related capital assets.

In January 2025, in connection with a $ 100,000 credit agreement and related security agreement entered into by RMR and certain of its subsidiaries with Citibank, N.A., or Citibank, and the other lenders party thereto, we consented to the pledge and assignment of RMR’s interest in our management agreements under the security agreement.

Pursuant to the consent, we agreed, among other things, that upon notice that an event of default under the RMR credit agreement has occurred and is continuing, we will continue to make all payments under our management agreements in accordance with the instructions of Citibank, and that if there is an event of default by RMR under our management agreements that would allow us to terminate or suspend our obligations, we will not terminate or suspend without notice to Citibank and provide Citibank 30 days to cure the default on RMR’s behalf.

The consent was approved by our Independent Trustees.

Management Agreements between our Joint Ventures and RMR.

2 unchanged sentences

Our joint ventures are not our consolidated subsidiaries and, as a result, we are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding the joint ventures.

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

Related Person Transactions

1 unchanged sentence

RMR is a majority owned subsidiary of RMR Inc.

The Chair of our Board of Trustees and one of our Managing Trustees, Adam D.

Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc., an officer and employee of RMR and, until the acquisition of AlerisLife by ABP Trust on March 20, 2023, the chair of the board of directors and a managing director of AlerisLife, and currently the sole director of AlerisLife.

Christopher J.

Bilotto, our other Managing Trustee and President and Chief Executive Officer, and Matthew C.

Brown, our Chief Financial Officer and Treasurer, are also officers and employees of RMR.

Francis, our former Managing Trustee and our former President and Chief Executive Officer, served as an officer of RMR until December 31, 2023 and remained an employee of RMR until her retirement on July 1, 2024.

Clark, our Secretary and former Managing Trustee, also serves as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR, an officer of ABP Trust and secretary of AlerisLife and, until March 20, 2023, a managing director of AlerisLife.

The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc., an officer and employee of RMR and the sole director of AlerisLife.

Christopher Bilotto, our other Managing Trustee and President and Chief Executive Officer, and Matthew Brown, our Chief Financial Officer and Treasurer, are also officers and employees of RMR.

Jennifer Clark, our Secretary and former Managing Trustee, also serves as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR, an officer of ABP Trust and secretary of AlerisLife.

Jeffrey Leer, the president and chief executive officer of AlerisLife, is an executive officer of RMR.

5 unchanged sentences

serve as our officers and officers of other companies to which RMR or its subsidiaries provide management services.

As of September 30, 2024, ABP Trust and Mr.

As of March 31, 2025, ABP Trust and Mr.

Portnoy owned 9.8 % of our outstanding common shares.

Until March 20, 2023, we were AlerisLife's largest stockholder, owning approximately 31.9 % of AlerisLife's outstanding common shares, and ABP Acquisition LLC, or ABP Acquisition, a subsidiary of ABP Trust, together with ABP Trust, owned approximately 6.1 % of AlerisLife's outstanding common shares.

Five Star is an operating division of AlerisLife.

Five Star manages certain of the senior living communities we own.

RMR provides management services to both us and AlerisLife.

On February 2, 2023, AlerisLife entered into an Agreement and Plan of Merger, or the ALR Merger Agreement, with certain subsidiaries of ABP Trust, pursuant to which ABP Trust acquired all of the publicly held outstanding AlerisLife common shares at a price of $ 1.31 per share by tender offer.

In connection with the ALR Merger Agreement, on February 2, 2023, we agreed to tender all the AlerisLife common shares that we and our subsidiary then owned, into the tender offer at the tender offer price, subject to the right, but not the obligation, to purchase, on or before December 31, 2023, AlerisLife common shares at the tender offer price, and otherwise pursuant to a stockholders agreement to be entered into at the time of any such purchase.

On December 20, 2023, we and ABP Trust extended our right to purchase AlerisLife common shares until March 31, 2024.

On February 16, 2024, we exercised this purchase right and acquired, together with our applicable TRS, approximately 34.0 % of the then outstanding AlerisLife common shares from ABP Trust at the tender offer price, for a total purchase price of $ 14,890 , excluding transaction related costs, and we, our applicable TRS, ABP Trust and AlerisLife entered into a stockholders agreement.

Following this acquisition, ABP Trust owns the remaining approximately 66.0 % of AlerisLife.

In connection with AlerisLife's sale of its Ageility branded business to a subsidiary of Fox Rehabilitation on June 17, 2024, we approved Five Star's sublease to a subsidiary of Fox Rehabilitation of space at certain of our senior living communities, which is used to provide certain outpatient rehabilitation and wellness services.

On February 16, 2024, we exercised our purchase right in connection with ABP Trust's acquisition of AlerisLife in March 2023 and acquired, together with our applicable TRS, approximately 34.0 % of the then outstanding AlerisLife common shares from ABP Trust, for a total purchase price of $ 15,459 , including transaction related costs, and we, our applicable TRS, ABP Trust and AlerisLife entered into a stockholders agreement.

Following this acquisition, ABP Trust owns the remaining approximate 66.0 % of AlerisLife.

On February 14, 2025, AlerisLife paid an aggregate cash dividend of $ 50,000 to its stockholders.

Our pro rata share of this cash dividend was $ 17,000 .

See Note 9 for further information regarding our relationships, agreements and transactions with AlerisLife (including Five Star).

1 unchanged sentence

In connection with our entering into the LSMD JV in January 2022, we paid mortgage escrow amounts and closing costs that were payable by that joint venture.

The remaining costs totaled $ 6,080 as of September 30, 2024 and are included in other assets, net, in our condensed consolidated balance sheet.

The remaining costs totaled $ 4,056 as of March 31, 2025 and are included in other assets, net, in our condensed consolidated balance sheet.

RMR provides management services to each of the Seaport JV and the LSMD JV.

See Note 10 for further information regarding those management agreements with RMR.

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

Our Manager, RMR.

3 unchanged sentences

We lease office space to RMR in certain of our properties for RMR’s property management offices.

We recognized rental income from RMR for this leased office space of $ 97 and $ 58 for the three months ended September 30, 2024 and 2023, respectively, and $ 354 and $ 132 for the nine months ended September 30, 2024 and 2023, respectively.

We recognized rental income from RMR for this leased office space of $ 107 and $ 109 for the three months ended March 31, 2025 and 2024, respectively.

For further information about these and other such relationships and certain other related person transactions, see our Annual Report.

Derivatives and Hedging Activities

We are exposed to certain risks relating to our ongoing business operations, including the impact of changes in interest rates.

The only risk currently managed by us using derivative instruments is our interest rate risk.

As required under the applicable loan agreement, we have an interest rate cap agreement to manage our interest rate risk exposure on our $ 140,000 floating rate mortgage loan secured by 14 SHOP communities with interest payable at a rate equal to SOFR plus a premium of 2.50 %.

The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements.

To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships.

We do not anticipate that any of the counterparties will fail to meet their obligations.

DIVERSIFIED HEALTHCARE TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(dollar amounts in thousands, except per share data or as otherwise stated)

Our interest rate cap agreement is designated as a cash flow hedge of interest rate risk and is measured on a recurring basis at fair value.

See Notes 5 and 6 for further information regarding the debt our interest rate cap is related to and the fair value of our interest rate cap.

The following table summarizes the terms of our outstanding interest rate cap agreement as of March 31, 2025:

Balance Sheet Line Item Underlying Instrument Maturity Date Strike Rate Notional Amount Fair Value

Other assets, net Floating rate mortgage loan

3/31/2028 4.50 % $ 140,000 $ 41

Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in cumulative other comprehensive income (loss) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election.

The earnings recognition of excluded components is presented in interest expense.

Amounts reported in cumulative other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made, if any, on our applicable debt.

The following table summarizes the activity related to our cash flow hedges within cumulative other comprehensive income (loss) for the period shown:

Three Months Ended March 31, 2025

Amount of loss recognized on derivative in other comprehensive income (loss) $ ( 6 )

Amount of gain (loss) reclassified from cumulative other comprehensive income (loss) into interest expense $ —

Total amount of interest expense presented in the condensed consolidated statements of comprehensive income (loss) $ ( 57,831 )

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements.

2 unchanged sentences

Our current income tax expense (or benefit) fluctuates from period to period based primarily on the timing of our income, including gains on the disposition of properties or losses in a particular quarter.

For the three months ended September 30, 2024 and 2023, we recognized income tax expense of $ 148 and $ 189 , respectively, and for the nine months ended September 30, 2024 and 2023, we recognized income tax expense of $ 505 and $ 379 , respectively.

For the three months ended March 31, 2025 and 2024, we recognized income tax expense of $ 49 and $ 187 , respectively.

Weighted Average Common Share s

2 unchanged sentences

Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share.

T a ble of Contents

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.

What changed 10-Q

Item 1. Financial Statements