DIVERSIFIED HEALTHCARE TRUST

Previous wording

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.

Current wording

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 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.

Previous wording

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):

Current wording

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

Previous wording

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):

Current wording

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:

Previous wording

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

Current wording

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

Previous wording

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):

Current wording

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:

Previous wording

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

Current wording

(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.

Previous wording

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

Current wording

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:

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

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 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.

Previous wording

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 an increase in real estate taxes and other direct costs. Property operating expenses decreased at our non-comparable properties primarily due to dispositions since January 1, 2025.

Current wording

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.

Previous wording

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 $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. 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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

(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.

Current wording

(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 our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

Previous wording

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.

Current wording

Gain on insurance recoveries. 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.

Previous wording

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. 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.

Current wording

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 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 $343,157 of mortgage financings during 2025.

Previous wording

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. 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. These measures should be considered in conjunction with net income (loss) as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss). We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties.

Current wording

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 and six months ended June 30, 2026 and 2025. 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. These measures should be considered in conjunction with net income (loss) as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss). We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties.

Previous wording

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

Current wording

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.

Previous wording

(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.

Current wording

(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 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.

Previous wording

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:

Current wording

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 and six months ended June 30, 2026 and 2025:

Previous wording

•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; and

Current wording

•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 and limited labor availability; and

Previous wording

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.

Current wording

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.

Previous wording

The decrease in cash provided by investing activities for the three months ended March 31, 2026 compared tothe prior periodwas 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.

Current wording

The change in cash (used in) provided by investing activities for the six months ended June 30, 2026 compared tothe prior periodwas 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.

Previous wording

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

Current wording

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.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

Our principal debt obligations at March 31, 2026 were: (1) $1,600,000 outstanding principal amount of senior unsecured notes; (2) $375,000 outstanding principal amount of senior secured notes secured by 36 properties; (3) $327,774 aggregate principal amount of fixed rate mortgage notes secured by 22 properties; and (4) $140,000 principal amount floating rate mortgage loan secured by 14 properties. For further information regarding our indebtedness, see Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

Our principal debt obligations at June 30, 2026 were: (1) $1,600,000 outstanding principal amount of senior unsecured notes; (2) $375,000 outstanding principal amount of senior secured notes secured by 36 properties; (3) $327,190 aggregate principal amount of fixed rate mortgage notes secured by 22 properties; and (4) $140,000 principal amount floating rate mortgage loan secured by 14 properties. For further information regarding our indebtedness, see Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

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 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. 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.

Current wording

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 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 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.

Previous wording

We have relationships and historical and continuing transactions with RMR, RMR Inc., AlerisLife (including Five Star) 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. In addition, see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.

Current wording

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. In addition, see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services.

Previous wording

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. 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. Also, some of our medical office and life science property tenants participate in federal Medicare and state Medicaid programs and other government healthcare payment programs.

Current wording

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. Also, some of our medical office and life science property tenants participate in federal Medicare and state Medicaid programs and other government healthcare payment programs.