DIVERSIFIED HEALTHCARE TRUST
For the period ended Sep 30, 2026. Filed Nov 2, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 2, 2026
DHCNL$19.92-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-03.
0001075415-26-000030
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-02.
0001075415-26-000039
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 144 previous paragraphs and 150 current paragraphs.
98 unchanged; 42 reworded; 8 added; 4 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
(3)Triple net leased senior living communities include, beginning in October 2026, seven skilled nursing facilities with 807 units that were formerly under management agreements and transitioned to a triple net lease. These seven communities had NOI of $1,341 and $4,420 during the three and nine months ended September 30, 2026, respectively.
Current report
(2)Includes one tenant at a life science property that is expected to vacate such property, with annualized rental income of $2,193 and leased square feet of 75,920.
Current report
On October 1, 2026, we transitioned seven skilled nursing facilities with 807 units from management agreements with Stellar Senior Living LLC and entered into a 15-year triple net lease with operating subsidiaries of The Ensign Group, Inc. The initial annual rent is $8,000 and the lease provides annual rent increases based on the Consumer Price Index. Annualized rental income under this lease is not yet included in the table above as the lease start date was October 1, 2026.
Current report
Beginning with the three and nine months ended September 30, 2026, we revised our calculation of Normalized FFO to include estimated incentive management fees in the periods in which they are recognized as expense in accordance with GAAP. Previously, our calculation excluded incentive management fees. Normalized FFO for the three and nine months ended September 30, 2025 has been recast to conform to the current presentation. This revision has no effect on our condensed consolidated financial statements.
Current report
(2)Normalized FFO includes estimated incentive management fees recognized of $5,374 and $5,676 for the three months ended September 30, 2026 and 2025, respectively, and $21,995 and $12,231 for the nine months ended September 30, 2026 and 2025, respectively. These estimated incentive management fees recognized had a per share impact of $0.02 for both the three months ended September 30, 2026 and 2025, and $0.09 and $0.05 for the nine months ended September 30, 2026 and 2025, respectively.
Current report
As of November 2, 2026, we had a property under agreement to sell for a sales price of $10,500, excluding closing costs. We may not complete the sales of any or all of the properties we currently plan to sell. Also, we may sell some or all of these properties at amounts that are less than currently expected and/or less than the carrying values of such properties, and we may incur losses on any such sales as a result.
Current report
Credit Rating
Current report
In October 2026, S&P Global, or S&P, upgraded our senior unsecured notes rating from B- to B, and affirmed our issuer credit rating of B-, our 7.25% senior secured notes due 2030 rating of B+ and our 4.375% senior notes due 2031 rating of B+. S&P also updated our ratings outlook to positive.
Removed paragraphs (4)
Previous report
(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.
Previous report
n/m - not meaningful
Previous report
(1)Incentive management fees are estimated and accrued during the applicable measurement period. Actual incentive management fees are calculated based on common share total return, as defined in our business management agreement, for the three year period ending December 31 of the applicable calendar year, and are included in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss) and are payable to RMR in January of the following calendar year. In calculating net income (loss) in accordance with GAAP, we recognize estimated incentive management fees expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income (loss), we do not include these amounts in the calculation of Normalized FFO until the fourth quarter, when the amount of the incentive management fees expense for the calendar year, if any, is determined.
Previous report
For further information regarding our outstanding debt, see Note 6 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Reworded paragraphs (42)
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 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.
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 September 30, 2026, we owned 285 properties located in 33 states and Washington, D.C. As of September 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 13.4 years.
Previous wording
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:
Current wording
The following tables present key operating metrics of our portfolio as of and for the three and nine months ended September 30, 2026 and 2025:
Previous wording
(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.
Current wording
(1)Consists of properties owned, in service and reported in the same segment since July 1, 2025 for the three months ended September 30, 2026, and January 1, 2025 for the nine months ended September 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.
Previous 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:
Current wording
During the three and nine months ended September 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
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:
Current wording
The following table summarizes the results of operations of each of our segments for the three and nine months ended September 30, 2026 and 2025:
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 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.
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 management fees as a result of higher revenues and marketing expense, partially offset by decreases in maintenance and repair expense, dietary expense, insurance costs and other direct costs. Property operating expenses decreased at our non-comparable properties primarily due to dispositions since July 1, 2025.
Previous wording
Rental income. Rental income increased at our comparable properties primarily due to increases from our net leasing activity and property operating expense reimbursements at certain of our properties. Rental income decreased at our non-comparable properties primarily due to dispositions since January 1, 2025.
Current wording
Rental income. Rental income increased at our comparable properties primarily due to a $1,523 termination fee paid by a former tenant, partially offset by vacancies at certain of our properties. Rental income decreased at our non-comparable properties primarily due to dispositions since July 1, 2025 and vacancies at certain of our properties.
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 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.
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 decrease in property operating expenses at our comparable properties is primarily due to decreases in utility expenses, partially offset by increases in other direct costs at certain of our properties. Property operating expenses decreased at our non-comparable properties primarily due to dispositions since July 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 $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.
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 higher business management fees as a result of an increase in our average share price during the 2026 period and higher equity compensation expense.
Previous wording
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.
Current wording
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 September 30, 2026 and 2025, we incurred transition costs as a result of our transition of senior living communities to both new and existing third party managers.
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 six months ended June 30, 2026 compared to the 2025 period.
Current wording
Interest income and other expenses. The change in interest income and other expenses was primarily due to certain expenses recognized in the 2025 period, partially offset by lower average invested cash balances and interest rates during the three months ended September 30, 2026 compared to the 2025 period.
Previous 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 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.
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 three months ended September 30, 2025, we recognized discount accretion of $16,313 for our then outstanding senior secured notes due 2026. This decrease was partially offset by the issuance of $375,000 in aggregate principal amount of our 7.25% senior secured notes due 2030 in September 2025.
Previous 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.
Current wording
Loss on modification or early extinguishment of debt. During the three months ended September 30, 2025, we recorded a loss on early extinguishment of debt in connection with the partial redemption of our then outstanding senior secured notes due 2026.
Previous wording
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 (amounts in thousands, except per share data):
Current wording
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025 (amounts in thousands, except per share data):
Previous wording
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. 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.”
Current wording
Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the nine months ended September 30, 2026 to the nine months ended September 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.”
Previous wording
Property operating expenses. 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 expense and dietary expense. 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 increased at our comparable properties primarily due to increases in management fees as a result of higher revenues, labor costs, marketing expense 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 January 1, 2025.
Previous wording
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.
Current wording
Rental income. Rental income increased at our comparable properties primarily due to a $1,846 increase in termination fees paid by former tenants and increases from our net leasing activity at certain of our properties. Rental income decreased at our non-comparable properties primarily due to dispositions since January 1, 2025 and vacancies at certain of our properties.
Previous wording
General and administrative expense. 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.
Current wording
General and administrative expense. General and administrative expense increased primarily due to $21,995 of estimated incentive management fees that we recognized for the nine months ended September 30, 2026, compared to $12,231 for the nine months ended September 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 our average share price during the 2026 period.
Previous wording
Acquisition and certain other transaction related costs. 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.
Current wording
Acquisition and certain other transaction related costs. During the nine months ended September 30, 2026 and 2025, we incurred transition costs as a result of our transition of senior living communities to both new and existing third party managers.
Previous wording
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.
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 September 30, 2025.
Previous 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.
Current wording
Gain on insurance recoveries. During the nine months ended September 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 September 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 June 30, 2026 compared to the 2025 period.
Current wording
Interest income and other expenses. The decrease in interest income and other expenses is primarily due to lower average invested cash balances and interest rates during the nine months ended September 30, 2026 compared to the 2025 period, partially offset by certain expenses recognized in the 2025 period.
Previous 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.
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 nine months ended September 30, 2025, we recognized discount accretion of $54,742 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
Loss on modification or early extinguishment of debt. 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.
Current wording
Loss on modification or early extinguishment of debt. During the nine months ended September 30, 2025, we recorded a loss on early extinguishment of debt in connection with the partial redemption of an aggregate $606,164 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.
Previous wording
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 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.
Current wording
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 nine months ended September 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.
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 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.
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 nine months ended September 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
We calculate FFO and Normalized FFO as shown below. FFO is calculated on the basis defined by the National Association of Real Estate Investment Trusts, which is net income (loss), calculated in accordance with GAAP, excluding any gain or loss on sale of real estate, equity in net earnings or losses of investees, loss on impairment of real estate assets, gains or losses on equity securities, net, if any, and including adjustments to reflect our proportionate share of FFO of our unconsolidated joint venture properties and prior to the wind-down of AlerisLife’s business, our proportionate share of FFO of our former equity method investment, plus real estate depreciation and amortization of consolidated properties, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the items shown below including similar adjustments for our unconsolidated joint ventures and incentive management fees, if any. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in the agreements governing our debt, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.
Current wording
We calculate FFO and Normalized FFO as shown below. FFO is calculated on the basis defined by the National Association of Real Estate Investment Trusts, which is net income (loss), calculated in accordance with GAAP, excluding any gain or loss on sale of real estate, equity in net earnings or losses of investees, loss on impairment of real estate assets, gains or losses on equity securities, net, if any, and including adjustments to reflect our proportionate share of FFO of our unconsolidated joint venture properties and prior to the wind-down of AlerisLife’s business, our proportionate share of FFO of our former equity method investment, plus real estate depreciation and amortization of consolidated properties, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the items shown below including adjustments for such items related to our unconsolidated joint ventures, if any.
Previous 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.
Current wording
Our calculations of FFO and Normalized FFO for the three and nine months ended September 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 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.
Current wording
(1)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 nine months ended September 30, 2026 and 2025, we incurred transition costs as a result of our transition of senior living 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 and six months ended June 30, 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 nine months ended September 30, 2026 and 2025:
Previous 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.
Current wording
The increase in cash provided by operating activities for the nine months ended September 30, 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 $86,992 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. These increases were partially offset by 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 both new and existing third party managers and lower interest income primarily due to lower average invested cash balances and interest rates.
Previous 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.
Current wording
The change in cash (used in) provided by investing activities for the nine months ended September 30, 2026 compared tothe prior periodwas primarily due to a decrease in proceeds from the sale of real estate, a $28,000 cash distribution paid to us by the Seaport JV in the 2025 period 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 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.
Current wording
As of September 30, 2026, we had estimated unspent leasing related obligations at our medical office and life science properties of approximately $11,010, all of which are expected to be spent during the next 12 months. We expect to fund these obligations using operating cash flows and cash on hand.
Previous wording
During the six months ended June 30, 2026, we sold 13 properties for an aggregate sales price of $23,000, excluding closing costs.
Current wording
During the nine months ended September 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 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.
Current wording
The decrease in cash used in financing activities for the nine months ended September 30, 2026 compared to the prior period was primarily due to the partial redemption of our then outstanding senior secured notes due 2026 and redemption of our then outstanding senior unsecured notes due 2025, partially offset by our issuance of $375,000 in aggregate principal amount of our 7.25% senior secured notes due 2030 and our execution of four mortgage financings for aggregate proceeds, excluding closing costs, of $343,157, all in the 2025 period.
Previous 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.
Current wording
As of September 30, 2026, we had $110,659 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
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 June 30, 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 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.
Current wording
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 September 30, 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 September 30, 2026, the annual interest rate payable on borrowings under our revolving credit facility was 6.50%. As of September 30, 2026 and October 30, 2026, we had no borrowings under our revolving credit facility and $150,000 available for borrowings.
Previous 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.
Current wording
During the nine months ended September 30, 2026, we paid quarterly cash distributions to our shareholders totaling approximately $7,263 using cash on hand. On October 8, 2026, we declared a quarterly distribution to common shareholders of record on October 19, 2026 of $0.01 per share, or approximately $2,425. We expect to pay this distribution on or about November 12, 2026 using cash on hand.
Previous 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.
Current wording
Our principal debt obligations at September 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) $326,401 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.
Previous wording
Our senior notes indentures and their supplements do not contain provisions for acceleration which could be triggered by our debt ratings. See "—Our Financing Liquidity and Resources" above for information regarding recent changes to our issuer credit rating and senior debt ratings.
Current wording
Our senior notes indentures and their supplements do not contain provisions for acceleration which could be triggered by our debt ratings. See "—Our Financing Liquidity and Resources" below for information regarding recent changes to our issuer credit rating and senior debt ratings.
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Current report — wording carried from elsewhere
FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in the agreements governing our debt, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.
Current report — wording carried from elsewhere
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.