DIVERSIFIED HEALTHCARE TRUST 10-Q

Item 1. Financial Statements. DIVERSIFIED HEALTHCARE TRUST CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data) (unaudited) March 31, December 31, 2025 2024 Assets Real estate properties: Land $ 599,262 $ 605,973 Buildings and improvements 5,768,101 5,817,279 Total real estate properties, gross 6,367,363 6,423,252 Accumulated depreciation ( 2,112,276 ) ( 2,082,777 ) Total real estate properties, net 4,255,087 4,340,475 Investments in unconsolidated joint ventures 133,797 126,859 Assets of properties held for sale 79,737 276,270 Cash and cash equivalents 302,577 144,584 Restricted cash 4,078 5,270 Equity method investment 7,965 24,590 Acquired real estate leases and other intangible assets, net 24,307 26,300 Other assets, net 188,295 192,657 Total assets $ 4,995,843 $ 5,137,005 Liabilities and Equity Senior secured notes, net $ 581,873 $ 826,974 Senior unsecured notes, net 1,958,347 1,957,319 Secured debt and finance leases, net 260,173 126,611 Liabilities of properties held for sale 5,570 6,024 Accrued interest 21,359 23,092 Other liabilities 220,470 238,142 Total liabilities 3,047,792 3,178,162 Commitments and contingencies Common shares of beneficial interest, $ .01 par value: 300,000,000 shares authorized, 241,267,819 and 241,271,703 shares issued and outstanding, respectively 2,413 2,413 Additional paid in capital 4,620,899 4,620,313 Cumulative net income 1,399,037 1,408,023 Cumulative other comprehensive income (loss) 4 ( 17 ) Cumulative distributions ( 4,074,302 ) ( 4,071,889 ) 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. 1 Table of Contents DIVERSIFIED HEALTHCARE TRUST CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (amounts in thousands, except per share data) (unaudited) Three Months Ended March 31, 2025 2024 Revenues: Rental income $ 58,558 $ 62,650 Residents fees and services 328,306 308,126 Total revenues 386,864 370,776 Expenses: Property operating expenses 314,326 307,604 Depreciation and amortization 68,325 70,133 General and administrative 9,000 7,568 Acquisition and certain other transaction related costs 24 86 Impairment of assets 38,472 12,142 Total expenses 430,147 397,533 Gain (loss) on sale of properties 110,140 ( 5,874 ) Gain on insurance recoveries 7,522 — Interest and other income 2,099 2,237 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 taxes and equity in net earnings of investees ( 10,424 ) ( 87,970 ) Income tax expense ( 49 ) ( 187 ) Equity in net earnings of investees 1,487 1,898 Net loss $ ( 8,986 ) $ ( 86,259 ) 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 ) Weighted average common shares outstanding (basic and diluted) 239,957 239,193 Per common share amounts (basic and diluted): Net loss $ ( 0.04 ) $ ( 0.36 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents DIVERSIFIED HEALTHCARE TRUST CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (dollars in thousands) (unaudited) Number of Shares Common Shares Additional Paid In Capital Cumulative Net Income Cumulative Other Comprehensive Income (Loss) Cumulative Distributions Total Equity Balance at December 31, 2024: 241,271,703 $ 2,413 $ 4,620,313 $ 1,408,023 $ ( 17 ) $ ( 4,071,889 ) $ 1,958,843 Net loss — — — ( 8,986 ) — — ( 8,986 ) Other comprehensive income — — — — 21 — 21 Distributions — — — — — ( 2,413 ) ( 2,413 ) Share grants 33,582 — 605 — — — 605 Share repurchases ( 2,035 ) — ( 6 ) — — — ( 6 ) Share forfeitures ( 35,431 ) — ( 13 ) — — — ( 13 ) Balance at March 31, 2025: 241,267,819 $ 2,413 $ 4,620,899 $ 1,399,037 $ 4 $ ( 4,074,302 ) $ 1,948,051 Balance at December 31, 2023: 240,423,898 $ 2,405 $ 4,618,470 $ 1,778,278 $ — $ ( 4,062,262 ) $ 2,336,891 Net loss — — — ( 86,259 ) — — ( 86,259 ) Other comprehensive loss — — — — ( 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 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents DIVERSIFIED HEALTHCARE TRUST CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 8,986 ) $ ( 86,259 ) 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, issuance costs and interest rate cap 26,087 24,863 Payment of accreted interest on senior secured notes ( 34,700 ) — Straight line rental income ( 455 ) ( 291 ) Amortization of acquired real estate leases and other intangible assets, net 26 28 Loss on modification or early extinguishment of debt 29,071 — Impairment of assets 38,472 12,142 (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 earnings of investees ( 1,487 ) ( 1,898 ) Change in assets and liabilities: Deferred leasing costs, net ( 773 ) ( 669 ) Other assets 6,444 10,102 Accrued interest ( 1,733 ) 904 Other liabilities ( 5,521 ) ( 7,173 ) Net cash (used in) provided by operating activities ( 3,243 ) 28,602 Cash flows from investing activities: Real estate improvements ( 39,650 ) ( 46,723 ) Proceeds from sale of properties, net 318,235 3,343 Investment in AlerisLife Inc. — ( 15,459 ) Equity method investment distribution 17,000 — Contributions to unconsolidated joint ventures ( 5,800 ) — Proceeds from insurance recoveries 1,308 — Net cash provided by (used in) investing activities 291,093 ( 58,839 ) Cash flows from financing activities: Proceeds from mortgage notes payable 140,000 — 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 ) Repurchase of common shares ( 6 ) ( 78 ) Distributions to shareholders ( 2,413 ) ( 2,404 ) Net cash used in financing activities ( 131,049 ) ( 8,561 ) Increase (decrease) in cash and cash equivalents and restricted cash 156,801 ( 38,798 ) Cash and cash equivalents and restricted cash at beginning of period 149,854 246,961 Cash and cash equivalents and restricted cash at end of period $ 306,655 $ 208,163 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents DIVERSIFIED HEALTHCARE TRUST CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (dollars in thousands) (unaudited) Three Months Ended March 31, 2025 2024 Supplemental cash flow information: Interest paid (1) $ 68,177 $ 31,809 Income taxes paid $ — $ — Non-cash investing activities: 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 March 31, 2025 2024 Cash and cash equivalents $ 302,577 $ 207,123 Restricted cash (1) 4,078 1,040 Total cash and cash equivalents and restricted cash shown in our condensed consolidated statements of cash flows $ 306,655 $ 208,163 (1) Restricted cash consists of amounts escrowed for real estate taxes, insurance and capital expenditures at certain of our mortgaged properties. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) Note 1. Basis of Presentation 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. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2024, or our Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and impairments of real estate and intangible assets. We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other governmental audits, investigations and proceedings arising in the ordinary course of our business. While the outcome of any litigation is inherently uncertain, we do not believe any currently pending litigation or proceedings will have a material adverse effect on our financial condition, results of operations or cash flows. Note 2. Recent Accounting Pronouncements On December 14, 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , or ASU No. 2023-09, which requires public entities to enhance their annual income tax disclosures by requiring: (i) consistent categories and greater disaggregation of information in the rate reconciliation, and (ii) income taxes paid disaggregated by jurisdiction. ASU No. 2023-09 should be applied prospectively but entities have the option to apply it retrospectively to all prior periods presented in the financial statements. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We expect to include additional disclosures in the notes to our condensed consolidated financial statements as a result of the implementation of ASU No. 2023-09; 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. Note 3. 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 6 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) 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 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) 5 $ 25,368 SHOP 5 45,813 All Other 1 2,240 11 $ 73,421 (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. Also, we may sell some or all of these properties at amounts that are less than currently expected and/or less than the carrying values of such properties, and we may incur losses on any such sales as a result. Impairment: We regularly evaluate our assets for indicators of impairment. Impairment indicators may include declining tenant or resident occupancy, weak or declining profitability from the property, decreasing tenant cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of an asset. If indicators of impairment are present, we evaluate the carrying value of the affected assets by comparing it to the expected future undiscounted cash flows to be generated from those assets. 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. 7 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) 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, 2025 2024 Medical Office and Life Science Portfolio capital expenditures: Lease related costs (1) $ 3,847 $ 6,029 Building improvements (2) 1,524 919 Recurring capital expenditures - Medical Office and Life Science Portfolio 5,371 6,948 Wellness centers lease related costs (1) — 6,923 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) $ — $ 713 Development, redevelopment and other activities - SHOP (3) 5,568 1,189 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 — 6,923 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 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 The LSMD Fund REIT LLC 20 % 43,927 10 CA, MA, NY, TX, WA 1,068,763 $ 133,797 11 2,203,242 8 Table of Contents 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) 3.53 % 11/6/2028 $ 620,000 Mortgage Notes Payable (secured by nine properties in five states) (4) 3.46 % 2/11/2032 189,800 Mortgage Notes Payable (secured by one property in California) (4) (5) 7.64 % 2/9/2026 266,825 4.54 % $ 1,076,625 (1) Amounts are not adjusted for our minority equity interest. (2) We provide certain guaranties on this debt. (3) This mortgage loan requires interest only payments until the anticipated repayment date on August 6, 2026, at which time all accrued and unpaid interest along with the principal balance of $ 620,000 is expected to be repaid. This mortgage loan matures on November 6, 2028 and any unpaid principal from the anticipated repayment date through the maturity date bears interest at a variable rate of the greater of 6.53 % or the then effective U.S. swap rate terminating on the maturity date plus 5.00 %. (4) The debt securing these properties is non-recourse to us. (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 $ 1,138 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 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. Other: 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. 9 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) Note 4. Leases We are a lessor of medical office and life science properties, senior living communities and other healthcare related properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the premises demised under the leases; therefore, we have determined to evaluate our leases as lease arrangements. Our leases provide for base rent payments and, in addition, may include variable payments. Rental income from operating leases, including any payments derived by index or market based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. 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 $ 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 $ 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 $ 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. In addition, we lease equipment at certain of our managed senior living communities. 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. Note 5. Indebtedness 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 10 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) 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: Number of Properties Securing Principal Balance as of (1) Net Book Value of Collateral as of 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 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. 11 Table of Contents 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. No cash interest will accrue on these notes prior to maturity. 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 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. 12 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) Note 6. Fair Value of Assets and Liabilities 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 Recurring Fair Value Measurements Assets: Investment in unconsolidated joint venture (Level 3) (1) $ 89,870 $ 81,949 Investment in unconsolidated joint venture (Level 3) (2) $ 43,927 $ 44,910 Interest rate cap (Level 2) (3) $ 41 $ — 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). The significant unobservable inputs used in the fair value analysis are a discount rate of 7.00 %, an exit capitalization rate of 6.00 %, a holding period of 10 years and market rents. The assumptions made in the fair value analysis are based on the location, type and nature of the property, and current and anticipated market conditions. See Note 3 for further information regarding this joint venture. (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 6.25 % 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 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 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 March 31, 2025 As of December 31, 2024 Description Carrying Value (1) Estimated Fair Value Carrying Value (1) Estimated Fair Value Senior unsecured notes, 9.750 % coupon rate, due 2025 $ 379,720 $ 379,597 $ 379,392 $ 379,970 Senior secured notes, zero coupon rate, due 2026 581,873 604,542 826,974 885,108 Senior unsecured notes, 4.750 % coupon rate, due 2028 496,337 429,615 496,018 429,170 Senior unsecured notes, 4.375 % coupon rate, due 2031 494,916 382,665 494,702 368,240 Senior unsecured notes, 5.625 % coupon rate, due 2042 343,397 186,200 343,302 218,260 Senior unsecured notes, 6.250 % coupon rate, due 2046 243,977 145,200 243,905 157,700 Secured debt and finance leases 260,173 241,918 126,611 126,001 $ 2,800,393 $ 2,369,737 $ 2,910,904 $ 2,564,449 (1) Includes unamortized net discounts, premiums and debt issuance costs, if any. 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, 13 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) 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). Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values. Note 7. Shareholders' Equity Common Share Awards: 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 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 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 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. Note 8. Segment Reporting 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. 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. 14 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) For the Three Months Ended March 31, 2025 Medical Office and Life Science Portfolio SHOP Total Revenues: 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) 8,795 Total revenues 386,864 Less: 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 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) 6,485 General and administrative ( 9,000 ) Acquisition and certain other transaction related costs ( 24 ) Gain on sale of properties 97,560 Interest and other income 2,099 Interest expense ( 55,512 ) Loss on modification or early extinguishment of debt ( 29,071 ) Income tax expense ( 49 ) Equity in net earnings of an investee 349 Net loss $ ( 8,986 ) (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. 15 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) For the Three Months Ended March 31, 2024 Medical Office and Life Science Portfolio SHOP Total Revenues: 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) 8,501 Total revenues 370,776 Less: 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 Interest expense 222 68 290 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) 5,739 General and administrative ( 7,568 ) Acquisition and certain other transaction related costs ( 86 ) Interest and other income 2,237 Interest expense ( 57,286 ) Income tax expense ( 187 ) Equity in net earnings of an investee 285 Net loss $ ( 86,259 ) (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. As of March 31, 2025 As of December 31, 2024 Assets (1) 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. 16 Table of Contents DIVERSIFIED HEALTHCARE TRUST NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (dollar amounts in thousands, except per share data or as otherwise stated) Note 9. Senior Living Community Management Agreements Our managed senior living communities are operated by third parties pursuant to management agreements. Five Star Senior Living, or Five Star, which is an operating division of AlerisLife, manages many of our SHOP communities. Five Star manages these communities for us pursuant to a master management agreement. AlerisLife guarantees the payment and performance of each of its applicable subsidiary's obligations under the applicable management agreements. Our Senior Living Communities Managed by Five Star. 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 $ 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. Our Senior Living Communities Managed by Other Third Party Managers. 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. 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). 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 March 31, Revenue from contracts with customers: 2025 2024 Basic housing and support services $ 252,772 $ 243,655 Medicare and Medicaid programs 27,280 23,849 Private pay and other third party payer SNF services 48,254 40,622 Total residents fees and services $ 328,306 $ 308,126 Note 10. Business and Property Management Agreements with RMR We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to the property level operations of many of our properties, including our medical office and life science properties, and major renovation or repositioning activities at our senior living communities that we may request RMR to manage from time to time. See Note 11 for further information regarding our relationship, agreements and transactions with RMR. 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 17 Table of Contents 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. 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) 226 366 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. We have two separate joint venture arrangements with third party institutional investors, the Seaport JV and the LSMD JV. RMR provides management services to both of these joint ventures. 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. Note 11. Related Person Transactions We have relationships and historical and continuing transactions with RMR, RMR Inc., AlerisLife (including Five Star), and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the 18 Table of Contents 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. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as the chair of the board and as a managing trustee of these companies. Other officers of RMR, including Ms. Clark and certain of our officers, serve as managing trustees or officers of certain of these companies. In addition, officers of RMR and RMR Inc. serve as our officers and officers of other companies to which RMR or its subsidiaries provide management services. As of March 31, 2025, ABP Trust and Mr. Portnoy owned 9.8 % of our outstanding common shares. AlerisLife. 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). Our Joint Ventures. 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 $ 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. Our Manager, RMR. We have two agreements with RMR to provide management services to us. See Note 10 for further information regarding our management agreements with RMR. Leases with RMR. 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 $ 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. Note 12. 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. 19 Table of Contents 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 ) Note 13. Income Taxes 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. We do, however, lease our managed senior living communities to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated federal corporate income tax return and are subject to federal and state income taxes. Our consolidated income tax provision includes the income tax provision related to the operations of our TRSs and certain state income taxes we incur despite our taxation as a REIT. 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 March 31, 2025 and 2024, we recognized income tax expense of $ 49 and $ 187 , respectively. Note 14. Weighted Average Common Share s We calculate basic earnings per common share using the two class method. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share. 20 T a ble of Contents