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Item 1. Business

2026-02-24 compared with 2025-02-25 · 194 added, 163 removed, 823 unchanged (30% of the section changed)

We are a real estate investment trust, or REIT, that was organized under Maryland law in 1998.

We primarily own medical office and life science properties, senior living communities and other healthcare related properties throughout the United States.

We primarily own senior living communities, medical office and life science properties and other healthcare related properties throughout the United States.

As of December 31, 2025, we owned 298 properties, including 13 properties classified as held for sale, located in 33 states and Washington, D.C.

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According to U.S.

Census data, between now and 2030, more than 20% of the total U.S.

Census data, by 2030, more than 20% of the total U.S.

population will be age 65 or older, with that demographic projected to grow thereafter by the equivalent of 10,000 people per day.

According to U.S.

Census data, the age 75+ demographic is projected to be among the fastest growing age cohorts in the United States over the next 20 years, and according to CMS, the age 85+ demographic is projected to grow over 30% over the next five years.

Also, as a result of medical advances, seniors are living longer, and CMS reports that healthcare spending is projected to grow at an average rate of 5.6% per year and reach $7.7 trillion by 2032.

According to the U.S.

Census Bureau, the age 75+ demographic is projected to be among the fastest growing age cohorts in the United States with an average annual growth of 4% between 2025 and 2035.

Census Bureau projects that the age 75+ demographic as a percentage of the total U.S.

population will increase from an estimated 8.1% in 2025 to 11.1% in 2035.

Also, as a result of medical advances, seniors are living longer, and CMS reports that healthcare spending is projected to grow at an average rate of 5.8% per year, and as a result, health spending as a percentage of GDP is projected to exceed 20% by 2033.

We believe that this will increase demand for our senior living communities (including active adult communities) and for healthcare services and products supplied by the tenants in our medical office and life science properties.

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As a result of elevated financing and construction costs over recent years, inventory growth for senior living communities has been historically low.

According to The National Investment Center for Seniors Housing and Care, or NIC, annual inventory growth was 1.2% across all markets during the fourth quarter of 2024.

According to The National Investment Center for Seniors Housing and Care, or NIC, annual inventory growth was 0.5% across primary and secondary markets during the fourth quarter of 2025.

Additionally, annual absorption was 2.8% for the fourth quarter of 2025, according to NIC.

We expect improving market fundamentals and constrained supply to continue to result in increased occupancy at our senior living communities.

We plan to seek to profit from this demand in the future by, over time, investing in our properties, acquiring additional properties and entering into lease and management arrangements with qualified tenants, managers and operators which enhance our cash flow and generate returns that exceed our operating and capital costs to us, including structuring leases that provide for or permit periodic rent increases.

We also seek to selectively sell properties from time to time when we determine our continued ownership or ongoing required capital expenditures will not achieve desired returns, when we believe we have maximized returns or when we believe we can successfully pursue more desirable opportunities than retaining these properties.

We also may use future sales proceeds to manage our leverage, to invest in our properties and to acquire new properties that we believe will help us reduce the overall average age of our properties, increase our weighted average lease term, reduce our ongoing capital requirements and/or increase our distributions to shareholders.

We plan to seek to profit from this demand in the future by, over time, investing in our properties, acquiring additional properties and entering into management and lease arrangements with qualified managers, operators and tenants which enhance our cash flow and generate returns that exceed our operating and capital costs to us, including structuring leases that provide for or permit periodic rent increases.

We also seek to selectively sell properties from time to time when we determine our continued ownership or ongoing required capital expenditures will not achieve desired returns, when we believe there is an opportunity to reduce leverage, when we believe we have maximized returns or when we believe we can successfully pursue more desirable opportunities than retaining these properties.

We also may use future sales proceeds to invest in our properties and to acquire new properties that we believe will help us reduce the overall average age of our properties, increase our weighted average lease term, if applicable, reduce our ongoing capital requirements and/or increase our distributions to shareholders.

Additionally, we seek to selectively develop, redevelop or reposition our properties when we believe the returns will be satisfactory.

Medical Office and Life Science Portfolio

Our portfolio of medical office and life science properties, or our Medical Office and Life Science Portfolio, consists of commercial properties constructed for use or operated as medical office space for physicians and other healthcare personnel and other businesses in medical related fields, including clinics and life science or laboratory uses.

Some of our office properties are occupied as administrative facilities, such as hospitals and healthcare insurance companies or similar uses.

As our lease expirations approach, we will seek to renew our leases with existing tenants or to enter into new leases with new tenants, in both circumstances at rental rates equal to or higher than current rental rates for the same space.

Our ability to renew leases with our existing tenants or to enter into new leases with new tenants and the rents we are able to charge will depend in large part upon market and economic conditions, which are beyond our control.

Senior Living Communities

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Licensed nursing professionals staff SNFs 24 hours per day.

Medical Office and Life Science Portfolio

Some of our office properties are occupied as administrative facilities, such as hospitals and healthcare insurance companies or similar uses.

Wellness Centers

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A portion of our medical office and life science property leases are “full service” leases where we receive fixed rent from the tenants and do not charge the tenants for any property operating expenses.

Our leases for senior living communities and wellness centers are “triple net” leases.

Our leases for wellness centers and senior living communities are “triple net” leases.

Senior Housing Operating Portfolio Management Agreements

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Our managed senior living communities are operated by third parties pursuant to management agreements.

As of December 31, 2024, Five Star Senior Living, or Five Star, which is an operating division of AlerisLife Inc., or AlerisLife, managed 118 of our senior living communities.

Also as of December 31, 2024, 114 of our senior living communities were managed by other third party managers.

Beginning in September 2025, we transitioned the management of 116 of our senior living communities previously managed by Five Star Senior Living, or Five Star, which was an operating division of AlerisLife Inc., or AlerisLife, to seven different third party managers in connection with AlerisLife's sale of all of its assets and the wind-down of its business.

As of December 31, 2025, we completed the transition of all of the Five Star managed senior living communities to these managers.

As of December 31, 2025, our 212 senior living communities were managed by 14 new and existing third party managers.

We lease nearly all of our senior living communities to our TRSs.

For more information about the terms of the management agreements with Five Star and the other third party managers, see Note 6 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

The senior living communities in our SHOP segment managed by Sinceri Senior Living, Discovery Senior Living, Tutera Senior Living, Charter Senior Living and Phoenix Senior Living represented 30.8%, 23.7%, 8.9%, 7.0% and 5.7%, respectively, of our gross real estate value as of December 31, 2025.

We rely on our third party managers to perform substantially all operational functions at our senior living communities.

Under the terms of our management agreements, these managers are responsible for hiring, training and supervising personnel;

implementing and maintaining technology platforms and systems for managing financial performance, sales and resident retention;

and setting rents and related resident fees in accordance with market conditions and our strategic objectives.

As a result, our ability to achieve desired operational and financial outcomes is dependent on the expertise, performance and integrity of these third party managers.

We monitor their activities through regular reporting and oversight, but we do not directly control day-to-day operations at our communities.

Our management agreements with third party managers generally include provisions that allow us to terminate the agreements under certain circumstances, including if a community does not meet specified financial performance thresholds after a stabilization period.

These rights provide us with flexibility to address underperforming communities and to ensure alignment with our operational and financial objectives.

Terminating our management agreements and transitioning to new managers would result in additional costs, including potential termination fees and expenses associated with the transition process.

For more information about the terms of the management agreements with our managers, see Note 6 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

Our Investment and Operating Policies

Our investment objectives include increasing cash flows from operations from dependable and diverse sources in order to make distributions to our shareholders.

To seek to achieve these objectives, we seek to:

To achieve these objectives, we seek to:

maintain a strong capital base of shareholders' equity;

invest in properties with strong market fundamentals and high credit quality tenants and managers;

invest in properties with strong market fundamentals and high credit quality managers and tenants;

use leverage to fund additional investments which increase cash flow from operations because of positive spreads between our cost of capital and investment yields;

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Our Board of Trustees may change our investment and operating policies at any time without a vote of, or notice to, our shareholders.

Acquisition Policies

Our Acquisition Policies

Our acquisition strategy is to seek to acquire additional properties primarily for income and secondarily for appreciation potential.

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• the price at which the property may be acquired as compared to the estimated replacement cost of the property;

• the existing or proposed lease or management terms;

• the existing or proposed management or lease terms;

• the existence of alternative sources, uses or needs for our capital and our leverage;

• the availability and reputation of experienced and financially qualified tenants, managers or guarantors;

• the availability and reputation of experienced and financially qualified managers, tenants or guarantors;

• the historical and projected cash flows from the operations of the property;

• the construction quality, physical condition and design of the property, including various environmental sustainability factors;

• the expected capital expenditures that may be needed at the property;

• the competitive market environment of the property;

• the construction quality, physical condition and design of the property, including various environmental sustainability factors;

• the growth, tax and regulatory environments of the market in which the property is located;

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• the strategic fit of the property with the rest of our portfolio;

• the level of permitted services and regulatory history of the property and its historical tenants and managers.

An important part of our acquisition strategy is to identify and select qualified, experienced and financially stable tenants and managers.

Disposition Policies

We plan to selectively sell certain properties from time to time to manage our leverage and improve our liquidity, to fund future acquisitions and to strategically update, rebalance and reposition our investment portfolio with a goal of (1) reducing our leverage, (2) improving the asset quality of our portfolio by reducing the overall average age of our properties and increasing the weighted average term of our leases and the likelihood of retaining our tenants and (3) increasing our distributions to shareholders.

• the level of permitted services and regulatory history of the property and its historical managers and tenants.

An important part of our acquisition strategy is to identify and select qualified, experienced and financially stable managers and tenants.

Our Disposition Policies

We plan to selectively sell certain properties from time to time to manage our leverage and improve our liquidity, to strategically update, rebalance and reposition our investment portfolio and to fund future acquisitions with a goal of (1) reducing our leverage, (2) improving the asset quality of our portfolio by reducing the overall average age of our properties and increasing the weighted average term of our leases and the likelihood of retaining both our residents and tenants and (3) increasing our distributions to shareholders.

Other than as described, we generally consider ourselves to be a long term owner of properties and are more interested in the long term earnings potential of our properties and stability of our portfolio than selling properties for short term gains.

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We make disposition decisions based on a number of factors, including, but not limited to, the following:

• our ability to lease or operate the affected property on terms acceptable to us or have the affected property managed with our realizing acceptable returns;

• the manager's or tenant's desire to dispose of or cease operating the affected property;

• the proposed sale price or targeted returns;

• our ability to operate or lease the affected property on terms acceptable to us or have the affected property managed with our realizing acceptable returns;

• the existence of alternative sources, uses or needs for our capital and our leverage;

• the manager's or tenant's desire to dispose of or cease operating the affected property;

• the estimated value and returns we may receive by selling the property;

• the remaining length of the lease relating to the property and its other terms;

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• the age and capital required to maintain the property;

• the estimated value we may receive by selling the property;

• our intended use of the proceeds we may realize from the sale of a property;

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• the tax implications to us and our shareholders.

Other Investments

We have no policies which specifically limit the percentage of our assets that may be invested in any individual property, in any one type of property, in properties leased to any one tenant or to an affiliated group of tenants or in properties operated by any one tenant or manager or by an affiliated group of tenants or managers or in securities of one or more persons.

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, or the Tender Offer Price, 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 $15.5 million, 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.

Our Investment Policies

We have no policies which specifically limit the percentage of our assets that may be invested in any individual property, in any one type of property, in properties leased to any one tenant or to an affiliated group of tenants or in properties operated by any one manager or tenant or by an affiliated group of managers or tenants or in securities of one or more persons.

Since February 2024, we, together with our applicable TRS, have owned approximately 34.0% of the outstanding AlerisLife common shares and ABP Trust owns the remaining approximate 66.0% of AlerisLife.

On February 14, 2025, AlerisLife paid an aggregate cash dividend of $50.0 million to its stockholders.

Our pro rata share of this cash dividend was $17.0 million.

On July 15, 2025, AlerisLife paid an aggregate cash dividend of $10.0 million to its stockholders.

Our pro rata share of this cash dividend was $3.4 million.

In connection with AlerisLife's sale of all of its assets and the wind-down of its business, on January 9, 2026, AlerisLife paid an aggregate cash dividend of $80.0 million to its stockholders.

Our pro rata share of this cash dividend was $27.2 million.

We may in the future acquire additional common shares or securities of other entities, including entities engaged in real estate activities.

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We also may invest in participating, convertible or other types of mortgages if we conclude that by doing so, we may benefit from the cash flow or appreciation in the value of a property which is not available for purchase.

Subject to the discussions below under the heading "Material United States Federal Income Tax Considerations—REIT Qualification Requirements" included in Part I, Item 1 of this Annual Report on Form 10-K, we have no limitations on the amount or percentage of our total assets that may be invested in any one property, in any one type of property, or in properties managed by or leased by any one entity, and no limits on the concentration of investments in any one location.

However, we believe it is prudent to seek portfolio diversification, not concentration.

Our Board of Trustees may change our investment policies at any time without a vote of, or notice to, our shareholders.

Our Financing Policies

Although there are no limitations in our organizational documents on the amount of indebtedness we may incur, our senior notes indentures and their supplements contain covenants which, among other things, restrict our ability to incur debts and generally require us to maintain certain financial ratios.

Although there are no limitations in our organizational documents on the amount of indebtedness we may incur, our credit agreement and senior notes indentures and their supplements contain covenants which, among other things, restrict our ability to incur debts and generally require us to maintain certain financial ratios.

We may seek additional capital through secured or unsecured debt financing or refinancing transactions, sales of properties or equity interests in properties, retention of cash flows in excess of distributions to shareholders, equity offerings or a combination of these methods or other transactions.

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

and an officer and employee of RMR.

and an officer and employee of RMR and the sole director of AlerisLife.

Christopher J.

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

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

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 and an officer of ABP Trust.

Bilotto, our other Managing Trustee and President and Chief Executive Officer is also an executive of RMR Inc., Matthew C.

Brown, our Chief Financial Officer and Treasurer, is also an executive vice president and the chief financial officer and treasurer of RMR Inc.

and an officer of ABP Trust, and each of our officers is also an officer and employee of RMR.

Clark, our former Managing Trustee and former Secretary, also served as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR and an officer of ABP Trust until her retirement on December 31, 2025.

Our day to day operations are conducted by RMR.

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RMR has a principal place of business at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts, 02458-1634, and its telephone number is (617) 796-8390.

RMR is an alternative asset management company that is focused on commercial real estate and related businesses.

RMR is an alternative asset management company that is focused on both residential and commercial real estate and related businesses.

RMR or its subsidiaries also act as a manager to other publicly traded real estate companies, privately held real estate funds and real estate related operating businesses.

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Bilotto, executive vice president;

Clark, executive vice president, general counsel and secretary;

Jordan, executive vice president, chief financial officer and treasurer;

Brown, executive vice president, chief financial officer and treasurer;

Yael Duffy, executive vice president;

Getz, executive vice president, general counsel and secretary;

Jordan, executive vice president and chief operating officer;

Leer, executive vice president;

Murray, executive vice president.

Bilotto is also our President and Chief Executive Officer, our Chief Financial Officer and Treasurer, Matthew C.

Brown, is a senior vice president of RMR and our Vice President, Anthony Paula, is a vice president of RMR.

Bilotto also serves as our President and Chief Executive Officer and a managing trustee and officer of another company managed by RMR.

Brown also serves as our Chief Financial Officer and Treasurer and an officer of another company managed by a subsidiary of RMR.

Additionally, our Vice President, Anthony Paula, serves as a vice president of RMR.

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

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The senior living and healthcare industries are subject to extensive, frequently changing federal, state and local laws and regulations.

Although most of these laws and regulations affect the manner in which our tenants and managers operate our properties, some of them also impact us and the values of our properties.

Some of the laws that impact or may impact us or our tenants or managers include:

Although most of these laws and regulations affect the manner in which our managers and tenants operate our properties, some of them also impact us and the values of our properties.

Some of the laws that impact or may impact us or our managers or tenants include:

state and local licensure laws;

laws protecting consumers against deceptive practices;

laws relating to the operation of our properties and how our tenants and managers conduct their operations, such as health and safety, fire and privacy laws;

laws relating to the operation of our properties and how our managers and tenants conduct their operations, such as health, safety and fire laws and standards;

federal and state laws relating to the privacy and security of personal information and health information;

federal and state laws affecting assisted living communities that participate in Medicaid and federal and state laws affecting SNFs, clinics and other healthcare facilities that participate in both Medicaid and Medicare that mandate allowable costs, pricing, reimbursement procedures and limitations, quality of services and care, food service and physical plants;

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anti-kickback and physician referral laws;

the Americans with Disabilities Act and similar state and local laws;

the Americans with Disabilities Act, or ADA, and similar state and local laws;

and safety and health standards set by the federal Occupational Safety and Health Administration, or OSHA.

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there have also been recent, ongoing legislative and regulatory efforts to increase federal oversight of assisted living and SNF operations, including a federal minimum staffing rule for SNFs published on May 10, 2024.

We have been and may continue to be subject to federal and state laws, regulations and executive orders relating to healthcare providers' response to the COVID-19 pandemic.

While many of the regulatory requirements were temporary and expired with the end of the public health emergency in May 2023, these requirements generally may include mandatory requirements for vaccination of staff, testing of residents and/or staff, providing COVID-19 related paid leave, implementation of infection control standards and procedures, imposition of restrictions on new admissions or readmissions of residents, required screening of all persons entering a community, imposition of restrictions or limitations on who and how residents may be visited, and imposition of mandatory notification requirements to residents, families, staff, and regulatory bodies related to positive COVID-19 cases.

Enhanced or additional penalties may apply for violation of such requirements.

We are unable to predict the future course of federal, state and local legislation or regulations.

In addition, to the extent the current administration and the 119th Congress alter these laws and regulations, additional regulatory risks may arise.

Changes in the regulatory

framework could have a material adverse effect on the ability of our tenants to pay us rent, the profitability of our managed senior living communities and the values of our properties.

Changes in the regulatory framework could have a material adverse effect on the ability of our tenants to pay us rent, the profitability of our managed senior living communities and the values of our properties.

State and local health and social service agencies and other regulatory authorities regulate and license many senior living communities.

State health authorities regulate and license clinics and other healthcare facilities.

In most states in which we own properties, we and our tenants and managers are prohibited from providing certain services without first obtaining appropriate licenses.

In most states in which we own properties, we and our managers and tenants are prohibited from providing certain services without first obtaining appropriate licenses.

In addition, some states require a certificate of need, or CON, before an entity may open an assisted living community or SNF or expand services at an existing facility.

In addition, some states (such as California and Texas) that have eliminated CON laws have retained other means of limiting development of facilities, including moratoria, licensing laws and limitations upon participation in the state Medicaid program.

In addition, some states that have eliminated CON laws have retained other means of limiting development of facilities, including moratoria, licensing laws and limitations upon participation in the state Medicaid program.

Senior living communities and certain other healthcare facilities must also comply with applicable state and local building, zoning, fire and food service codes before licensing or Medicare and Medicaid certification are granted.

These laws and regulatory requirements could affect our ability and that of our tenants and managers to expand into new markets or to expand communities in existing markets.

These laws and regulatory requirements could affect our ability and that of our managers and tenants to expand into new markets or to expand communities in existing markets.

In addition, government authorities have been subjecting healthcare facilities such as those that we own to increasing numbers of inspections, surveys, investigations, audits and other potential enforcement actions.

We and our tenants and managers expend considerable resources to respond to such actions.

We and our managers and tenants expend considerable resources to respond to such actions.

Unannounced inspections or surveys may occur annually or biannually, or even more regularly, such as following a regulatory body's receipt of a complaint about a facility.

From time to time in the ordinary course of business, we and our tenants and managers receive deficiency reports from state regulatory bodies resulting from those inspections and surveys.

We and our tenants and managers seek to resolve most inspection deficiencies through a plan of corrective action relating to the affected facility's operations.

If we or our tenants or managers fail to comply with any applicable legal requirements, or are unable to cure deficiencies, certain sanctions may be imposed and, if imposed, may adversely affect the ability of our tenants to pay their rent to us, the profitability of our managed senior living communities and the values of our properties.

From time to time in the ordinary course of business, we and our managers and tenants receive deficiency reports from state regulatory bodies resulting from those inspections and surveys.

We and our managers and tenants seek to resolve most inspection deficiencies through a plan of corrective action relating to the affected facility's operations.

If we or our managers or tenants fail to comply with any applicable legal requirements, or are unable to cure deficiencies, certain sanctions may be imposed and, if imposed, may adversely affect the ability of our tenants to pay their rent to us, the profitability of our managed senior living communities and the values of our properties.

In addition, government agencies typically have the authority to take or seek further action against a licensed or certified facility, including the ability to impose civil money penalties or fines;

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In addition, state Medicaid fraud control agencies may investigate and prosecute assisted living communities and SNFs, clinics and other healthcare facilities under fraud and patient abuse and neglect laws.

Current state laws and regulations allow enforcement officials to make determinations as to whether the care provided by or on behalf of our tenants or by our managers at our facilities exceeds the level of care for which a particular facility is licensed, which could result in closure of the community and the immediate discharge and transfer of residents, which could adversely affect the ability of that tenant to pay rent to us, the profitability of our managed senior living communities and the values of our properties.

Current state laws and regulations allow enforcement officials to make determinations as to whether the care provided by our managers or by or on behalf of our tenants at our facilities exceeds the level of care for which a particular facility is licensed, which could result in closure of the community and the immediate discharge and transfer of residents, which could adversely affect the ability of that tenant to pay rent to us, the profitability of our managed senior living communities and the

values of our properties.

Citations or revocation of a license could impact the ability for us or our managers to obtain new licenses or certifications or maintain or renew existing licenses and certifications which would trigger defaults under management agreements and leases with us and adversely affect our ability to operate.

Furthermore, some states and the federal government allow certain citations of one facility to impact other facilities owned or operated by the same entity or a related entity, including facilities in other states.

Revocation of a license or certification at one facility could therefore impact our or a tenant's or manager's ability to obtain new licenses or certifications or to maintain or renew existing licenses at other facilities, which could adversely affect the ability of that tenant to pay rent to us, the profitability of that manager, the profitability and values of our properties and trigger defaults under our tenants' leases and managers' management agreements and our or our tenants' or managers' credit arrangements, or adversely affect our or our tenants' or managers' ability to obtain financing in the future.

Revocation of a license or certification at one facility could therefore impact our or a tenant's or manager's ability to obtain new licenses or certifications or to maintain or renew existing licenses at other facilities, which could adversely affect the ability of that tenant to pay rent to us, the profitability of that manager, the profitability and values of our properties and trigger defaults under our managers' management agreements and tenants' leases and our or our managers' or tenants' credit arrangements, or adversely affect our or our managers' or tenants' ability to obtain financing in the future.

In addition, an adverse finding by state officials could serve as the basis for lawsuits by private plaintiffs and lead to investigations under federal and state laws, which could result in civil and/or criminal penalties against the facility as well as a related entity.

For the year ended December 31, 2025, substantially all of our net operating income, or NOI, from our senior living communities was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and a small amount of our NOI was generated from our senior living communities where a majority of the revenue is dependent upon Medicare and Medicaid programs.

Our tenants and managers operate facilities in many states and they and we participate in federal and state healthcare payment programs, including the federal Medicare and state Medicaid

benefit programs for services in SNFs and other similar facilities and state Medicaid programs for services in assisted living communities.

Our managers and tenants operate facilities in many states and they and we participate in federal and state healthcare payment programs, including the federal Medicare and state Medicaid benefit programs for services in SNFs and other similar facilities and state Medicaid programs for services in assisted living communities.

Government Payers.

In light of the current and projected federal budget deficit and challenging state fiscal conditions, there have been numerous recent legislative and regulatory actions or proposed actions with respect to federal Medicare rates and state Medicaid rates and federal payments to states for Medicaid programs, each of which, or in any combination, could have a material adverse effect on the ability of our tenants to pay us rent, the profitability of our managed senior living communities and the values of our properties.

It is unclear whether any adjustments in Medicare rates will compensate for the increased costs our tenants and managers may incur for services to residents whose services are paid for by Medicare.

Reimbursement levels under the Medicare and Medicaid programs may not remain at levels comparable to present levels or may not be sufficient to cover the costs allocable to residents eligible for reimbursement.

Medicare reimbursement for skilled nursing services is subject to fixed payments under the Medicare prospective payment systems.

In accordance with Medicare laws, CMS makes annual adjustments to Medicare payment rates.

Medicaid reimbursement rates for many of our assisted living and memory care communities also are based upon fixed payment systems.

Generally, these rates are adjusted annually for inflation.

However, those adjustments may not reflect actual increases of the cost of providing healthcare services.

In addition, Medicaid reimbursement can be impacted negatively by state budgetary pressures, which may lead to reduced reimbursement or delays in receiving payments.

On July 4, 2025, the U.S.

government enacted Public Law No.

119-21, commonly known as the One Big Beautiful Bill Act, which, among other things, included significant funding cuts and policy changes to Medicaid, which could have a material adverse effect on the ability of our tenants to pay us rent, the profitability of our managed senior living communities and the values of our properties.

It is unclear whether any adjustments in Medicare and Medicaid rates will compensate for the increased costs our managers and tenants may incur for services to residents whose services are paid for by Medicare and Medicaid.

Current and future programmatic changes to Medicaid eligibility and rates may also impact us.

Federal and state efforts to target false claims, fraud and abuse and violations of anti-kickback, physician referral and privacy laws by providers under Medicare, Medicaid and other public and private programs have increased in recent years, as have civil monetary penalties, treble damages, repayment requirements and criminal sanctions for noncompliance, loss of licensure, termination of government payments, exclusion from any government health care program and damage assessments.

Federal and state efforts to target false claims, fraud and abuse and violations of anti-kickback, and physician referral laws by providers under Medicare, Medicaid and other public and private programs have increased in recent years, as have civil monetary penalties, treble damages, repayment requirements and criminal sanctions for noncompliance, loss of licensure, termination of government payments, exclusion from any government health care program and damage assessments.

The federal False Claims Act, as amended and expanded by the Fraud Enforcement and Recovery Act of 2009 and the Patient Protection and Affordable Care Act of 2010, or the ACA, provides significant civil monetary penalties and treble damages for false claims and authorizes individuals to bring claims on behalf of the federal government for false claims and earn a percentage of the government's recovery should the government intervene.

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In addition, the ACA requires all states to terminate the Medicaid participation of any provider that has been terminated under Medicare or any Medicaid state plan.

We and our tenants and managers expend significant resources to comply with these laws and regulations.

We and our managers and tenants expend significant resources to comply with these laws and regulations.

Data Privacy and Security.

Federal and state laws designed to protect the confidentiality and security of individually identifiable information apply to us, our tenants and our managers.

Federal and state laws designed to protect the confidentiality and security of individually identifiable information apply to us, our managers and our tenants.

Under the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, and the Health Information Technology for Economic and Clinical Health Act, or the HITECH Act, we, our managers and our tenants that are covered entities or business associates within the meaning of HIPAA must comply with rules adopted by HHS governing the privacy, security, use and disclosure of individually identifiable information, including financial information and protected health information, or PHI, and also with security rules for electronic PHI.

There may be both civil monetary penalties and criminal sanctions for noncompliance with such federal laws.

In January 2013, HHS released the HIPAA Omnibus Rule, or the Omnibus Rule, which modified various requirements, including the standard for providing breach notices, which previously required an analysis of the harm of any disclosure, to a more objective analysis relating to whether any PHI was actually acquired or viewed as a result of the breach.

On January 21, 2021, HHS issued a proposed rule that would modify certain standards, definitions and patient rights under the previously promulgated Standards for Privacy of Individually Identifiable Health Information to address barriers to coordinated care and case management.

The effect of this proposed rule, if finalized, upon our operations is unknown at this time.

HIPAA enforcement efforts have increased considerably over the past few years, with HHS, through its Office for Civil Rights, or OCR, entering into several multi-million dollar HIPAA settlements in prior years.

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The increasing sophistication of cybersecurity threats presents challenges to the entire healthcare industry.

In addition, many states have enacted their own security and privacy laws relating to individually identifiable information and consumer health information.

For example, the California Consumer Privacy Act, or the CCPA, became effective in 2020, and was further modified by the California Privacy Rights Act, or the CPRA.

The CPRA significantly expanded the CCPA's data protection obligations.

Failure to comply with the CCPA or CPRA could result in penalties for noncompliance of up to $7,500 per violation.

In addition, many states have enacted their own security and privacy laws relating to individually identifiable information and consumer health information, including the California Consumer Privacy Act, the Maryland Online Data Privacy Act and the New York SHIELD Act.

Failure to comply with these laws could result in the imposition of fines and penalties.

A number of other states have enacted similar laws related to the protection and security of individually identifiable information and consumer health information, and we expect additional federal and state legislative and regulatory efforts to regulate consumer privacy in the future.

These laws generally require covered companies to disclose to consumers information regarding, for example, the type of personal information the company collects, the third parties to which it is disclosed and the purpose for disclosure, and whether the company sells any personal information to third parties.

Covered companies are generally also obligated to provide consumers with certain rights regarding their personal information including, for example, the right to know the type of information collected about the consumer and to whom it is disclosed, the right to correct and/or to delete such information, and the right to opt-out of sales of their personal information.

In some states, these laws are more stringent than HIPAA, and we, our tenants and our managers may be required to comply with both the applicable federal and state standards.

These laws generally create consumer rights protections and impose obligations on businesses to which they apply, including requirements to conduct data processing risk assessments, to enter into data processing agreements with vendors and other third-parties with whom a business shares personal information, and to make detailed disclosures to residents of those states about the business’ data collection, use and sharing practices.

Some states have also enacted laws that are specific to the protection of “consumer health data”:

Washington state enacted the My Health, My Data Act, a health-focused consumer privacy law, which took effect in March 2024;

Connecticut and Nevada have also enacted similar consumer health data privacy laws.

These laws impose obligations related to the collection and sharing of certain health-related information that is not subject to HIPAA and that does not fall within certain other exceptions in the law.

To the extent these state laws are applicable to our business and operations, they may increase compliance costs and potential liability with respect to other personal information we maintain about residents of these states.

These legislative and regulatory developments will continue to influence the design and operation of our business and our privacy and security efforts.

Other Matters.

We require our tenants and managers to comply with all laws that regulate the operation of our senior living communities.

We require our managers and tenants to comply with all laws that regulate the operation of our senior living communities.

The costs to comply with these laws may adversely affect the profitability of our managed senior living communities and the ability of our tenants to pay their rent to us.

If we, our managers, or any of our tenants were subject to an action alleging violations of such laws or to any adverse determination concerning any of our or our tenants' or managers' licenses or eligibility for Medicare or Medicaid reimbursement or any substantial penalties, repayments or sanctions, these actions could materially and adversely affect the ability of our tenants to pay rent to us, the profitability of our managed senior living communities and the values of our properties.

If we, our managers or any of our tenants were subject to an action alleging violations of such laws or to any adverse determination concerning any of our or our managers' or tenants' licenses or eligibility for Medicare or Medicaid reimbursement or any substantial penalties, repayments or sanctions, these actions could materially and adversely affect the ability of our tenants to pay rent to us, the profitability of our managed senior living communities and the values of our properties.

If our managers or any of our tenants becomes unable to operate our properties, or if any of our tenants becomes unable to pay its rent because it has violated government regulations or payment laws, we may experience difficulty in finding a substitute tenant or manager or selling the affected property at a price that provides us with a desirable return, and the value of the affected property may decline materially.

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Many states require medical clinics, ambulatory surgery centers, clinical laboratories and other outpatient healthcare facilities to be licensed and inspected for compliance with licensure regulations concerning professional staffing, services, patient rights and physical plant requirements, among other matters.

Our tenants must comply with the Americans with Disabilities Act, or ADA, and similar state and local laws to the extent that such facilities are “public accommodations” as defined in those statutes.

Our tenants must comply with the ADA and similar state and local laws to the extent that such facilities are “public accommodations” as defined in those statutes.

The obligation to comply with the ADA and similar laws is an ongoing obligation, and our tenants expend significant resources to comply with such laws.

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Our tenants that are healthcare providers or suppliers are subject to reimbursement rates that are increasingly subject to cost control pressures and may be reduced or may not be increased sufficiently to cover their increasing costs, including our rents.

Further, healthcare providers are experiencing heightened scrutiny under antitrust laws in the United States as integration and consolidation of health care delivery increase and affect competition.

Further, healthcare providers are experiencing heightened scrutiny under antitrust laws in

the United States as integration and consolidation of health care delivery increase and affect competition.

In addition, there has been a movement toward increased scrutiny of private equity and REIT interest in the healthcare industry, including the long-term care sector.

For example, on November 15, 2023, CMS issued a final rule, effective January 16, 2024, that requires SNFs and Medicaid-participating nursing facilities to disclose certain additional data on their owners, operators and management in an effort to increase transparency of nursing facility ownership and to promote competition among nursing facilities by allowing patients to choose facilities based on publicly available data of their owners and operators.

For example, CMS issued a final rule, effective January 16, 2024, that requires SNFs and Medicaid-participating nursing facilities to disclose certain additional data on their owners, operators and management in an effort to increase transparency of nursing facility ownership and to promote competition among nursing facilities by allowing patients to choose facilities based on publicly available data of their owners and operators.

Further, federal legislation has been introduced that, if enacted, would impose significant transparency requirements, federal oversight, and restrictions on private equity and REIT investment in the health care space, including the ability of federal regulators to review and block certain transactions.

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Preclinical and clinical studies and documentation in connection with FDA approval of new pharmaceuticals or medical devices involve significant time, expense and risks of failure.

Once a product is approved, the FDA maintains oversight of the product and its developer and can withdraw its approval, recall products or suspend their production,

impose or seek to impose civil or criminal penalties on the developer or take other actions for the developer's failure to comply with regulatory requirements, including anti-fraud, false claims, anti-kickback or physician referral laws.

Once a product is approved, the FDA maintains oversight of the product and its developer and can withdraw its approval, recall products or suspend their production, impose or seek to impose civil or criminal penalties on the developer or take other actions for the developer's failure to comply with regulatory requirements, including anti-fraud, false claims, anti-kickback or physician referral laws.

Other concerns affecting our biotechnology laboratory tenants include the potential for subsequent discovery of safety concerns and related litigation, ensuring that the product qualifies for reimbursement under Medicare, Medicaid or other federal or state programs, cost control initiatives of payment programs, the potential for litigation over the validity or infringement of intellectual property rights related to the product, the eventual expiration of relevant patents and the need to raise additional capital.

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Depending upon what aspects of the laws and regulations are altered, the ability of our biotechnology laboratory tenants to pay rent to us could be adversely and materially affected.

Owning and operating medical office and life science properties, senior living communities and other healthcare related properties is a highly competitive business.

Owning and operating senior living communities, medical office and life science properties and other healthcare related properties is a highly competitive business.

We compete against other REITs, numerous financial institutions, individuals and other public and private companies that are actively engaged in this business.

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We believe the quality and diversity of our investments, the financial strength of many of our tenants and the experience and capabilities of our managers may afford us some competitive advantages and allow us to operate our business successfully despite the competitive nature of our business.

Our tenants and managers compete on a local and regional basis with operators of facilities that provide comparable services.

Our managers and tenants compete on a local and regional basis with operators of facilities that provide comparable services.

Operators compete for residents and patients based on quality of care, reputation, physical appearance of properties, services offered, family preferences, physicians, staff, price and location.

We and our tenants and managers also face competition from other healthcare facilities for qualified personnel, such as physicians and other healthcare providers that provide comparable facilities and services.

We and our managers and tenants also face competition from other healthcare facilities for qualified personnel, such as physicians and other healthcare providers that provide comparable facilities and services.

For additional information on competition and the risks associated with our business, see “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

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Our manager, RMR, periodically publishes its Sustainability Report, which summarizes the environmental, social and governance, or ESG, initiatives employed by RMR and its client companies, including us.

RMR’s Sustainability Report may be accessed on the RMR Inc.

RMR’s Sustainability Report may be

accessed on the RMR Inc.

website at www.rmrgroup.com/corporate-sustainability/default.aspx.

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24 of our properties containing 3.6 million square feet (12.5% and 18.2% of our eligible properties and rentable square feet, respectively).

In April 2021, we were selected by the U.S.

Department of Energy's Better Buildings Alliance and Institute for Market Transformation as a Gold Level Green Lease Leader.

For more information, see “Risk Factors—Risks Related to Our Business—Ownership of real estate is subject to environmental risks and liabilities” and “Risk Factors—Risks Related to Our Business—We are subject to risks from adverse weather, natural disasters and adverse impacts from global climate change, and we incur significant costs and invest significant amounts with respect to these matters” in Part I, Item 1A of this Annual Report on Form 10-K and “Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Climate Change” in Part II, Item 7 of this Annual Report on Form 10-K.

amounts with respect to these matters” in Part I, Item 1A of this Annual Report on Form 10-K and “Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Climate Change” in Part II, Item 7 of this Annual Report on Form 10-K.

Environmental Matters

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These laws also expose us to the possibility that we may become liable to government agencies or third parties for costs and damages they incur in connection with hazardous substances.

In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us or the tenants or managers of our properties to incur costs to comply with.

In addition, these laws also impose various requirements regarding the operation and maintenance of properties and recordkeeping and reporting requirements relating to environmental matters that require us or the managers or tenants of our properties to incur costs to comply with.

We reviewed environmental surveys of the properties we own prior to their purchase.

Based upon those surveys, other studies we may have since reviewed and our understanding of the operations of these properties by our tenants and managers,

we do not believe that there are environmental conditions at any of our properties that have had or will have a material adverse effect on us.

Based upon those surveys, other studies we may have since reviewed and our understanding of the operations of these properties by our managers and tenants, we do not believe that there are environmental conditions at any of our properties that have had or will have a material adverse effect on us.

However, we cannot be sure that conditions are not present at our properties or that costs we may be required to incur in the future to remediate contamination will not have a material adverse effect on our business or financial condition or results of operations.

When adverse weather, natural disasters and adverse impacts from global climate change, such as hurricanes, floods or wildfires, occur near our properties, we, our tenants or our managers may relocate the residents at our senior living properties to alternative locations for their safety and we, our tenants or our managers may close or limit the operations of the impacted senior living community or office property until the event has ended and the property is then ready for operation.

We or the tenants or managers of our properties may incur significant costs and losses as a result of these activities, both in terms of operating, preparing and repairing our properties in anticipation of, during and after adverse weather, natural disasters and adverse impacts from global climate change and in terms of potential lost business due to the interruption in operating our properties.

Our insurance and our tenants' and managers' insurance may not adequately compensate us or them for these costs and losses.

When adverse weather, natural disasters and adverse impacts from global climate change, such as hurricanes, floods or wildfires, occur near our properties, we, our managers or our tenants may relocate the residents at our senior living properties to alternative locations for their safety and we, our managers or our tenants may close or limit the operations of the impacted senior living community or office property until the event has ended and the property is then ready for operation.

We or the managers or tenants of our properties may incur significant costs and losses as a result of these activities, both in terms of operating, preparing and repairing our properties in anticipation of, during and after adverse weather, natural disasters and adverse impacts from global climate change and in terms of potential lost business due to the interruption in operating our properties.

Our insurance and our managers' and tenants' insurance may not adequately compensate us or them for these costs and losses.

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns.

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We do not expect the direct impact of these increases to be material to our results of operations, because the increased costs either would be the responsibility of our tenants directly or in the longer term, passed through and paid by tenants of our leased properties and residents at our managed senior living communities.

Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our buildings obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants or managers and their ability to pay rent or returns to us.

Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our buildings obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our managers or tenants and their ability to pay rent or returns to us.

For more information regarding climate change and other environmental matters and their possible adverse impacts on us, see “Risk Factors—Risks Related to Our Business—Ownership of real estate is subject to environmental risks and liabilities” and “Risk Factors—Risks Related to Our Business—We are subject to risks from adverse weather, natural disasters and adverse impacts from global climate change, and we incur significant costs and invest significant amounts with respect to these matters” in Part I, Item 1A of this Annual Report on Form 10-K and “Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Climate Change” in Part II, Item 7 of this Annual Report on Form 10-K.

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As of December 31, 2025, our Board of Trustees was comprised of seven Trustees, of which five were independent trustees.

Our Board of Trustees is comprised of 43% women and approximately 29% members of underrepresented minorities.

Our Board of Trustees is comprised of 43% women and approximately 29% members of marginalized minorities.

We or our tenants are generally responsible for the costs of insurance coverage for our properties and the operations conducted on them, including for casualty, liability, fire, extended coverage and rental or business interruption losses.

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Copies of our governance guidelines, our code of business conduct and ethics, or our Code of Conduct, and the charters of our audit, compensation and nominating and governance committees are posted on our website and also may be obtained free of charge by writing to our Secretary, Diversified Healthcare Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634.

We also have a policy outlining

procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters and a governance hotline accessible on our website that shareholders can use to report concerns or complaints about accounting, internal accounting controls or auditing matters or violations or possible violations of our Code of Conduct.

We also have a policy outlining procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters and a governance hotline accessible on our website that shareholders can use to report concerns or complaints about accounting, internal accounting controls or auditing matters or violations or possible violations of our Code of Conduct.

We make available, free of charge, through the "Investors" section of our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after these forms are filed with, or furnished to, the Securities and Exchange Commission, or SEC.

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As of December 31, 2025, we had two reportable segments:

Medical Office and Life Science Portfolio and SHOP.

SHOP and Medical Office and Life Science Portfolio.

For further information, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report on Form 10-K and our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

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• a person subject to special tax accounting rules as a result of their use of applicable financial statements (within the meaning of Section 451(b)(3) of the IRC);

• except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person.

• except as specifically described in the following summary, a trust, estate, tax-exempt entity, governmental organization or foreign person.

The sections of the IRC that govern the federal income tax qualification and treatment of a REIT and its shareholders are complex.

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We have elected to be taxed as a REIT under Sections 856 through 860 of the IRC, commencing with our 1999 taxable year.

Our REIT election, assuming continuing compliance with the then applicable qualification tests, has continued and will

continue in effect for subsequent taxable years.

Our REIT election, assuming continuing compliance with the then applicable qualification tests, has continued and will continue in effect for subsequent taxable years.

Although we cannot be sure, we believe that from and after our 1999 taxable year we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified us and will continue to qualify us to be taxed as a REIT under the IRC.

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Our dividends are not generally entitled to the preferential tax rates on qualified dividend income, but a portion of our dividends may be treated as capital gain dividends or as qualified dividend income, all as explained below.

In addition, for taxable years beginning before 2026 and pursuant to the deduction-without-outlay mechanism of Section 199A of the IRC, our noncorporate U.S.

In addition, pursuant to the deduction-without-outlay mechanism of Section 199A of the IRC, our noncorporate U.S.

shareholders that meet specified holding period requirements are generally eligible for lower effective tax rates on our dividends that are not treated as capital gain dividends or as qualified dividend income.

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Our current or accumulated earnings and profits are generally allocated first to distributions made on our preferred shares, of which there are none outstanding at this time, and thereafter to distributions made on our common shares.

To the extent that such distributions exceed the basis of a U.S.

shareholder’s shares, the U.S.

shareholder generally must include such distributions in income as long-term capital gain, or short-term capital gain if the shares have been held for one year or less.

For all these purposes, our distributions include cash distributions, any in kind distributions of property that we might make, and deemed or constructive distributions resulting from capital market activities (such as some redemptions), as described below.

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Our continued qualification and taxation as a REIT will depend upon our compliance with various qualification tests imposed under the IRC and summarized below.

While we believe that we have satisfied and will satisfy these tests, our counsel does not review compliance with these tests on a continuing basis.

While we believe that we have satisfied and will satisfy these tests, our counsel

does not review compliance with these tests on a continuing basis.

If we fail to qualify for taxation as a REIT in any year, then we will be subject to federal income taxation as if we were a corporation taxed under subchapter C of the IRC, or a C corporation, and our shareholders will be taxed like shareholders of a regular C corporation, meaning that federal income tax generally will be applied at both the corporate and shareholder levels.

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In addition, if we so elect by making a timely designation to our shareholders, a shareholder would be taxed on its proportionate share of our undistributed capital gain and would generally be expected to receive a credit or refund for its proportionate share of the federal corporate income tax we paid on our retained net capital gain.

income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate.

• If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate.

• If we have net income from “prohibited transactions,” that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors, we will be subject to tax on this income at a 100% rate.

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Further, as a regular C corporation, distributions to our shareholders will not be deductible by us, nor will distributions be required under the IRC.

Also, to the extent of our current and accumulated earnings and profits, all distributions to our shareholders will generally be taxable as ordinary dividends potentially eligible for the preferential tax

rates discussed below under the heading “—Taxation of Taxable U.S.

Shareholders” and, subject to limitations in the IRC, will be potentially eligible for the dividends received deduction for corporate shareholders.

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To help comply with condition (6), our declaration of trust and bylaws restrict transfers of our shares that would otherwise result in concentrated ownership positions.

These restrictions, however, do not ensure that we have previously satisfied, and may not ensure that we will in all cases be able to continue to satisfy, the share ownership requirements described in condition (6).

These restrictions, however, do not ensure that we have previously satisfied, and may not ensure that we will in all cases be able to continue to

satisfy, the share ownership requirements described in condition (6).

If we comply with applicable Treasury regulations to ascertain the ownership of our outstanding shares and do not know, or by exercising reasonable diligence would not have known, that we failed condition (6), then we will be treated as having met condition (6).

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Each such excused failure will result in the imposition of a $50,000 penalty instead of REIT disqualification.

This relief provision may

apply to a failure of the applicable conditions even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

This relief provision may apply to a failure of the applicable conditions even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

Our Wholly Owned Subsidiaries and Our Investments Through Partnerships.

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Taxable REIT Subsidiaries.

As a REIT, we are permitted to own any or all of the securities of a TRS, provided that no more than 20% of the total value of our assets, at the close of each quarter, is comprised of our investments in the stock or other securities of our TRSs.

As a REIT, we are permitted to own any or all of the securities of a TRS, provided that no more than 20% (25% with respect to taxable years beginning after December 31, 2025) of the total value of our assets, at the close of each quarter, is comprised of our investments in the stock or other securities of our TRSs.

Very generally, a TRS is a subsidiary corporation other than a REIT in which a REIT directly or indirectly holds stock and that has made a joint election with such REIT to be treated as a TRS.

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Among other requirements, a TRS of ours must:

(1) not directly or indirectly operate or manage a health care facility or a lodging facility;

(2) not directly or indirectly provide to any person, under a franchise, license or otherwise, rights to any brand name under which any health care facility or lodging facility is operated, except that in limited circumstances a subfranchise, sublicense or similar right can be granted to an independent contractor to operate or manage a health care facility or a lodging facility.

(1) not directly or indirectly operate or manage a health care facility or lodging facility;

In addition, any corporation (other than a REIT and other than a QRS) in which a TRS directly or indirectly owns more than 35% of the voting power or value of the outstanding securities is automatically a TRS (excluding, for this purpose, certain “straight debt” securities).

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Therefore, our TRSs may generally conduct activities that would be treated as prohibited transactions or would give rise to nonqualified income if conducted by us directly.

Additionally, while a REIT is generally limited in its ability to earn qualifying rental income from a TRS, a REIT can earn qualifying rental income from the lease of a qualified health care property to a TRS if an eligible independent contractor operates the facility, as discussed more fully below.

Restrictions and sanctions are imposed on TRSs and their affiliated REITs to ensure that the TRSs will be subject to an appropriate level of federal income taxation.

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We must satisfy two gross income tests annually to maintain our qualification for taxation as a REIT.

First, at least 75% of our gross income for each taxable year must be derived from investments relating to real property, including “rents from real property” within the meaning of Section 856(d) of the IRC, interest and gain from mortgages on real property or on interests in real property, income and gain from foreclosure property, gain from the sale or other disposition of real property (including specified ancillary personal property treated as real property under the IRC), or dividends on and gain from the sale or disposition of shares in other REITs (but excluding in all cases any gains subject to the 100% tax on prohibited transactions).

from the sale or disposition of shares in other REITs (but excluding in all cases any gains subject to the 100% tax on prohibited transactions).

When we receive new capital in exchange for our shares or in a public offering of our five-year or longer debt instruments, income attributable to the temporary investment of this new capital in stock or a debt instrument, if received or accrued within one year of our receipt of the new capital, is generally also qualifying income under the 75% gross income test.

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• Rents generally do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules.

We generally do not intend to lease property to any party if rents from that property

would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control.

We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control.

Our declaration of trust and bylaws generally disallow transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC.

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• There is an additional exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant.

For this additional exception to apply, a real property interest in a “qualified health care property” must be leased by the REIT to its TRS, and the facility must be operated on behalf of the TRS by a person who is an “eligible independent contractor,” all as described in Sections 856(d)(8)-(9) and 856(e)(6)(D) of the IRC.

For this additional exception to apply, a real property interest in a “qualified health care property” must be leased by the REIT to its TRS, and the property must be operated on behalf of the TRS by a person who is an “eligible independent contractor,” all as described in Sections 856(d)(8)-(9) and 856(e)(6)(D) of the IRC.

As described below, we believe our leases with our TRSs have satisfied and will continue to satisfy these requirements.

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• In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated.

Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities;

Whether separately stated charges received by a REIT for services that are not geographically customary and provided

by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities;

however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary.

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Sections 857(b)(6)(C) and (E) of the IRC provide safe harbors pursuant to which limited sales of real property held for at least two years and meeting specified additional requirements will not be treated as prohibited transactions.

However, compliance with the safe harbors is not always achievable in practice.

However, compliance

with the safe harbors is not always achievable in practice.

We attempt to structure our activities to avoid transactions that are prohibited transactions, or otherwise conduct such activities through TRSs;

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and (b) after we identify the failure, we file a schedule describing each item of our gross income included in the 75% gross income test or the 95% gross income test for that taxable year.

Even if this relief provision does apply, a 100% tax is imposed upon the greater of the amount by which we failed the 75% gross income

test or the amount by which we failed the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year.

Even if this relief provision does apply, a 100% tax is imposed upon the greater of the amount by which we failed the 75% gross income test or the amount by which we failed the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year.

This relief provision may apply to a failure of the applicable income tests even if the failure first occurred in a year prior to the taxable year in which the failure was discovered.

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Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests.

• Not more than 20% of the value of our total assets may be represented by stock or other securities of our TRSs.

• Not more than 20% (25% with respect to taxable years beginning after December 31, 2025) of the value of our total assets may be represented by stock or other securities of our TRSs.

• Not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC.

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We have not elected to treat AlerisLife as a TRS, and it is not otherwise an automatic TRS because no TRS of ours owns more than 35% of AlerisLife.

This structure for our AlerisLife ownership permits our continued engagement of a corporate subsidiary of AlerisLife to manage health care facilities leased to our TRSs, as described below in greater detail.

This structure for our AlerisLife ownership permitted our prior engagement of a corporate subsidiary of AlerisLife to manage health care properties leased to our TRSs, as described below in greater detail.

Upon concluding its business dispositions, AlerisLife adopted a plan of complete liquidation under Sections 331 and 336 of the IRC.

Accordingly, we (and also our TRS that owns common stock of AlerisLife) began to receive liquidating distributions of cash from AlerisLife in 2026.

As a result of the foregoing, we may in 2026 or future taxable years receive capital gain income or (via cash distributions from our TRS that owns common stock of AlerisLife) dividend income, both of which are expected to qualify for the 95% gross income test but neither of which will qualify for the 75% gross income test.

The amounts involved are not material to our 75% gross income test compliance.

As of February 23, 2026, we have received $27.2 million of our pro rata share of cash dividends paid to AlerisLife's stockholders in connection with the wind-down of AlerisLife's business.

For further information regarding our relationship with AlerisLife, see Note 8 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

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We currently own properties that we purchased to be leased to our TRSs or which are being leased to our TRSs as a result of modifications to, or expirations of, a prior lease, all as agreed to by applicable parties.

For example, in connection with past lease defaults and expirations, we have terminated occupancy of some of our health care properties by the defaulting or expiring tenants and immediately leased these properties to our TRSs and entered into other third-party management agreements for these properties.

and entered into third-party management agreements for these properties.

We may from time to time lease additional health care properties to our TRSs.

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For these purposes, an otherwise eligible independent contractor is not disqualified from that status on account of (a) the TRS bearing the expenses of the operation of the qualified health care property, (b) the TRS receiving the revenues from the operation of the qualified health care property, net of expenses for that operation and fees payable to the eligible independent contractor, or (c) the REIT receiving income from the eligible independent contractor pursuant to a preexisting or otherwise grandfathered lease of another property.

We have engaged as an intended eligible independent contractor a particular corporate subsidiary of AlerisLife.

This contractor and its affiliates are actively engaged in the trade or business of operating qualified health care properties for their own accounts, including pursuant to management contracts among themselves;

however, this contractor and its affiliates have few if any management contracts for qualified health care properties with third parties other than us and our TRSs.

Based on a plain reading of the statute as well as applicable legislative history, our counsel, Sullivan & Worcester LLP, has opined that this intended eligible independent contractor should in fact so qualify.

If the IRS or a court determines that this opinion is incorrect, then the rental income we receive from our TRSs in respect of properties managed by this particular contractor would be nonqualifying income for purposes of the 75% and 95% gross income tests, possibly jeopardizing our compliance with one or both of these gross income tests.

For 2025 and prior taxable years, we engaged as an intended eligible independent contractor a particular corporate subsidiary of AlerisLife.

This contractor and its affiliates were actively engaged in the trade or business of operating qualified health care properties for their own accounts, including pursuant to management contracts among themselves;

however, this contractor and its affiliates had few if any management contracts for qualified health care properties with third parties other than us and our TRSs.

Based on a plain reading of the statute as well as applicable legislative history, our counsel, Sullivan & Worcester LLP, opined that this intended eligible independent contractor should in fact have so qualified.

If the IRS or a court determines that this opinion was incorrect, then the rental income we received from our TRSs in respect of properties managed by this particular contractor would have been nonqualifying income for purposes of the 75% and 95% gross income tests, possibly jeopardizing our past compliance with one or both of these gross income tests.

Under those circumstances, however, we expect we would qualify for the gross income tests’ relief provision described above, and thereby would preserve our qualification for taxation as a REIT.

If the relief provision were to apply to us, we would be subject to tax at a 100% rate upon the greater of the amount by which we failed the 75% gross income test or the amount by which we failed the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year;

even though we have little or no nonqualifying income from other sources in a

typical taxable year, imposition of this 100% tax in this circumstance would be material because a significant number of the properties leased to our TRSs are managed for the TRSs by this contractor.

even though we had little nonqualifying income from other sources in past taxable years, imposition of this 100% tax in this circumstance would be material because a significant number of the properties leased to our TRSs were managed for the TRSs by this contractor.

As explained above, we will be subject to a 100% tax on the rents paid to us by any of our TRSs if the IRS successfully asserts that those rents exceed an arm’s length rental rate.

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For these purposes, our “real estate investment trust taxable income” is as defined under Section 857 of the IRC and is computed without regard to the dividends paid deduction and our net capital gain and will generally be reduced by specified corporate-level income taxes that we pay (e.g., taxes on built-in gains or foreclosure property income).

The IRC generally limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income,” subject to specified exceptions.

Beginning with the calendar taxable year 2018, the IRC generally limits the deductibility of net interest expense paid or accrued on debt properly allocable to a trade or business to 30% of “adjusted taxable income,” subject to specified exceptions.

For calendar taxable years 2018 through 2021 and beginning with the calendar taxable year 2025, adjusted taxable

income was (and is) an amount roughly equivalent to earnings before interest, taxes, depreciation and amortization;

provided, however, adjusted taxable income for calendar taxable years 2022 through 2024 was an amount roughly equivalent to earnings before interest and taxes (i.e., an amount after depreciation and amortization).

For taxable years beginning after December 31, 2025, the interest deduction limitation generally is calculated prior to the application of any interest capitalization provisions under the IRC.

Any deduction in excess of the limitation is carried forward and may be used in a subsequent year, subject to that year’s 30% limitation.

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Treasury regulations provide that a real property trade or business includes a trade or business conducted by a REIT.

We have made an election to be treated as a real property trade or business and accordingly do not expect the foregoing interest deduction limitations to apply to us or to the calculation of our “real estate investment trust taxable income,” but the interest deduction limitations could apply to our subsidiary partnerships or REITs that are not eligible for or otherwise do not make the election for electing real property trades or businesses.

Distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our federal income tax return for the earlier taxable year and if paid on or before the first regular distribution payment after that declaration.

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In addition to the other distribution requirements above, to preserve our qualification for taxation as a REIT we are required to timely distribute all C corporation earnings and profits that we inherit from acquired corporations, as described below.

We may elect to retain, rather than distribute, some or all of our net capital gain and certain of our cancellation of indebtedness income, and pay income tax on such retained amounts.

We may elect to retain, rather than distribute, some or all of our net capital gain and certain of our cancellation of indebtedness income, if any, and pay income tax on such retained amounts.

In addition, if we so elect by making a timely designation to our shareholders, our shareholders would include their proportionate share of such undistributed capital gain in their taxable income, and they would receive a corresponding credit for their share of the federal corporate income tax that we pay thereon.

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Shareholders.”

Section 302 of the IRC treats a redemption of our shares for cash only as a distribution under Section 301 of the IRC, and hence taxable as a dividend to the extent of our available current or accumulated earnings and profits, unless the redemption satisfies one of the tests set forth in Section 302(b) of the IRC enabling the redemption to be treated as a sale or exchange of the shares.

satisfies one of the tests set forth in Section 302(b) of the IRC enabling the redemption to be treated as a sale or exchange of the shares.

The redemption for cash only will be treated as a sale or exchange if it (a) is “substantially disproportionate” with respect to the surrendering shareholder’s ownership in us, (b) results in a “complete termination” of the surrendering shareholder’s entire share interest in us, or (c) is “not essentially equivalent to a dividend” with respect to the surrendering shareholder, all within the meaning of Section 302(b) of the IRC.

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As a result, our ordinary dividends generally are taxed at the higher federal income tax rates applicable to ordinary income (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is generally available to our noncorporate U.S.

shareholders that meet specified holding period requirements for taxable years before 2026).

shareholders that meet specified holding period requirements).

To summarize, the preferential federal income tax rates for long-term capital gains and for qualified dividends generally apply to:

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shareholders that we do not designate as a capital gain dividend generally will be treated as an ordinary income dividend to the extent of our available current or accumulated earnings and profits (subject to the lower effective tax rates applicable to qualified REIT dividends via the deduction-without-outlay mechanism of Section 199A of the IRC, which is generally available to our noncorporate U.S.

shareholders that meet specified holding period requirements for taxable years before 2026).

shareholders that meet specified holding period requirements).

Distributions made out of our current or accumulated earnings and profits that we properly designate as capital gain dividends generally will be taxed as long-term capital gains, as discussed below, to the extent they do not exceed our actual net capital gain for the taxable year.

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In addition, any loss upon a sale or exchange of our shares held for six months or less will generally be treated as a long-term capital loss to the extent of any long-term capital gain dividends we paid on such shares during the holding period.

shareholders who are individuals, estates or trusts are generally required to pay a 3.8% Medicare tax on their net investment income (including dividends on our shares (without regard to any deduction allowed by Section 199A of the IRC) and gains from the sale or other disposition of our shares), or in the case of estates and trusts on their net investment income

that is not distributed, in each case to the extent that their total adjusted income exceeds applicable thresholds.

shareholders are urged to consult their tax advisors regarding the application of the 3.8% Medicare tax.

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Under Section 163(d) of the IRC, interest paid or accrued on indebtedness incurred or continued to purchase or carry property held for investment is generally deductible only to the extent of the investor’s net investment income.

shareholder’s net investment income will include ordinary income dividend distributions received from us and, only if an appropriate election is made by the shareholder, capital gain dividend distributions and qualified dividends received from us;

shareholder’s net investment income will include ordinary income dividend distributions received from us and, only if an appropriate election is made by the shareholder, capital gain dividend

distributions and qualified dividends received from us;

however, distributions treated as a nontaxable return of the shareholder’s basis will not enter into the computation of net investment income.

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shareholder that is not designated as a capital gain dividend will be treated as an ordinary income dividend to the extent that it is made out of our current or accumulated earnings and profits.

distribution of this type will generally be subject to U.S.

A distribution of this type will generally be subject to U.S.

federal income tax and withholding at the rate of 30%, or at a lower rate if the non-U.S.

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shareholders will not be required to file U.S.

federal income tax returns or pay branch profits tax in respect of these dividends.

federal income tax returns or pay branch profits tax in respect of

these dividends.

Instead, these dividends will generally be treated as ordinary dividends and subject to withholding in the manner described above.

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federal income taxation as a sale of a USRPI.

Second, our shares will not

constitute USRPIs if we are a “domestically controlled” REIT.

Second, our shares will not constitute USRPIs if we are a “domestically controlled” REIT.

We will be a “domestically controlled” REIT if less than 50% of the value of our shares (including any future class of shares that we may issue) is held, directly or indirectly, by non-U.S.

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If a shareholder is subject to backup or other U.S.

federal income tax withholding, then the applicable withholding agent will be required to withhold the appropriate amount with respect to a deemed or constructive distribution or a distribution in kind even though there is insufficient cash from which to satisfy the withholding obligation.

income tax withholding, then the applicable withholding agent will be required to withhold the appropriate amount with respect to a deemed or constructive distribution or a distribution in kind even though there is insufficient cash from which to satisfy the withholding obligation.

To satisfy this withholding obligation, the applicable withholding agent may collect the amount of U.S.

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shareholder status on an applicable IRS Form W-8 or substantially similar form.

Even without having executed an applicable IRS Form W-8 or substantially similar form, however, in some cases information reporting and backup withholding will not

apply to proceeds that a non-U.S.

Even without having executed an applicable IRS Form W-8 or substantially similar form, however, in some cases information reporting and backup withholding will not apply to proceeds that a non-U.S.

shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares if the non-U.S.

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The restrictions on transfer enumerated in the regulation as not affecting that finding include any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order.

We believe that the restrictions imposed under our declaration of trust and bylaws on the transfer of shares do not result in the failure of our shares to be “freely transferable.” In addition, we do not expect or intend to impose in the future, or to permit any person to impose on our behalf, any limitations or restrictions on transfer that would not be among the enumerated permissible limitations or restrictions in the regulation.

Assuming that each class of our shares will be “widely held” and that no facts and circumstances exist that restrict transferability of these shares, our counsel, Sullivan & Worcester LLP, is of the opinion that our shares will not fail to be “freely transferable” for purposes of the regulation due to the restrictions on transfer of our shares in our declaration of trust and bylaws and that under the regulation each class of our currently outstanding shares is publicly offered and our assets will not be deemed to be “plan assets” of any ERISA Plan or Non-ERISA Plan that acquires our shares in a public offering.

Additionally, limitations or restrictions on the transfer or assignment of a security that are created or imposed by persons other than the issuer of a security or persons acting for or on behalf of the issuer will ordinarily not prevent the security from being considered freely transferable.

We believe that the restrictions imposed under our declaration of trust and bylaws on the transfer of shares do not result in the failure of our shares to be “freely transferable.” In addition, we do not expect or intend to impose in the future, or to permit any person to impose on our behalf, on shares owned by an ERISA Plan or Non-ERISA Plan, any limitations or restrictions on transfer that would not be among the enumerated permissible limitations or restrictions in the regulation and that would otherwise result in the failure of our shares to be “freely transferable”.

Assuming that each class of our shares will be “widely held” and that no facts and circumstances exist that prevent shares owned by an ERISA Plan or Non-ERISA Plan from being “freely transferable” for purposes of the regulation, our counsel, Sullivan & Worcester LLP, is of the opinion that under the regulation each class of our currently outstanding shares is publicly offered and our assets will not be deemed to be “plan assets” of any ERISA Plan or Non-ERISA Plan that acquires our shares in a public offering.

This opinion is conditioned upon certain assumptions and representations, as discussed above under the heading “Material United States Federal Income Tax Considerations—Taxation as a REIT.” Also, the opinion of our counsel is not binding on either the Department of Labor or a court, and either could take a position different from that expressed by our counsel.

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-K

Item 1. Business