DIVERSIFIED HEALTHCARE TRUST 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk. (dollars in thousands, except per share data) We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives, including fixed rate debt, and employing derivative instruments, including interest rate caps, to limit our exposure to increasing interest rates. Other than as described below, we do not currently expect any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future. Floating Rate Debt As of June 30, 2026, our outstanding floating rate debt consisted of the following: Principal Annual Interest Annual Interest Maturity Interest Debt Balance Rate (1) Expense Date Payments Due Floating rate mortgage loan $ 140,000 6.15% $ 8,730 3/31/2028 Monthly Floating rate secured revolving credit facility — — — 6/11/2029 Monthly Total $ 140,000 $ 8,730 (1) The annual interest rate is the rate stated in the applicable contract, as adjusted by our interest rate cap, if applicable. Our $140,000 floating rate mortgage loan is subject to two one-year extension options and requires that interest be paid at one-month term SOFR plus a premium of 2.50%. We are vulnerable to changes in the U.S. dollar based on short term interest rates, specifically SOFR. In connection with this mortgage loan, to hedge our exposure to risks related to changes in SOFR and pursuant to the terms of the applicable loan agreement, we have purchased an interest rate cap with a one-month term SOFR strike rate equal to 4.50%. At June 30, 2026, we had no amounts outstanding under our revolving credit facility. No principal repayments are required under our revolving credit facility prior to maturity and repayments may be made and redrawn subject to conditions at any time without penalty. Borrowings under our revolving credit facility are in U.S. dollars and require interest to be paid at a rate of daily SOFR plus a premium. Accordingly, we are vulnerable to changes in the U.S. dollar based on short term interest rates, specifically SOFR. In addition, upon renewal or refinancing of these obligations, we are vulnerable to increases in interest rate premiums, including increases in the cost of replacement interest rate caps, due to market conditions and our perceived credit risk. The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at June 30, 2026, including the impact of our interest rate cap: Impact of an Increase in Interest Rates Total Interest Annual Earnings Interest Rate (1) Outstanding Debt Expense Per Year Per Share Impact (2) As of June 30, 2026 6.15% $ 140,000 $ 8,730 $ (0.04) One percentage point increase (3) 7.00% $ 140,000 $ 9,936 $ (0.04) (1) Based on one-month term SOFR plus a premium, which was 250 basis points per annum for our $140,000 floating rate mortgage loan, as of June 30, 2026. (2) Based on the diluted weighted average common shares outstanding for the six months ended June 30, 2026. (3) A one percentage point increase in interest rates would be capped at 7.00% for our $140,000 floating rate mortgage loan as a result of our 4.50% interest rate cap purchased for this debt. However, a one percentage point increase in the interest rate of our floating rate debt to 7.15% at June 30, 2026 would result in total floating rate interest expense per year of $10,149 and a decrease in annual earnings per share of $0.04. 38 Table of Contents The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at June 30, 2026 if we were fully drawn on our revolving credit facility: Impact of an Increase in Interest Rates Total Interest Annual Earnings Interest Rate (1) Outstanding Debt (2) Expense Per Year Per Share Impact (3) As of June 30, 2026 6.22% $ 290,000 $ 18,289 $ (0.08) One percentage point increase (4) 7.14% $ 290,000 $ 20,994 $ (0.09) (1) Based on the applicable SOFR plus a premium, which was 250 basis points per annum for both our revolving credit facility and our $140,000 floating rate mortgage loan as of June 30, 2026. Interest rate is weighted based on amounts outstanding. (2) Represents the maximum amount available under our revolving credit facility and our $140,000 floating rate mortgage loan. (3) Based on the diluted weighted average common shares outstanding for the six months ended June 30, 2026. (4) A one percentage point increase in interest rates would be capped at 7.00% for our $140,000 floating rate mortgage loan as a result of our 4.50% interest rate cap purchased for this debt. However, a one percentage point increase in the interest rate of our floating rate debt to 7.22% at June 30, 2026 would result in total floating rate interest expense per year of $21,229 and a decrease in annual earnings per share of $0.09. The foregoing tables show the impact of an immediate one percentage point change in floating interest rates, including the impact of our interest rate cap. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts of any floating rate debt we may incur and the impact, if any, of interest rate caps we may purchase. Generally, if interest rates were to change gradually over time, the impact would be spread over time. Fixed Rate Debt There have been no material changes to market interest rate risks associated with our fixed rate debt from those we previously disclosed in our Annual Report. For a discussion of market interest rate risks associated with our fixed rate debt, see "Quantitative and Qualitative Disclosures About Market Risk" included in Part II, Item 7A of our Annual Report.