DIVERSIFIED HEALTHCARE TRUST

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Diversified Healthcare Trust and its subsidiaries, or DHC, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, or our Annual Report.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and impairments of real estate and intangible assets.

We have been, are currently and expect in the future to be involved in claims, lawsuits and regulatory and other governmental audits, investigations and proceedings arising in the ordinary course of our business. While the outcome of any litigation is inherently uncertain, we do not believe any currently pending litigation or proceedings will have a material adverse effect on our financial condition, results of operations or cash flows.

Note 2. Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, or ASU No. 2024-03, which requires public entities to disclose specific expense categories such as employee compensation, depreciation and intangible asset amortization. These details must be presented in a tabular format in the notes to condensed consolidated financial statements for both interim and annual reporting periods. ASU No. 2024-03 is required to be applied prospectively but can be applied retrospectively, and is effective for the first annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact that ASU No. 2024-03 will have on our condensed consolidated financial statements.

Note 3. Real Estate and Other Investments

As of September 30, 2026, we owned 285 properties located in 33 states and Washington, D.C., and we owned an equity interest in each oftwo unconsolidated joint ventures that own medical office and life science properties located infive states.

Acquisitions:

In April 2026, we acquiredtwo land parcels located in Lexington, Kentucky previously subject to our finance leases pursuant to our exercise of a purchase option for an aggregate purchase price of $14,500, excluding closing costs.

Dispositions:

The table below represents the sale price, excluding closing costs, of our dispositions for the nine months ended September 30, 2026. We do not believe these sales represent a strategic shift in our business. As a result, the results of operations for these properties are included in continuing operations through the date of sale of such properties in our condensed consolidated statements of comprehensive income (loss).

During the nine months ended September 30, 2026, we recognized an additional loss on sale of real estate of $1,522 related to post-closing adjustments for dispositions completed in prior periods.

As of September 30, 2026, we hadtwo properties classified as held for sale in our condensed consolidated balance sheet as follows:

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.

Impairment:

We regularly evaluate our assets for indicators of impairment. Impairment indicators may include declining tenant or resident occupancy, weak or declining profitability from the property, decreasing tenant cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of an asset. If indicators of impairment are present, we evaluate the carrying value of the affected assets by comparing it to the expected future undiscounted cash flows to be generated from those assets. The future cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the asset to its estimated fair value.

During the nine months ended September 30, 2026, we recorded impairment charges of $14,543 to adjust the carrying value oftwo vacant medical office properties to their estimated fair values. These properties were classified as held for sale in our condensed consolidated balance sheet as of September 30, 2026.

Investments and Capital Expenditures:

The following is a summary of capital expenditures, development, redevelopment and other activities for the periods presented:

(1)Includes capital expenditures to improve tenants' space or amounts paid directly to tenants to improve their space and other leasing related costs, such as brokerage commissions and tenant inducements.

(2)Includes capital expenditures to replace obsolete building components that extend the useful life of existing assets or other improvements to increase the marketability of the property.

(3)Includes capital expenditures that reposition a property or result in change of use or new sources of revenue.

Equity Method Investments in Unconsolidated Joint Ventures:

We own a 10% equity interest in Seaport Innovation LLC, or the Seaport JV, an unconsolidated joint venture that ownsone life science property located in Boston, Massachusetts totaling 1,134,479 square feet.

We own a 20% equity interest in The LSMD Fund REIT LLC, or the LSMD JV, an unconsolidated joint venture that owns 10 medical office and life science properties located infive states totaling 1,068,763 square feet.

We account for the unconsolidated joint ventures as equity method investments under the fair value option. We recognized changes in the fair value of our investments in the unconsolidated joint ventures of $2,706 and $1,868 for the three months ended September 30, 2026 and 2025, respectively, and $4,652 and $5,660 for the nine months ended September 30, 2026 and 2025, respectively. These amounts are included in equity in net earnings of investees in our condensed consolidated statements of comprehensive income (loss).

See Note 7 for further information regarding the valuation of our investment in these joint ventures.

Equity Method Investment in AlerisLife:

As of September 30, 2026, we owned approximately 34% of the outstanding common shares of AlerisLife Inc., or AlerisLife. We did not control the activities that were most significant to AlerisLife and, as a result, we accounted for our non-controlling interest in AlerisLife using the equity method of accounting. As of December 31, 2025, AlerisLife had ceased operations and was in the process of winding down its business. As of September 30, 2026 and December 31, 2025, our investment in AlerisLife had a carrying value of $0 and $27,200, respectively.

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. Our pro rata share of this cash dividend was $27,200, thereby reducing the carrying value of our investment in AlerisLife to $0. We recognizedno income or loss from our former equity method investment in AlerisLife for the three or nine months ended September 30, 2026. We recognized income of $3,215 and $3,992 for the three and nine months ended September 30, 2025, respectively, which is included in equity in net earnings of investees in our condensed consolidated statements of comprehensive income (loss). See Note 11 for more information regarding our former equity method investment in AlerisLife.

Note 4. Senior Living Community Management Agreements

Our managed senior living communities are operated by third parties pursuant to management agreements. Between September and December 2025, we transitioned the management of 116 of our senior living communities previously managed by Five Star Senior Living, or Five Star, which was an operating division of AlerisLife, toseven different third party managers in connection with AlerisLife’s sale of all of its assets and the wind-down of its business. As of December 31, 2025, we completed the transition of the management agreements for all senior living communities previously managed by Five Star to these managers. In December 2025, we and Five Star terminated our amended and restated master management agreement, or the Master Management Agreement, as part of the wind-down of AlerisLife’s business. We lease to our taxable REIT subsidiaries, or TRSs, nearly all of our senior living communities managed by third party managers.

We incurred management fees payable to Five Star of $0 and $10,877 for the three months ended September 30, 2026 and 2025, respectively, and $0 and $33,251 for the nine months ended September 30, 2026 and 2025, respectively. For the three months ended September 30, 2026 and 2025, $0 and $10,446, respectively, of the total management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $0 and $431, respectively, were capitalized in our condensed consolidated balance sheets. For the nine months ended September 30, 2026 and 2025, $0 and $31,721, respectively, of the total management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $0 and $1,530, respectively, were capitalized in our condensed consolidated balance sheets. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

Our Senior Living Communities Managers. As of September 30, 2026 and 2025, our managers managed 199 and 229, respectively, of our senior living communities, including closed communities.

In September 2026, we provided notice to terminate our management agreements with Oaks Senior Living, LLC and Oaks-CaraVita Senior Care, LLC and expect to transition management ofsix communities with 486 units to a new manager as early as in the fourth quarter of 2026. The terms of the management agreement for these communities are generally consistent with the terms of the existing management agreements with our other third party managers. We expect to incur transition costs related to the transition of these communities, including termination and other fees.

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.

We incurred management fees payable to our managers, other than Five Star, of $18,173 and $6,812 for the three months ended September 30, 2026 and 2025, respectively, and $54,141 and $19,116 for the nine months ended September 30, 2026 and 2025, respectively. Additionally, we incurred incentive management fees payable to certain of our managers of $123 and $351 for the nine months ended September 30, 2026 and 2025, respectively. These amounts are included in property operating expenses in our condensed consolidated statements of comprehensive income (loss).

The following table presents residents fees and services revenues from all of our managed senior living communities disaggregated by the type of contract and payer:

(1)Beginning with the three and nine months ended September 30, 2026, we revised our methodology for disaggregating residents fees and services revenues. Basic housing and support services revenues include private pay basic housing and other support services revenues from our independent living, active adult, assisted living and memory care communities. Skilled nursing facility private pay and other third party payer services revenues include private pay and other third party payer revenues, excluding Medicare and Medicaid, from our skilled nursing facilities, which generally provide extensive nursing and healthcare services. Prior period amounts have been recast to conform to the current period presentation. This change had no impact on Medicare and Medicaid programs revenues or total residents fees and services revenues.

The following table provides a summary of our managers that manage a large concentration of our senior living communities as of September 30, 2026:

(1)Includes closed senior living communities, if any.

Note 5. Leases

We are a lessor of medical office and life science properties, senior living communities and other healthcare related properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the premises demised under the leases; therefore, we have determined to evaluate our leases as lease arrangements.

Our leases provide for base rent payments and, in addition, may include variable payments. Rental income from operating leases, including any payments derived by index or market based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term.

We (decreased) increased rental income to record revenue on a straight line basis by $(105) and $450 for the three months ended September 30, 2026 and 2025, respectively, and $(252) and $759 for the nine months ended September 30, 2026 and 2025, respectively. Rents receivable, excluding receivables related to our properties classified as held for sale, if any, include $61,912 and $62,163 of straight line rent receivables at September 30, 2026 and December 31, 2025, respectively, and are included in other assets, net in our condensed consolidated balance sheets.

We do not include in our measurement of our lease receivables certain variable payments, including changes in the index or market based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $8,406 and $10,098 for the three months ended September 30, 2026 and 2025, respectively, of which tenant reimbursements totaled $8,360 and $10,064, respectively, and $26,705 and $30,748 for the nine months ended September 30, 2026 and 2025, respectively, of which tenant reimbursements totaled $26,570 and $30,255, respectively.

Right of Use Asset and Lease Liability: For leases where we are the lessee, we recognize a right of use asset and a lease liability equal to the present value of the minimum lease payments, with rental payments being applied to the lease liability and the right of use asset being amortized over the term of the lease. The values of the right of use assets and related liabilities representing our future obligation under the respective lease arrangements for which we are the lessee were $13,797 and $14,171, respectively, as of September 30, 2026, and $16,537 and $16,921, respectively, as of December 31, 2025. The right of use assets and related lease liabilities are included within other assets, net and other liabilities, respectively, within our condensed consolidated balance sheets. In addition, we lease equipment at certain of our managed senior living communities. These equipment leases are short term in nature, are cancelable with no fee or do not result in an annual expense in excess of our capitalization policy and, as a result, are not recorded on our condensed consolidated balance sheets.

Note 6. Indebtedness

As of September 30, 2026 and December 31, 2025, our outstanding indebtedness consisted of the following:

Senior Unsecured Notes:

As of September 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 the notes and related guarantees are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes. Our remaining $1,100,000 of senior unsecured notes do not have the benefit of any guarantees as of September 30, 2026.

Secured and Other Debt:

(1)The principal balances are the amounts stated in the contracts. In accordance with GAAP, our carrying values and recorded interest expense may be different because of market conditions at the time we assumed certain of these debts.

(2)Interest rates are as of September 30, 2026, and reflect the impact of interest rate caps, if any.

(3)These notes are fully and unconditionally guaranteed, on a joint, several and senior secured basis by certain of our subsidiaries that own 36 properties, or the 2030 Collateral Guarantors, and on a joint, several and unsecured basis, by all of our subsidiaries other than the 2030 Collateral Guarantors and certain excluded subsidiaries. These notes and the guarantees provided by the 2030 Collateral Guarantors are secured by a first-priority lien on and security interest in 100% of the equity interests in each of the 2030 Collateral Guarantors. The unsecured guarantees related to these notes are effectively subordinated to all of the subsidiary guarantors' secured indebtedness to the extent of the value of the applicable collateral, and the notes and related guarantees are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.

(4)This mortgage loan requires that interest be paid at an annual rate of one-month term secured overnight financing rate, or SOFR, plus a premium of 2.50%, with interest-only payments through April 2027, and we havetwo six-month extension options for the interest-only period, subject to satisfaction of certain conditions. In connection with this mortgage loan, we have purchased an interest rate cap effective through March 2027 with a one-month term SOFR strike rate equal to 4.50% pursuant to the terms of the applicable loan agreement. We havetwo one-year extension options for the maturity date of this mortgage, subject to satisfaction of certain conditions and payment of an extension fee.

(5)These mortgage loans require interest-only payments through May 2030.

(6)These mortgage loans require interest-only payments through June 2028.

(7)In April 2026, we acquired the land parcels attwo senior living communities previously subject to our finance leases pursuant to our exercise of a purchase option for an aggregate purchase price of $14,500, excluding closing costs.

(8)Excludes unamortized debt issuance costs for our revolving credit facility as these costs are included in other assets, net in our condensed consolidated balance sheets.

Our revolving credit facility is available for general business purposes, including acquisitions. We can borrow, repay and reborrow funds available under our revolving credit facility, and no principal repayments are due, until maturity. Availability of borrowings under the agreement governing our revolving credit facility, or our credit agreement, is subject to satisfying certain financial covenants and other credit facility conditions. Our revolving credit facility matures in June 2029 and we havetwo 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 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 hadno borrowings under our revolving credit facility and $150,000 available for borrowings.

Interest on our senior unsecured notes and our 7.25% senior secured notes due 2030 is payable either semi-annually or quarterly in arrears; however, no principal repayments are due until maturity. Our mortgage loan maturing in June 2034 requires monthly interest payments and no principal payment is due until maturity, while our mortgage loans maturing in March 2028, May 2035 and June 2035 require monthly interest payments and no principal payment is due for a specified amount of time. Our mortgage loans maturing in June 2030 and July 2043 require monthly principal and interest payments.

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. Borrowings under our revolving credit facility are subject to satisfying certain financial covenants and other credit facility conditions. We believe we were in compliance with the terms and conditions of our debt agreements as of September 30, 2026.

Required principal payments due in the next five years and thereafter, excluding extension options, on all of our outstanding debt as of September 30, 2026, were as follows:

Note 7. Fair Value of Assets and Liabilities

The table below presents certain of our assets that are measured at fair value as of September 30, 2026 and December 31, 2025, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

(1)The fair values of our interest rate cap derivatives are based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date.

(2)The assumptions we made in the fair value analysis are based on the location, type and nature of each property, and current and anticipated market conditions.

(3)We have assets in our condensed consolidated balance sheets that are measured at fair value on a nonrecurring basis. During the three months ended September 30, 2026, we recorded impairment charges of $14,543 to adjust the carrying value oftwo vacant medical office properties classified as held for sale to their estimated aggregate sales price, less estimated costs to sell, of $31,540 based on negotiated sales prices with third party buyers. See Note 3 for further information regarding impairment charges and the properties we have classified as held for sale.

The discount rates, exit capitalization rates and holding periods used to determine the fair value of our investments in the unconsolidated joint ventures' significant unobservable inputs are shown in the table below:

The table below presents a summary of the changes in fair value for our investments in the unconsolidated joint ventures:

In addition to the assets described in the tables above, our financial instruments at September 30, 2026 and December 31, 2025 included cash and cash equivalents, restricted cash, certain other assets, our revolving credit facility, senior unsecured notes, senior secured notes, secured debt and finance leases and certain other unsecured obligations and liabilities. The fair values of these financial instruments approximated their carrying values in our condensed consolidated financial statements as of such dates, except as follows:

(1)Includes unamortized net discounts, premiums and debt issuance costs, if any.

The fair values of ourtwo issuances of senior unsecured notes due 2042 and 2046 are based on the closing price on The Nasdaq Stock Market LLC, or Nasdaq, as of September 30, 2026 and December 31, 2025 (Level 1 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair values of ourtwo issuances of senior unsecured notes due 2028 and 2031 and our issuance of senior secured notes due 2030 using an average of the bid and ask price on Nasdaq on or about September 30, 2026 and December 31, 2025 (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair values of our secured debts by using discounted cash flows analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.

Note 8. Shareholders' Equity

Common Share Awards:

On June 10, 2026, in accordance with our Trustee compensation arrangements, we awarded to each of ourseven Trustees 12,401 of our common shares, valued at $8.87 per share, the closing price of our common shares on Nasdaq on that day.

On September 10, 2026, we awarded to our officers and certain other employees of The RMR Group LLC, or RMR, under our equity compensation plan an aggregate of 682,321 of our common shares, valued at $7.54 per share, the closing price of our common shares on Nasdaq on that day.

We include the aggregate value of these awards in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).

Common Share Purchases:

During the three and nine months ended September 30, 2026, we purchased an aggregate of 308,140 and 326,619 of our common shares, respectively, valued at a weighted average share price of $8.32 and $8.27, respectively, from our officers and certain other current and former employees of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of prior awards of our common shares. We withheld and purchased these common shares at their fair market values based upon the trading prices of our common shares at the close of trading on Nasdaq on the applicable purchase dates.

Distributions:

During the nine months ended September 30, 2026, we declared and paid quarterly distributions to common shareholders as follows:

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.

Note 9. Segment Reporting

Our operating segments are based on our internal reporting structure and property type and are aligned with how our Chief Operating Decision Maker, or the CODM, reviews the operating results to allocate resources and assess segment performance. The CODM is our President and Chief Executive Officer. Ourtwo reportable segments are Senior Housing Operating Portfolio, or SHOP, and Medical Office and Life Science Portfolio. Our SHOP segment consists of managed senior living communities that provide short term and long term residential living and, in some instances, care and other services for residents where we pay fees to managers to operate the communities on our behalf. Our Medical Office and Life Science Portfolio segment primarily consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties primarily leased to biotech laboratories and other similar tenants. The significant expense categories and amounts presented below align with the segment-level information that is regularly provided to our CODM. The CODM reviews operating and financial results, including net income (loss) and its components, to assess performance, allocate resources and guide strategic decisions. For further information regarding the accounting policies of our reportable segments, see Note 2 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.

The tables below present information about our segments:

(1)Revenue and net income from our triple net leased wellness centers and senior living communities that are leased to third party operators, which we do not consider to be sufficiently material to constitute a separate reportable segment.

(2)Other operating expenses for each reportable segment include expenses such as management fees, repairs and maintenance, cleaning and other costs incurred in connection with the operation of our properties.

(3)Other segment items for each reportable segment include impairment of assets, gain (loss) on sale of real estate, gain (loss) on modification or early extinguishment of debt, equity in net earnings (losses) of investees, interest income and other expenses and gain on insurance recoveries, as applicable.

(1)Revenue and net income from our triple net leased wellness centers and senior living communities that are leased to third party operators, which we do not consider to be sufficiently material to constitute a separate reportable segment.

(2)Other operating expenses for each reportable segment include expenses such as management fees, repairs and maintenance, cleaning and other costs incurred in connection with the operation of our properties.

(3)Other segment items for each reportable segment include impairment of assets, gain (loss) on sale of real estate, gain (loss) on modification or early extinguishment of debt, equity in net earnings (losses) of investees, interest income and other expenses and gain on insurance recoveries, as applicable.

(1)See Note 3 for further information regarding additions to long-lived assets.

Note 10. Business and Property Management Agreements with RMR

We haveno employees. The personnel and various services we require to operate our business are provided to us by RMR. We havetwo agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to the property level operations of many of our properties, including our medical office and life science properties, and major renovation or repositioning activities at our senior living communities that we may request RMR to manage from time to time. See Note 11 for further information regarding our relationship, agreements and transactions with RMR.

Business Management Agreement with RMR. Pursuant to our business management agreement and in accordance with GAAP, we accrued estimated incentive management fees during the three and nine months ended September 30, 2026 and 2025. The actual amount of incentive management fees incurred for 2026, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2026, and will be payable to RMR in January 2027. We incurred 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.

Expense Reimbursement. We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR's employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR's employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR's centralized accounting personnel, our share of RMR's costs for providing our internal audit function or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR.

For the three and nine months ended September 30, 2026 and 2025, the business management fees, incentive management fees, property management fees and construction supervision fees and expense reimbursements recognized in our condensed consolidated financial statements were as follows:

(1)The net business management fees we recognized reflect a reduction of $744 for each of the three months ended September 30, 2026 and 2025, and $2,232 for each of the nine months ended September 30, 2026 and 2025, for the amortization of the liability we recorded in connection with our former investment in The RMR Group Inc., or RMR Inc., as further described in Note 11.

(2)The net property management and construction supervision fees we recognized reflect a reduction of $199 for each of the three months ended September 30, 2026 and 2025, and $597 for each of the nine months ended September 30, 2026 and 2025, for the amortization of the liability we recorded in connection with our former investment in RMR Inc., as further described in Note 11.

(3)Amounts capitalized as building improvements are depreciated over the estimated useful lives of the related capital assets.

Management Agreements between our Joint Ventures and RMR. We havetwo separate joint venture arrangements with third party institutional investors, the Seaport JV and the LSMD JV. RMR provides management services to both of these joint ventures. Our joint ventures are not our consolidated subsidiaries and, as a result, we are not obligated to pay management fees to RMR under our management agreements with RMR for the services it provides regarding the joint ventures.

Note 11. Related Person Transactions

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, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc., an officer and employee of RMR and the sole director of AlerisLife. Christopher J. Bilotto, our other Managing Trustee and President and Chief Executive Officer, is also an executive of RMR Inc., Matthew C. Brown, our Chief Financial Officer and Treasurer, is also an executive vice president and the chief financial officer and treasurer of RMR Inc. and an officer of ABP Trust, and each of our officers is also an officer and employee of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Mr. Portnoy serves as a trustee of these public companies and as chair of the boards of certain of these public companies. Other officers of RMR, including Mr. Bilotto, Mr. Brown and certain of our officers, serve as managing trustees or officers of certain of these companies. In addition, officers of RMR and RMR Inc. serve as our officers and officers of other companies to which RMR or its subsidiaries provide management services. As of September 30, 2026, ABP Trust and Mr. Portnoy owned 9.8% of our outstanding common shares.

AlerisLife. As of September 30, 2026, we owned approximately 34% of the outstanding AlerisLife common shares and ABP Trust owned the remaining outstanding common shares of AlerisLife. As of December 31, 2025, we completed the transition of the management agreements for all of the senior living communities previously managed by Five Star to third party managers and terminated the Master Management Agreement with Five Star.

On February 14, 2025 and July 15, 2025, AlerisLife paid aggregate cash dividends of $50,000 and $10,000, respectively, to its stockholders, and our pro rata share of these cash dividends was $17,000 and $3,400, respectively. 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.

See Note 4 for further information regarding our relationships, agreements and transactions with AlerisLife (including Five Star) and Note 3 for further information regarding our investment in AlerisLife.

Our Joint Ventures. In connection with our entering into the LSMD JV in January 2022, we paid mortgage escrow amounts and closing costs that were payable by that joint venture. The remaining costs totaled $1,220 as of September 30, 2026 and are included in other assets, net, in our condensed consolidated balance sheet. In October 2026, the LSMD JV reimbursed us for these costs in full. RMR provides management services to each of the Seaport JV and the LSMD JV. See Note 10 for further information regarding those management agreements with RMR.

Our Manager, RMR. We havetwo agreements with RMR to provide management services to us. See Note 10 for further information regarding our management agreements with RMR.

Leases with RMR. We lease office space to RMR in certain of our properties for RMR’s property management offices. We recognized rental income from RMR for leased office space of $72 and $102 for the three months ended September 30, 2026 and 2025, respectively, and $245 and $311 for the nine months ended September 30, 2026 and 2025, respectively.

For further information about these and other such relationships and certain other related person transactions, see our Annual Report.

Note 12. Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

We are exposed to certain risks relating to our ongoing business operations, including the impact of changes in interest rates. The only risk currently managed by us using derivative instruments is our interest rate risk. As required under the applicable loan agreement, we have an interest rate cap agreement to manage our interest rate risk exposure on our $140,000 floating rate mortgage loan secured by 14 senior living communities with interest payable at a rate equal to one-month term SOFR plus a premium of 2.50%. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which we or our related parties may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

Our interest rate cap agreement is designated as a cash flow hedge of interest rate risk and is measured on a recurring basis at fair value. The following table summarizes the terms of our outstanding interest rate cap agreement as of September 30, 2026 and December 31, 2025:

Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in cumulative other comprehensive income (loss) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election. The earnings recognition of excluded components is presented in interest expense. Amounts reported in cumulative other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made, if any, on our applicable debt.

The following table summarizes the activity related to our cash flow hedges within cumulative other comprehensive income (loss) for the periods shown:

See Notes 6 and 7 for further information regarding the debt our interest rate cap is related to and the fair value of our interest rate cap.

Note 13. Income Taxes

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We do, however, lease our managed senior living communities to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated federal corporate income tax return and are subject to federal and state income taxes. Our consolidated income tax provision includes the income tax provision related to the operations of our TRSs and certain state income taxes we incur despite our taxation as a REIT. Our current income tax expense (or benefit) fluctuates from period to period based primarily on the timing of our income, including gains on the disposition of properties or losses in a particular quarter. For the three months ended September 30, 2026 and 2025, we recognized income tax expense of $724 and $337, respectively, and for the nine months ended September 30, 2026 and 2025, we recognized income tax expense of $2,643 and $1,229, respectively.

Note 14. Weighted Average Common Shares

We calculate basic earnings per common share using the two class method. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share.