What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-03 compared with 2026-05-04 · 234 added, 115 removed, 321 unchanged (52% of the section changed)

2 unchanged sentences

We are a REIT organized under Maryland law that primarily owns senior living communities, medical office and life science properties and other healthcare related properties throughout the United States.

As of March 31, 2026, we owned 285 properties located in 33 states and Washington, D.C.

As of March 31, 2026, we owned an equity interest in each of the Seaport JV and the LSMD JV that own medical office and life science properties located in five states with an aggregate of approximately 2.2 million rentable square feet that were 99% leased with an average (by annualized rental income) remaining lease term of 13.9 years.

As of June 30, 2026, we owned 285 properties located in 33 states and Washington, D.C.

As of June 30, 2026, we owned an equity interest in each of the Seaport JV and the LSMD JV that own medical office and life science properties located in five states with an aggregate of approximately 2.2 million rentable square feet that were 99% leased with an average (by annualized rental income) remaining lease term of 13.6 years.

We are encouraged by positive trends, including increases in rates, margins and occupancy in our SHOP segment.

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For further information and risks relating to these economic uncertainties and their impact on our business and financial condition, see Part I, Item 1, "Business" and Part I, Item 1A, "Risk Factors" in our Annual Report.

Portfolio Overview

The following tables present an overview of our portfolio as of and for the three months ended March 31, 2026 (dollars in thousands, except average monthly rate):

Portfolio Overview (dollars in thousands, except average monthly rate and per square foot amounts)

The following table presents an overview of our portfolio as of and for the three months ended June 30, 2026:

Number of Units Book Value

11 unchanged sentences

Our definition of NOI and our reconciliation of net income (loss) to NOI are included below under the heading “Non-GAAP Financial Measures.”

The following tables present key operating metrics of our portfolio as of and for the three and six months ended June 30, 2026 and 2025:

Comparable Properties (1)

1 unchanged sentence

As of and for the As of and for the

Three Months Ended March 31, Three Months Ended March 31,

Three Months Ended June 30, Three Months Ended June 30,

2026 2025 2026 2025

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Weighted average 2.78 x 2.43 x 2.78 x 2.43 x

(1) Consists of properties that we have owned and are in service and which have been reported in the same segment and leased to the same operator continuously since January 1, 2025;

excludes properties classified as held for sale, planned for sale, closed or out of service, if any, and medical office and life science properties owned by unconsolidated joint ventures in which we own an equity interest.

Comparable Properties (1)

All Properties

As of and for the As of and for the

Six Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Total properties 184 184 199 230

Number of units 21,124 21,124 22,469 24,872

Occupancy 82.7 % 81.4 % 82.1 % 80.4 %

Average monthly rate (2)

$ 5,686 $ 5,360 $ 5,653 $ 5,427

Medical Office and Life Science Portfolio (3)

Total properties 65 65 67 92

Total square feet 5,349,272 5,349,272 5,558,089 7,400,023

Occupancy 95.8 % 94.7 % 92.2 % 82.9 %

Total properties:

Triple net leased senior living communities 8 8 9 9

Wellness centers 10 10 10 10

Rent coverage:

Triple net leased senior living communities 2.19 x 1.88 x 2.22 x 1.88 x

Wellness centers 3.32 x 2.93 x 3.32 x 2.93 x

Weighted average 2.78 x 2.43 x 2.78 x 2.43 x

(1) Consists of properties owned, in service and reported in the same segment since April 1, 2025 for the three months ended June 30, 2026, and January 1, 2025 for the six months ended June 30, 2026;

excludes properties classified as held for sale, closed or out of service, if any, planned dispositions and medical office and life science properties owned by unconsolidated joint ventures in which we own an equity interest.

Properties are included in same property once stabilized for the full period in both comparison periods presented.

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Excludes data for historical periods prior to our ownership of certain properties.

During the three months ended March 31, 2026, we entered into new and renewal leases in our Medical Office and Life Science Portfolio segment as summarized in the following table (dollars and square feet in thousands, except per square foot amounts):

Three Months Ended March 31, 2026

During the three and six months ended June 30, 2026, we entered into new and renewal leases in our Medical Office and Life Science Portfolio segment as summarized in the following tables:

Three Months Ended June 30, 2026

New Leases Renewals Total

Square feet leased during the quarter 113 56 169

Square feet leased during the period 33,000 444,000 477,000

Weighted average rental rate change (by rentable square feet) 46.3 % 4.4 % 6.7 %

6 unchanged sentences

$ 1.08 $ 2.98 $ 2.80

Six Months Ended June 30, 2026

New Leases Renewals Total

Square feet leased during the period 146,000 500,000 646,000

Weighted average rental rate change (by rentable square feet) 21.3 % 4.5 % 8.1 %

Weighted average lease term (years) 10.0 7.1 7.8

Total leasing costs and concession commitments (1)

$ 4,152 $ 10,364 $ 14,516

Total leasing costs and concession commitments per square foot (1)

$ 28.55 $ 20.71 $ 22.47

Total leasing costs and concession commitments per square foot per year (1)

$ 2.86 $ 2.94 $ 2.90

(1) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.

As of March 31, 2026, lease expirations in our Medical Office and Life Science Portfolio segment were as follows (dollars in thousands):

As of June 30, 2026, lease expirations in our Medical Office and Life Science Portfolio segment were as follows:

Cumulative Cumulative

2 unchanged sentences

of Square Feet Square Feet Square Feet Rental Income Rental Income Rental Income

Year Tenants Expiring Expiring Expiring Expiring (1)

Year Leases Expiring Expiring Expiring Expiring (1)

Expiring Expiring

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Weighted average remaining lease term (in years) 4.7 5.0

(1) Annualized rental income is based on rents pursuant to existing leases as of March 31, 2026, and includes straight line rent adjustments and estimated recurring expense reimbursements for certain net and modified gross leases and excludes lease value amortization.

As of March 31, 2026, lease expirations at our triple net leased wellness centers and senior living communities leased to third party operators were as follows (dollars in thousands):

(1) Annualized rental income is based on rents pursuant to existing leases as of June 30, 2026, and includes straight line rent adjustments and estimated recurring expense reimbursements for certain net and modified gross leases and excludes lease value amortization.

(2) Includes two tenants who vacated on June 30, 2026, with an aggregate annualized rental income of $6,885 and leased square feet of 212,767.

Excluding these two tenants, the annualized rental income and square footage with leases expiring in 2026 are $4,681 and 153,605, respectively.

As of June 30, 2026, lease expirations at our triple net leased wellness centers and senior living communities leased to third party operators were as follows:

% of Total % of Total

4 unchanged sentences

2026 — — $ — — % — %

4 533 units 4,841 16.0 % 16.0 %

2027 — — — — % — %

2028 — — — — % — %

2029 1 155 units 547 1.8 % 1.8 %

2030 5 277 units and 129,600 square feet 5,062 16.7 % 18.5 %

Thereafter 9 363 units and 682,646 square feet 19,891 65.5 % 100.0 %

Thereafter (2)

13 896 units and 682,646 square feet 24,732 81.5 % 100.0 %

Total 19 $ 30,341 100.0 %

Weighted average remaining lease term (in years) 11.0

(1) Annualized rental income is based on rents pursuant to existing leases as of March 31, 2026.

(1) Annualized rental income is based on rents pursuant to existing leases as of June 30, 2026.

Annualized rental income includes estimated percentage rents and straight line rent adjustments and excludes lease value amortization.

(2) In April 2026, Stellar Senior Living LLC exercised its renewal option to extend its lease through 2037.

This tenant's annual rent will be adjusted to a fair market rate effective August 2027 pursuant to the terms of the lease.

This rent amount has not yet been finalized and therefore the current annualized rental income is reflected.

RESULTS OF OPERATIONS (dollars in thousands, unless otherwise noted)

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We also report “All Other” operations, which consists of triple net leased wellness centers and senior living communities that are leased to third party operators from which we receive rents, which we do not consider to be sufficiently material to constitute a separate reportable segment, and any other income or expenses that are not attributable to a specific reportable segment.

The following table summarizes the results of operations of each of our segments for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

The following table summarizes the results of operations of each of our segments for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

SHOP $ 317,921 $ 327,545 $ 635,146 $ 655,851

2 unchanged sentences

Total revenues $ 365,387 $ 382,712 $ 731,858 $ 769,576

Net income (loss):

SHOP $ 201 $ (38,415) $ (10,855) $ (41,502)

3 unchanged sentences

The following section analyzes and discusses the results of operations of each of our segments for the periods presented.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025 (dollars in thousands):

Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the three months ended March 31, 2026 to the three months ended March 31, 2025.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025 (amounts in thousands, except per share data):

Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the three months ended June 30, 2026 to the three months ended June 30, 2025.

Our definition of NOI and our reconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”

Three Months Ended March 31,

2026 2025 $ Change % Change

NOI by segment:

SHOP $ 43,626 $ 36,828 $ 6,798 18.5 %

Comparable (1)

Non-Comparable Consolidated

Properties Results Properties Results Properties Results

Three Months Ended Three Months Ended Three Months Ended

June 30, June 30, June 30,

2026 2025 Change Change 2026 2025 2026 2025 Change Change

Residents fees and services $ 301,189 $ 282,464 $ 18,725 6.6 % $ 16,732 $ 45,081 $ 317,921 $ 327,545 $ (9,624) (2.9) %

Property operating expenses (249,214) (244,582) $ 4,632 1.9 % (15,212) (46,348) (264,426) (290,930) $ (26,504) (9.1) %

NOI $ 51,975 $ 37,882 $ 14,093 37.2 % $ 1,520 $ (1,267) $ 53,495 $ 36,615 $ 16,880 46.1 %

Medical Office and Life Science Portfolio:

All Other 7,225 8,854 (1,629) (18.4) %

Total NOI 75,915 72,538 3,377 4.7 %

Rental income $ 40,080 $ 39,869 $ 211 0.5 % $ 36 $ 8,187 $ 40,116 $ 48,056 $ (7,940) (16.5) %

Property operating expenses (16,012) (15,769) $ 243 1.5 % (395) (5,800) (16,407) (21,569) $ (5,162) (23.9) %

NOI $ 24,068 $ 24,100 $ (32) (0.1) % $ (359) $ 2,387 $ 23,709 $ 26,487 $ (2,778) (10.5) %

Rental income $ 7,165 $ 7,111 $ 54 0.8 % $ 185 $ — $ 7,350 $ 7,111 $ 239 3.4 %

Property operating expenses (111) (81) $ 30 37.0 % — — (111) (81) $ 30 37.0 %

NOI $ 7,054 $ 7,030 $ 24 0.3 % $ 185 $ — $ 7,239 $ 7,030 $ 209 3.0 %

Consolidated:

Revenues $ 348,434 $ 329,444 $ 18,990 5.8 % $ 16,953 $ 53,268 $ 365,387 $ 382,712 $ (17,325) (4.5) %

Property operating expenses (265,337) (260,432) $ 4,905 1.9 % (15,607) (52,148) (280,944) (312,580) $ (31,636) (10.1) %

NOI $ 83,097 $ 69,012 $ 14,085 20.4 % $ 1,346 $ 1,120 84,443 70,132 $ 14,311 20.4 %

Depreciation and amortization 62,542 66,266 $ (3,724) (5.6) %

2 unchanged sentences

Impairment of assets — 30,993 $ (30,993) (100.0) %

(Loss) gain on sale of real estate (1,207) 110,140 (111,347) (101.1) %

Gain on insurance recoveries — 7,522 (7,522) (100.0) %

Loss on sale of real estate (629) (7,429) $ 6,800 (91.5) %

Interest and other income 258 2,982 $ (2,724) (91.3) %

1 unchanged sentence

Loss on modification or early extinguishment of debt — (126) $ 126 (100.0) %

Loss before income taxes and equity in net earnings of investees (42,749) (10,424) (32,325) n/m

Income tax expense (622) (49) (573) n/m

Loss before income taxes and equity in net earnings of investees (37,972) (93,878) $ 55,906 (59.6) %

Income tax expense (1,297) (843) $ (454) 53.9 %

Equity in net earnings of investees 1,850 3,082 $ (1,232) (40.0) %

Net loss $ (43,275) $ (8,986) $ (34,289) n/m

Net loss $ (37,419) $ (91,639) $ 54,220 (59.2) %

Weighted average common shares outstanding (basic and diluted) 240,749 240,132 617 0.3 %

Net loss per common share (basic and diluted) $ (0.16) $ (0.38) $ 0.22 (57.9) %

n/m - not meaningful

Comparable (1)

Non-Comparable Consolidated

Properties Results Properties Results Properties Results

Three Months Ended Three Months Ended Three Months Ended

March 31, March 31, March 31,

2026 2025 Change Change 2026 2025 2026 2025 Change Change

Residents fees and services $ 296,504 $ 283,106 $ 13,398 4.7 % $ 20,721 $ 45,200 $ 317,225 $ 328,306 $ (11,081) (3.4) %

Property operating expenses (252,183) (244,069) $ 8,114 3.3 % (21,416) (47,409) (273,599) (291,478) $ (17,879) (6.1) %

NOI $ 44,321 $ 39,037 $ 5,284 13.5 % $ (695) $ (2,209) $ 43,626 $ 36,828 $ 6,798 18.5 %

(1) Consists of senior living communities that we have owned, are in service and reported in the same segment since January 1, 2025;

excludes communities classified as held for sale, planned for sale, closed or out of service, if any.

(1) Consists of properties owned, in service and reported in the same segment since April 1, 2025;

Properties are included in same property once stabilized for the full period in both comparison periods presented.

3 unchanged sentences

Residents fees and services increased at our comparable properties primarily due to increases in occupancy and average monthly rate at our communities.

Residents fees and services decreased at our non-comparable properties primarily due to dispositions since January 1, 2025.

Residents fees and services decreased at our non-comparable properties primarily due to dispositions since April 1, 2025.

Property operating expenses.

Property operating expenses consist of real estate taxes, utility expenses, insurance, wages and benefit costs of community level personnel, repairs and maintenance expense, management fees, cleaning expense and other direct costs of operating these communities.

Property operating expenses increased at our comparable properties primarily due to increases in labor costs, management fees as a result of higher revenues, insurance costs and other direct costs, partially offset by decreases in maintenance and repair costs.

Property operating expenses decreased at our non-comparable properties primarily due to dispositions since January 1, 2025.

Property operating expenses increased at our comparable properties primarily due to increases in labor costs, management fees as a result of higher revenues and insurance costs, partially offset by decreases in maintenance and repair expense, dietary expense and other direct costs.

Property operating expenses decreased at our non-comparable properties primarily due to dispositions since April 1, 2025.

Net operating income.

1 unchanged sentence

Medical Office and Life Science Portfolio:

Rental income.

Rental income increased at our comparable properties primarily due to increases from our net leasing activity at certain of our properties.

Rental income decreased at our non-comparable properties primarily due to dispositions since April 1, 2025.

Property operating expenses.

Property operating expenses consist of real estate taxes, utility expenses, insurance, management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these properties.

The increase in property operating expenses at our comparable properties is primarily due to increases in real estate taxes and cleaning expense, partially offset by a decrease in insurance and other direct costs at certain of our properties.

Property operating expenses decreased at our non-comparable properties primarily due to dispositions since April 1, 2025.

Net operating income.

The change in NOI reflects the net changes in rental income and property operating expenses described above.

Rental income.

There have been no material changes in rental income at our comparable properties.

The activity for our non-comparable properties primarily reflects one senior living community that transitioned to a triple net lease in December 2025.

Property operating expenses.

Property operating expenses consist of real estate taxes, insurance and other expenses that are not paid directly by our tenants.

There have been no material changes in property operating expenses.

Net operating income.

The change in NOI primarily reflects the change in rental income described above.

Consolidated:

Depreciation and amortization expense.

Depreciation and amortization expense decreased primarily due to dispositions since April 1, 2025 and certain depreciable assets becoming fully depreciated, partially offset by the purchase of capital improvements at certain of our properties.

General and administrative expense .

General and administrative expense consists of fees paid to RMR under our business management agreement, legal and accounting fees, fees and expenses of our Trustees, equity compensation expense and other costs relating to our status as a publicly traded company.

General and administrative expense increased primarily due to $9,993 of estimated incentive management fees that we recognized for the three months ended June 30, 2026, compared to $4,148 for the three months ended June 30, 2025.

These incentive management fees were recorded as a result of our total shareholder return exceeding the returns for the MSCI U.S.

REIT/Health Care REIT Index over the applicable measurement period.

General and administrative expense also increased due to higher business management fees as a result of an increase in average share price during the 2026 period.

Acquisition and certain other transaction related costs.

Acquisition and certain other transaction related costs primarily represent costs incurred with acquisitions and non-recurring transactions that we expensed under GAAP.

During the three months ended June 30, 2026, we incurred transition costs as a result of our transition of 116 communities to both new and existing third party managers.

Impairment of assets.

For information about our asset impairment charges, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

Loss on sale of real estate.

For information regarding loss on sale of real estate, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

Interest and other income.

The decrease in interest and other income is primarily due to lower average invested cash balances and interest rates during the three months ended June 30, 2026 compared to the 2025 period.

Interest expense.

Interest expense decreased primarily due to a decrease in discount accretion for our previously outstanding senior secured notes due 2026 due to the full redemption of the remaining balance of these notes during 2025.

During the three months ended June 30, 2025, we recognized discount accretion of $16,307 for our then outstanding senior secured notes due 2026.

Interest expense also decreased due to the redemption during 2025 of an aggregate $380,000 of our then remaining 9.75% senior unsecured notes due 2025.

These decreases were partially offset by the issuance of $375,000 in aggregate principal amount of our 7.25% senior secured notes due 2030 in September 2025 and three mortgage financings totaling $203,157 since April 1, 2025.

Loss on modification or early extinguishment of debt.

During the three months ended June 30, 2025, we recorded a loss on early extinguishment of debt in connection with the redemption of all $380,000 of our remaining 9.75% senior unsecured notes due 2025.

Income tax expense .

Income tax expense is the result of operating income we earned in certain jurisdictions where we are subject to state income taxes.

Equity in net earnings of investees.

Equity in net earnings of investees is the change in the fair value of our investments in our unconsolidated joint ventures and also represented our proportionate share of the earnings of our equity method investment in AlerisLife.

As of December 31, 2025, AlerisLife had ceased operations and was in the process of winding down its business.

We recognized no equity in net earnings of AlerisLife for the three months ended June 30, 2026.

For further information regarding our investment in AlerisLife, see Notes 3 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 (amounts in thousands, except per share data):

Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the six months ended June 30, 2026 to the six months ended June 30, 2025.

Comparable (1)

1 unchanged sentence

Properties Results Properties Results Properties Results

Three Months Ended Three Months Ended Three Months Ended

March 31, March 31, March 31,

Six Months Ended Six Months Ended Six Months Ended

June 30, June 30, June 30,

2026 2025 Change Change 2026 2025 2026 2025 Change Change

Residents fees and services $ 597,693 $ 565,570 $ 32,123 5.7 % $ 37,453 $ 90,281 $ 635,146 $ 655,851 $ (20,705) (3.2) %

Property operating expenses (501,397) (488,651) $ 12,746 2.6 % (36,628) (93,757) (538,025) (582,408) $ (44,383) (7.6) %

NOI $ 96,296 $ 76,919 $ 19,377 25.2 % $ 825 $ (3,476) $ 97,121 $ 73,443 $ 23,678 32.2 %

Medical Office and Life Science Portfolio:

Rental income $ 81,929 $ 80,499 $ 1,430 1.8 % $ 82 $ 17,320 $ 82,011 $ 97,819 $ (15,808) (16.2) %

1 unchanged sentence

NOI $ 49,435 $ 48,556 $ 879 1.8 % $ (662) $ 4,787 $ 48,773 $ 53,343 $ (4,570) (8.6) %

(1) Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2025;

excludes properties classified as held for sale, planned for sale or out of service undergoing redevelopment, if any, and properties owned by unconsolidated joint ventures in which we own an equity interest.

Rental income $ 14,330 $ 14,231 $ 99 0.7 % $ 371 $ 1,675 $ 14,701 $ 15,906 $ (1,205) (7.6) %

Property operating expenses (237) (20) $ 217 n/m — (2) (237) (22) $ 215 n/m

NOI $ 14,093 $ 14,211 $ (118) (0.8) % $ 371 $ 1,673 $ 14,464 $ 15,884 $ (1,420) (8.9) %

Consolidated:

Revenues $ 693,952 $ 660,300 $ 33,652 5.1 % $ 37,906 $ 109,276 $ 731,858 $ 769,576 $ (37,718) (4.9) %

Property operating expenses (534,128) (520,614) $ 13,514 2.6 % (37,372) (106,292) (571,500) (626,906) $ (55,406) (8.8) %

NOI $ 159,824 $ 139,686 $ 20,138 14.4 % $ 534 $ 2,984 160,358 142,670 $ 17,688 12.4 %

Depreciation and amortization 125,456 134,591 $ (9,135) (6.8) %

General and administrative 33,371 20,177 $ 13,194 65.4 %

Acquisition and certain other transaction related costs 6,779 99 $ 6,680 n/m

Impairment of assets — 69,465 $ (69,465) (100.0) %

(Loss) gain on sale of real estate (1,836) 102,711 $ (104,547) (101.8) %

Gain on insurance recoveries — 7,522 $ (7,522) (100.0) %

Interest and other income 491 5,081 $ (4,590) (90.3) %

Interest expense (74,128) (108,757) $ 34,629 (31.8) %

Loss on modification or early extinguishment of debt — (29,197) $ 29,197 (100.0) %

Loss before income taxes and equity in net earnings of investees (80,721) (104,302) $ 23,581 (22.6) %

Income tax expense (1,919) (892) $ (1,027) 115.1 %

Equity in net earnings of investees 1,946 4,569 $ (2,623) (57.4) %

Net loss $ (80,694) $ (100,625) $ 19,931 (19.8) %

Weighted average common shares outstanding (basic and diluted) 240,722 240,045 677 0.3 %

Net loss per common share (basic and diluted) $ (0.34) $ (0.42) $ 0.08 (19.0) %

n/m - not meaningful

(1) Consists of properties owned, in service and reported in the same segment since January 1, 2025;

Properties are included in same property once stabilized for the full period in both comparison periods presented.

Residents fees and services.

Residents fees and services increased at our comparable properties primarily due to increases in occupancy and average monthly rate at our communities.

Residents fees and services decreased at our non-comparable properties primarily due to dispositions since January 1, 2025.

Property operating expenses.

Property operating expenses decreased at our non-comparable properties primarily due to dispositions since January 1, 2025.

Net operating income.

The change in NOI reflects the net changes in residents fees and services and property operating expenses described above.

Medical Office and Life Science Portfolio:

Rental income.

2 unchanged sentences

Property operating expenses.

The increase in property operating expenses at our comparable properties is primarily due to an increase in real estate taxes and other direct costs.

Property operating expenses increased at our comparable properties primarily due to increases in real estate taxes and cleaning expense, partially offset by a decrease in other direct costs at certain of our properties.

Property operating expenses decreased at our non-comparable properties primarily due to dispositions since January 1, 2025.

1 unchanged sentence

The change in NOI reflects the net changes in rental income and property operating expenses described above.

Comparable (1)

Non-Comparable Consolidated

Properties Results Properties Results Properties Results

Three Months Ended Three Months Ended Three Months Ended

March 31, March 31, March 31,

2026 2025 Change Change 2026 2025 2026 2025 Change Change

Rental income.

Property operating expenses (2)

(126) 59 185 n/m — — (126) 59 185 n/m

NOI $ 7,039 $ 7,179 $ (140) (2.0) % $ 186 $ 1,675 $ 7,225 $ 8,854 $ (1,629) (18.4) %

n/m - not meaningful

(1) Consists of properties that we have owned and which have been reported in the same segment and leased to the same operator continuously since January 1, 2025;

excludes properties classified as held for sale and planned dispositions, if any.

Properties are included in same property once stabilized for the full period in both comparison periods presented.

(2) For the three months March 31, 2025, we recognized a net credit of $59 related to tax refunds received during the period.

Rental income.

There have been no material changes in rental income at our comparable properties.

1 unchanged sentence

Property operating expenses.

Property operating expenses consist of real estate taxes, insurance and other expenses that are not paid directly by our tenants.

There have been no material changes in property operating expenses.

5 unchanged sentences

General and administrative expense .

General and administrative expense increased primarily due to $6,628 of estimated incentive management fees that we recognized for the three months ended March 31, 2026, compared to $2,407 for the three months ended March 31, 2025.

General and administrative expense increased primarily due to $ 16,621 of estimated incentive management fees that we recognized for the six months ended June 30, 2026, compared to $ 6,555 for the six months ended June 30, 2025.

These incentive management fees were recorded as a result of our total shareholder return exceeding the returns for the MSCI U.S.

REIT/Health Care REIT Index over the applicable measurement period.

General and administrative expense also increased due to higher business management fees as a result of an increase in average share price during the 2026 period.

Acquisition and certain other transaction related costs.

Acquisition and certain other transaction related costs primarily represent costs incurred with acquisitions and non-recurring transactions that we expensed under GAAP.

During the three months ended March 31, 2026, we incurred transition costs as a result of our transition of 116 communities to both new and existing third party managers.

During the six months ended June 30, 2026, we incurred transition costs as a result of our transition of 116 communities to both new and existing third party managers.

Impairment of assets.

For information about our asset impairment charges, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.

(Loss) gain on sale of real estate.

For information regarding (loss) gain on sale of real estate, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.

For information regarding (loss) gain on sale of real estate, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

Gain on insurance recoveries.

During the three months ended March 31, 2025, we recognized a gain on insurance recoveries related to cash received from our insurance provider in excess of our losses for a claim that was finalized.

For further information regarding this gain on insurance recoveries, see Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.

During the six months ended June 30, 2025, we recognized a gain on insurance recoveries related to cash received from our insurance provider in excess of our losses for a claim that was finalized.

For further information regarding this gain on insurance recoveries, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

Interest and other income.

The decrease in interest and other income is primarily due to lower average invested cash balances and interest rates during the three months ended March 31, 2026.

The decrease in interest and other income is primarily due to lower average invested cash balances and interest rates during the six months ended June 30, 2026 compared to the 2025 period.

Interest expense.

Interest expense decreased primarily due to a decrease in discount accretion for our then senior secured notes due 2026 due to the full redemption of the remaining balance of these notes during 2025.

During the three months ended March 31, 2025, we recognized discount accretion of $22,122 for our then outstanding senior secured notes due 2026.

During the six months ended June 30, 2025, we recognized discount accretion of $38,429 for our then outstanding senior secured notes due 2026.

Interest expense also decreased due to the redemption during 2025 of an aggregate $380,000 of our then remaining 9.75% senior unsecured notes due 2025.

These decreases were partially offset by the issuance of $375,000 in aggregate principal amount of our 7.25% senior secured notes due 2030 in September 2025 and four mortgage financings totaling $343,157 during 2025.

These decreases were partially offset by the issuance of $375,000 in aggregate principal amount of our 7.25% senior secured notes due 2030 in September 2025 and $343,157 of mortgage financings during 2025.

Loss on modification or early extinguishment of debt.

During the three months ended March 31, 2025, we recorded a loss on early extinguishment of debt in connection with the partial redemption of an aggregate $299,158 of our outstanding senior secured notes due 2026.

During the six months ended June 30, 2025, we recorded a loss on early extinguishment of debt in connection with the partial redemption of an aggregate $299,158 of our then outstanding senior secured notes due 2026 and with the redemption of all $380,000 of our remaining 9.75% senior unsecured notes due 2025.

Income tax expense .

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As of December 31, 2025, AlerisLife had ceased operations and was in the process of winding down its business.

We recognized no equity in net earnings of AlerisLife for the three months ended March 31, 2026.

We recognized no equity in net earnings of AlerisLife for the six months ended June 30, 2026.

For further information regarding our investment in AlerisLife, see Notes 3 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Non-GAAP Financial Measures (dollars in thousands, except per share amounts)

We present certain "non-GAAP financial measures" within the meaning of the applicable rules of the Securities and Exchange Commission, or the SEC, including funds from operations, or FFO, normalized funds from operations, or Normalized FFO, and NOI for the three months ended March 31, 2026 and 2025.

Non-GAAP Financial Measures (amounts in thousands, except per share data)

These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) as indicators of our operating performance or as measures of our liquidity.

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Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

Our calculations of FFO and Normalized FFO for the three months ended March 31, 2026 and 2025 and reconciliations of net income (loss), the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to FFO and Normalized FFO appear in the following table.

Our calculations of FFO and Normalized FFO for the three and six months ended June 30, 2026 and 2025 and reconciliations of net income (loss), the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to FFO and Normalized FFO appear in the following table.

This table also provides a comparison of distributions to shareholders, FFO and Normalized FFO and net income (loss) per share for these periods.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net loss $ (37,419) $ (91,639) $ (80,694) $ (100,625)

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Incentive management fees (1)

9,993 4,148 16,621 6,555

Acquisition and certain other transaction related costs (2)

3,086 75 6,779 99

Gain on insurance recoveries — — — (7,522)

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(2) Acquisition and certain other transaction related costs primarily represent costs incurred with acquisitions and non-recurring transactions that we expensed under GAAP.

During the three months ended March 31, 2026, we incurred transition costs as a result of our transition of 116 communities to both new and existing third party managers.

During the three and six months ended June 30, 2026, we incurred transition costs as a result of our transition of 116 communities to both new and existing third party managers.

Property Net Operating Income (NOI)

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The calculation of NOI by reportable segment is included above in this Item 2.

The following table includes the reconciliation of net income (loss) to NOI for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

The following table includes the reconciliation of net income (loss) to NOI for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net loss $ (37,419) $ (91,639) $ (80,694) $ (100,625)

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• our ability to receive rents from our tenants;

• our and our managers' abilities to control operating expenses and capital expenses at our properties, including increased operating expenses that we may incur in response to wage and commodity price inflation, limited labor availability and increased insurance costs;

• our managers' abilities to maintain or increase our returns from our managed senior living communities.

The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows:

Three Months Ended March 31,

Six Months Ended June 30,

Cash and cash equivalents and restricted cash at beginning of period $ 121,799 $ 149,854

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We receive residents fees and services revenues, net of expenses, from our managed senior living communities monthly, we generally receive minimum rents from tenants at our senior living communities, medical office and life science properties and triple net leased wellness centers monthly and we receive percentage rents from tenants at certain of our triple net leased senior living communities monthly, quarterly or annually.

The change in cash provided by (used in) operating activities for the three months ended March 31, 2026 compared to the prior period was primarily due to a reduction in interest paid during the 2026 period primarily due to accreted interest of $34,700 paid during the 2025 period as a result of the partial redemption of our then outstanding senior secured notes due 2026.

This increase was partially offset by the payment of a $17,905 incentive management fee pursuant to our business management agreement for the year ended December 31, 2025.

We paid this incentive management fee to RMR in January 2026.

The decrease in cash provided by operating activities for the six months ended June 30, 2026 compared to the prior period was primarily due to payment of a $17,905 incentive management fee pursuant to our business management agreement for the year ended December 31, 2025, which was paid to RMR in January 2026, as well as dispositions of medical office, life science and triple net leased senior living properties in 2025, costs associated with our transition of 116 communities to new and existing third party managers and lower interest income primarily due to lower average invested cash balances and interest rates.

These decreases were partially offset by a reduction in interest paid during the 2026 period primarily due to accreted interest of $34,700 paid during the 2025 period as a result of the partial redemption of our then outstanding senior secured notes due 2026 and higher cash flows at our SHOP communities.

Our Investing Liquidity and Resources

The decrease in cash provided by investing activities for the three months ended March 31, 2026 compared to the prior period was primarily due to a decrease in proceeds from the sale of real estate, partially offset by an increase in cash dividends paid to us by AlerisLife and our $5,800 of contributions made to the Seaport JV in the 2025 period.

The change in cash (used in) provided by investing activities for the six months ended June 30, 2026 compared to the prior period was primarily due to a decrease in proceeds from the sale of real estate and an increase in cash used in real estate acquisitions, partially offset by a decrease in real estate improvements, an increase in cash dividends paid to us by AlerisLife and $8,500 of contributions made to the Seaport JV in the 2025 period.

In connection with the wind-down of its business, on January 9, 2026, AlerisLife paid an aggregate cash dividend of $80,000 to its stockholders, and our pro rata share of this cash dividend was $27,200.

Capital Expenditures

As of March 31, 2026, we had estimated unspent leasing related obligations at our medical office and life science properties of approximately $11,123, of which we expect to spend approximately $8,811 during the next 12 months.

As of June 30, 2026, we had estimated unspent leasing related obligations at our medical office and life science properties of approximately $11,022, of which we expect to spend approximately $10,844 during the next 12 months.

We expect to fund these obligations using operating cash flows and cash on hand.

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For further information regarding our capital expenditures, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

During the three months ended March 31, 2026, we sold 13 properties for an aggregate sales price of $23,000, excluding closing costs.

During the six months ended June 30, 2026, we sold 13 properties for an aggregate sales price of $23,000, excluding closing costs.

For further information regarding our dispositions, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Our Financing Liquidity and Resources

The decrease in cash used in financing activities for the three months ended March 31, 2026 compared to the prior period was primarily due to the partial redemption of our then outstanding senior secured notes due 2026, partially offset by our incurrence of a $140,000 mortgage loan, in the 2025 period.

As of March 31, 2026, we had $121,774 of cash and cash equivalents.

The decrease in cash used in financing activities for the six months ended June 30, 2026 compared to the prior period was primarily due to the redemption of our then outstanding senior unsecured notes due 2025 and partial redemption of our then outstanding senior secured notes due 2026, partially offset by our execution of four mortgage financings for aggregate proceeds, excluding closing costs, of $343,157, all in the 2025 period.

As of June 30, 2026, we had $116,793 of cash and cash equivalents.

We typically use cash balances, net proceeds from offerings of securities, debt issuances or dispositions of assets and cash flows from our operations to fund our operations, debt repayments, distributions, acquisitions, investments, capital expenditures and other general business purposes.

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Our revolving credit facility matures in June 2029 and we have two six-month extension options for the maturity date of the facility, subject to satisfaction of certain conditions and payment of an extension fee.

Interest payable on borrowings under our revolving credit facility is based on daily SOFR plus a premium of 2.50% to 3.00%, depending on our net leverage ratio, as defined in our credit agreement, which was 2.50% as of March 31, 2026.

We also pay an unused commitment fee of 25 to 35 basis points per annum based on amounts outstanding under our revolving credit facility.

As of March 31, 2026, the annual interest rate payable on borrowings under our revolving credit facility was 6.28%.

As of March 31, 2026 and April 30, 2026, we had no borrowings under our revolving credit facility and $150,000 available for borrowings.

As of June 30, 2026, the annual interest rate payable on borrowings under our revolving credit facility was 6.28%.

As of June 30, 2026 and July 31, 2026, we had no borrowings under our revolving credit facility and $150,000 available for borrowings.

Distributions

During the three months ended March 31, 2026, we paid a quarterly cash distribution to our shareholders totaling approximately $2,421 using cash on hand.

On April 9, 2026, we declared a quarterly distribution to common shareholders of record on April 21, 2026 of $0.01 per share, or approximately $2,421.

We expect to pay this distribution on or about May 14, 2026 using cash on hand.

Our principal debt obligations at March 31, 2026 were:

During the six months ended June 30, 2026, we paid quarterly cash distributions to our shareholders totaling approximately $4,842 using cash on hand.

On July 9, 2026, we declared a quarterly distribution to common shareholders of record on July 20, 2026 of $0.01 per share, or approximately $2,421.

We expect to pay this distribution on or about August 13, 2026 using cash on hand.

Our principal debt obligations at June 30, 2026 were:

(1) $1,600,000 outstanding principal amount of senior unsecured notes;

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Our senior notes are governed by our senior notes indentures and their supplements.

Our credit agreement, our mortgage loan agreements and our senior notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default.

Our credit agreement, our mortgage loan agreements and our senior notes indentures and their supplements provide for acceleration of payment of all amounts

outstanding upon the occurrence and continuation of certain events of default.

Our credit agreement and our senior notes indentures and their supplements also contain covenants that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts and require us to maintain various financial ratios.

As of March 31, 2026, we believe we were in compliance with all of the covenants under our debt agreements.

Although we continue to take steps to enhance our ability to maintain sufficient liquidity, as noted elsewhere in this Quarterly Report on Form 10-Q, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from wage or commodity price inflation, high interest rates, geopolitical risks or other economic, market or industry conditions, including the delayed recovery of the senior housing industry, economic downturns or a possible recession, may cause increased pressure on our ability to satisfy financial and other covenants.

As of June 30, 2026, we believe we were in compliance with all of the covenants under our debt agreements.

Although we continue to take steps to enhance our ability to maintain sufficient liquidity, as noted elsewhere in this Quarterly Report on Form 10-Q, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from wage or commodity price inflation, high interest rates, geopolitical risks or other economic, market or industry conditions, including economic downturns or a possible recession, may cause increased pressure on our ability to satisfy financial and other covenants.

If our operating results and financial condition are significantly negatively impacted by economic conditions or otherwise, we may fail to satisfy our debt covenants and conditions.

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On February 3, 2021, we issued $500,000 of our 4.375% senior notes due 2031.

As of March 31, 2026, all $500,000 of our 4.375% senior notes due 2031 were fully and unconditionally guaranteed, on a joint, several and unsecured basis, by all of our subsidiaries except certain excluded subsidiaries.

As of June 30, 2026, all $500,000 of our 4.375% senior notes due 2031 were fully and unconditionally guaranteed, on a joint, several and unsecured basis, by all of our subsidiaries except certain excluded subsidiaries.

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

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The following tables present summarized financial information for guarantor entities and issuer, on a combined basis after eliminating (i) intercompany transactions and balances among the guarantor entities and (ii) equity in earnings from, and any investments in, any subsidiary that is a non-guarantor:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Real estate properties, net $ 2,437,728 $ 2,472,229

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Total liabilities $ 2,114,767 $ 2,136,376

Three Months Ended

March 31, 2026

Six Months Ended

June 30, 2026

Revenues $ 453,302

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Related Person Transactions

We have relationships and historical and continuing transactions with RMR, RMR Inc., AlerisLife (including Five Star) and others related to them.

We have relationships and historical and continuing transactions with RMR, RMR Inc., AlerisLife (including Five Star) prior to its wind-down and others related to them.

For further information about these and other such relationships and related person transactions, see Notes 4, 10 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our Annual Report, our definitive Proxy Statement for our 2026 Annual Meeting of Shareholders and our other filings with the SEC.

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Impact of Government Reimbursement

For the three months ended March 31, 2026, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and a small amount of our NOI was generated from properties where a majority of the revenues are derived from Medicare and Medicaid payments.

For the six months ended June 30, 2026, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and a small amount of our NOI was generated from properties where a majority of the revenues are derived from Medicare and Medicaid payments.

Nonetheless, we own, and our tenants, managers and operators operate, facilities in many states that participate in federal and state healthcare payment programs, including the federal Medicare and state Medicaid programs and other federal and state healthcare payment programs.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis