Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2022
OR
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-15319
SENIOR HOUSING PROPERTIESDIVERSIFIED HEALTHCARE TRUST
(Exact Name of Registrant as Specified in Its Charter)
Maryland04-3445278
(State or Other Jurisdiction of Incorporation or

Organization)
(IRS Employer Identification No.)
Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634
(Address of Principal Executive Offices) (Zip Code)
617-796-8350617 - 796 - 8350
(Registrant’sRegistrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title Of Each ClassTrading Symbol(s)Name Of Each Exchange On Which Registered
Common Shares of Beneficial InterestDHCThe Nasdaq Stock Market LLC
5.625% Senior Notes due 2042DHCNIThe Nasdaq Stock Market LLC
6.25% Senior Notes due 2046DHCNLThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Large accelerated filer ☒Accelerated filer ☐
Non—accelerated filer ☐Smaller reporting company ☐
(Do not check if a smaller reporting company)
Emerging growth company ☐☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒
Number of registrant’sregistrant's common shares outstanding as of November 8, 2017: 237,630,409April 29, 2022:238,988,296


SENIOR HOUSING PROPERTIES
Table of Contents
DIVERSIFIED HEALTHCARE TRUST
FORM 10-Q
 
September 30, 2017March 31, 2022
 
INDEX
Page
1
1
2
3
34
46
1918
4635
4836
4937
5341
5442
5442
5442
Other Information
54
Item 6. 
5542
5744
 
References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Senior Housing PropertiesDiversified Healthcare Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.




Table of Contents
PART I. Financial Information
 
Item 1.  Financial Statements.
 
SENIOR HOUSING PROPERTIESDIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amountsdollars in thousands, except share data)
(unaudited)
 March 31,December 31,
 20222021
Assets  
Real estate properties:  
Land$652,302 $741,501 
Buildings and improvements5,760,881 6,072,055 
Total real estate properties, gross6,413,183 6,813,556 
Accumulated depreciation(1,689,680)(1,737,807)
Total real estate properties, net4,723,503 5,075,749 
Investments in unconsolidated joint ventures266,741 215,127 
Cash and cash equivalents732,058 634,848 
Restricted cash759,938 382,097 
Acquired real estate leases and other intangible assets, net40,231 48,746 
Other assets, net252,908 266,947 
Total assets$6,775,379 $6,623,514 
Liabilities and Shareholders' Equity  
Revolving credit facility$700,000 $800,000 
Senior unsecured notes, net2,808,467 2,806,811 
Secured debt and finance leases, net68,731 69,713 
Accrued interest45,579 29,845 
Assumed real estate lease obligations, net1,384 2,556 
Other liabilities250,485 252,199 
Total liabilities3,874,646 3,961,124 
Commitments and contingencies00
Shareholders' equity:  
Common shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 238,988,296 and 238,994,894 shares issued and outstanding, respectively2,390 2,390 
Additional paid in capital4,615,785 4,615,475 
Cumulative net income2,328,047 2,087,624 
Cumulative distributions(4,045,489)(4,043,099)
Total shareholders' equity2,900,733 2,662,390 
Total liabilities and shareholders' equity$6,775,379 $6,623,514 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
  September 30, December 31,
  2017 2016
ASSETS  
  
Real estate properties:  
  
Land $814,137
 $803,773
Buildings and improvements 7,023,311
 6,926,750
  7,837,448
 7,730,523
Accumulated depreciation (1,475,360) (1,328,011)
  6,362,088
 6,402,512
     
Cash and cash equivalents 28,870
 31,749
Restricted cash 14,088
 3,829
Acquired real estate leases and other intangible assets, net 463,802
 514,446
Other assets, net 318,893
 275,218
Total assets $7,187,741
 $7,227,754
     
LIABILITIES AND EQUITY  
  
Unsecured revolving credit facility $471,000
 $327,000
Unsecured term loans, net 547,253
 547,058
Senior unsecured notes, net 1,724,936
 1,722,758
Secured debt and capital leases, net 815,500
 1,117,649
Accrued interest 32,185
 18,471
Assumed real estate lease obligations, net 98,498
 106,038
Other liabilities 210,814
 189,375
Total liabilities 3,900,186
 4,028,349
     
Commitments and contingencies 

 

     
Equity:  
  
Equity attributable to common shareholders:    
Common shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 237,630,409 and 237,544,479 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 2,376
 2,375
Additional paid in capital 4,609,029
 4,533,456
Cumulative net income 1,701,495
 1,618,885
Cumulative other comprehensive income 66,310
 34,549
Cumulative distributions (3,267,792) (2,989,860)
Total equity attributable to common shareholders 3,111,418
 3,199,405
Noncontrolling interest:    
Total equity attributable to noncontrolling interest 176,137
 —
Total equity 3,287,555
 3,199,405
Total liabilities and equity $7,187,741
 $7,227,754
Table of Contents
See accompanying notes.

SENIOR HOUSING PROPERTIESDIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
(unaudited)
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
Revenues:  
  
  
  
Rental income $168,348
 $165,503
 $501,437
 $490,922
Residents fees and services 98,331
 98,480
 294,816
 292,803
Total revenues 266,679
 263,983
 796,253
 783,725
         
Expenses:  
  
  
  
Property operating expenses 104,714
 103,347
 308,565
 298,776
Depreciation and amortization 66,619
 72,344
 209,463
 214,938
General and administrative 19,883
 12,107
 57,889
 34,931
Acquisition and certain other transaction related costs —
 824
 292
 1,443
Impairment of assets —
 4,578
 5,082
 16,930
Total expenses 191,216
 193,200
 581,291
 567,018
         
Operating income 75,463
 70,783
 214,962
 216,707
         
Dividend income 659
 659
 1,978
 1,449
Interest and other income 128
 89
 323
 330
Interest expense (40,105) (43,438) (124,394) (123,837)
Loss on early extinguishment of debt (274) (84) (7,627) (90)
Income from continuing operations before income tax expense and equity in earnings of an investee 35,871
 28,009
 85,242
 94,559
Income tax expense (109) (119) (300) (318)
Equity in earnings of an investee 31
 13
 533
 107
Income before gain on sale of properties 35,793
 27,903
 85,475
 94,348
Gain on sale of properties —
 —
 —
 4,061
Net income 35,793
 27,903
 85,475
 98,409
Net income attributable to noncontrolling interest (1,379) —
 (2,865) —
Net income attributable to common shareholders $34,414
 $27,903
 $82,610
 $98,409
         
Other comprehensive income:  
  
  
  
Unrealized gain on investments in available for sale securities 7,333
 16,562
 26,383
 56,680
Amounts reclassified from cumulative other comprehensive income to net income —
 —
 5,082
 —
Equity in unrealized gain of an investee 116
 80
 296
 175
Other comprehensive income 7,449
 16,642
 31,761
 56,855
Comprehensive income 43,242
 44,545
 117,236
 155,264
Comprehensive income attributable to noncontrolling interest (1,379) —
 (2,865) —
Comprehensive income attributable to common shareholders $41,863
 $44,545
 $114,371
 $155,264
         
Weighted average common shares outstanding (basic) 237,421
 237,347
 237,404
 237,329
Weighted average common shares outstanding (diluted) 237,460
 237,396
 237,445
 237,369
         
Per common share amounts (basic and diluted):  
  
  
  
Net income attributable to common shareholders $0.14
 $0.12
 $0.35
 $0.41
 Three Months Ended March 31,
 20222021
Revenues:  
Rental income$65,285 $102,758 
Residents fees and services245,448 259,966 
Total revenues310,733 362,724 
Expenses:  
Property operating expenses268,742 287,391 
Depreciation and amortization57,259 66,153 
General and administrative7,285 7,542 
Acquisition and certain other transaction related costs928 — 
Impairment of assets— (174)
Total expenses334,214 360,912 
Gain (loss) on sale of properties327,794 (122)
Losses on equity securities, net(8,553)(8,339)
Interest and other income395 2,835 
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $2,472 and $2,812, respectively)(57,131)(60,091)
Loss on modification or early extinguishment of debt(483)(2,040)
Income (loss) from continuing operations before income tax expense and equity in earnings of investees238,541 (65,945)
Income tax expense(1,472)(238)
Equity in earnings of investees3,354 — 
Net income (loss)240,423 (66,183)
Net income attributable to noncontrolling interest— (1,322)
Net income (loss) attributable to common shareholders$240,423 $(67,505)
Weighted average common shares outstanding (basic)238,149 237,834 
Weighted average common shares outstanding (diluted)238,198 237,834 
Per common share amounts (basic and diluted):  
Net income (loss) attributable to common shareholders$1.01 $(0.28)
 
SeeThe accompanying notes.notes are an integral part of these unaudited condensed consolidated financial statements.

2
SENIOR HOUSING PROPERTIES
Table of Contents
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
(unaudited)
Number of
Shares		Common
Shares		Additional
Paid In
Capital		Cumulative
Net Income		Cumulative DistributionsTotal Equity Attributable to Common ShareholdersTotal Equity Attributable to Noncontrolling
Interest		Total Equity
Balance at December 31, 2021:238,994,894 $2,390 $4,615,475 $2,087,624 $(4,043,099)$2,662,390 $— $2,662,390 
Net income— — — 240,423 — 240,423 — 240,423 
Distributions— — — — (2,390)(2,390)— (2,390)
Share grants— — 318 — — 318 — 318 
Share repurchases(1,698)— (5)— — (5)— (5)
Share forfeitures(4,900)— (3)— — (3)— (3)
Balance at March 31, 2022:238,988,296 $2,390 $4,615,785 $2,328,047 $(4,045,489)$2,900,733 $— $2,900,733 
Balance at December 31, 2020:238,268,478 $2,383 $4,613,904 $1,913,109 $(4,033,559)$2,495,837 $123,385 $2,619,222 
Net (loss) income— — — (67,505)— (67,505)1,322 (66,183)
Distributions— — — — (2,383)(2,383)— (2,383)
Share grants— — 228 — — 228 — 228 
Distributions to noncontrolling interest— — — — — — (5,694)(5,694)
Balance at March 31, 2021:238,268,478 $2,383 $4,614,132 $1,845,604 $(4,035,942)$2,426,177 $119,013 $2,545,190 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Table of Contents
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amountsdollars in thousands)
(unaudited)
 Three Months Ended March 31,
 20222021
Cash flows from operating activities:  
Net income (loss)$240,423 $(66,183)
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:  
Depreciation and amortization57,259 66,153 
Net amortization of debt premiums, discounts and issuance costs2,472 2,812 
Straight line rental income(1,745)(804)
Amortization of acquired real estate leases105 (1,866)
Loss on modification or early extinguishment of debt483 2,040 
Impairment of assets— (174)
(Gain) loss on sale of properties(327,794)122 
Losses on equity securities, net8,553 8,339 
Other non-cash adjustments, net(628)(715)
Unconsolidated joint venture distributions2,720 — 
Equity in earnings of investees(3,354)— 
Change in assets and liabilities:  
Deferred leasing costs, net(2,568)(3,309)
Other assets21,326 (20,533)
Accrued interest15,734 29,035 
Other liabilities(20,250)19,905 
Net cash (used in) provided by operating activities(7,264)34,822 
Cash flows from investing activities:  
Real estate improvements(55,791)(44,005)
Proceeds from sale of properties, net252 8,702 
Proceeds from sale of properties to joint venture, net643,892 — 
Net cash provided by (used in) investing activities588,353 (35,303)
Cash flows from financing activities:  
Proceeds from issuance of senior unsecured notes, net— 492,500 
Proceeds from borrowings on revolving credit facility— 800,000 
Repayments of borrowings on revolving credit facility(100,000)— 
Repayment of term loan— (200,000)
Repayment of other debt(838)(779)
Payment of debt issuance costs(2,805)(4,007)
Repurchase of common shares(5)— 
Distributions to noncontrolling interest— (5,694)
Distributions to shareholders(2,390)(2,383)
Net cash (used in) provided by financing activities(106,038)1,079,637 
Increase in cash and cash equivalents and restricted cash475,051 1,079,156 
Cash and cash equivalents and restricted cash at beginning of period1,016,945 90,849 
Cash and cash equivalents and restricted cash at end of period$1,491,996 $1,170,005 
  Nine Months Ended
  September 30,
  2017 2016
Cash flows from operating activities:  
  
Net income $85,475
 $98,409
Adjustments to reconcile net income to cash provided by operating activities:  
  
Depreciation and amortization 209,463
 214,938
Amortization of debt issuance costs and debt discounts and premiums 4,050
 4,272
Straight line rental income (10,485) (13,598)
Amortization of acquired real estate leases and other intangible assets (3,963) (3,795)
Loss on early extinguishment of debt 7,627
 90
Impairment of assets 5,082
 16,930
Gain on sale of properties —
 (4,061)
Other non-cash adjustments (2,829) (2,828)
Equity in earnings of an investee (533) (107)
Change in assets and liabilities:  
  
Restricted cash (10,259) (170)
Other assets (390) 2,990
Accrued interest 13,714
 16,156
Other liabilities 27,438
 13,170
Net cash provided by operating activities 324,390
 342,396
     
Cash flows from investing activities:  
  
Real estate acquisitions and deposits (34,227) (188,523)
Real estate improvements (89,710) (72,455)
Proceeds from sale of properties —
 29,179
Net cash used for investing activities (123,937) (231,799)
     
Cash flows from financing activities:  
  
Proceeds from issuance of senior unsecured notes —
 250,000
Proceeds from borrowings on revolving credit facility 572,000
 505,000
Proceeds from issuance of secured debt —
 620,000
Repayments of borrowings on revolving credit facility (428,000) (1,065,000)
Repayment of other debt (303,964) (127,202)
Loss on early extinguishment of debt settled in cash (5,485) —
Payment of debt issuance costs (6,836) (12,016)
Repurchase of common shares (341) (416)
Proceeds from noncontrolling interest, net 255,813
 —
Distributions to noncontrolling interest (8,587) —
Distributions to shareholders (277,932) (277,846)
Net cash used for financing activities (203,332) (107,480)
     
(Decrease) increase in cash and cash equivalents (2,879) 3,117
Cash and cash equivalents at beginning of period 31,749
 37,656
Cash and cash equivalents at end of period $28,870
 $40,773
     
Supplemental cash flows information:  
  
Interest paid $106,629
 $103,409
Income taxes paid $441
 $363


SeeThe accompanying notes.

notes are an integral part of these unaudited condensed consolidated financial statements.
3
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Table of Contents
SENIOR HOUSING PROPERTIESDIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Supplemental cash flow information:  
Interest paid$38,925 $29,071 
Income taxes paid$50 $— 
Non-cash investing activities:
Decrease in assets resulting from the deconsolidation of investments that were previously consolidated:
   Real estate, net$(355,669)$— 
Real estate improvements accrued, not paid$20,645 $18,513 
Capitalized interest$— $827 
Supplemental disclosure of cash and cash equivalents and restricted cash:
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within our condensed consolidated balance sheets to the amount shown in our condensed consolidated statements of cash flows:
As of March 31,
20222021
Cash and cash equivalents$732,058 $843,237 
Restricted cash (1)
759,938 326,768 
Total cash and cash equivalents and restricted cash shown in our condensed consolidated statements of cash flows$1,491,996 $1,170,005 
(1) As of March 31, 2022, restricted cash consists of proceeds from the sale of joint venture interests and proceeds from the sale of properties to joint ventures held as collateral pursuant to the agreement governing our revolving credit facility, or our credit agreement. We may use these funds to pay for approved expenditures in accordance with our credit agreement. Restricted cash also consists of amounts escrowed for real estate taxes, insurance and capital expenditures at certain of our mortgaged properties. Prior to the deconsolidation of the joint venture that owns a life science property located in Boston, Massachusetts, or our Boston life science property joint venture, restricted cash also consisted of cash held for the operations of this joint venture. As of March 31, 2021, restricted cash also included amounts we used to redeem all $300,000 of our then outstanding 6.75% senior notes due 2021 in June 2021, when these notes became redeemable with no prepayment premium.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


5
Table of Contents
DIVERSIFIED HEALTHCARE TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

Note 1.  Basis of Presentation
The accompanying condensed consolidated financial statements of Senior Housing PropertiesDiversified Healthcare Trust and its subsidiaries, or 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, 2016,2021, or our Annual Report.

In the opinion of our management, all adjustments which include only(consisting of normal recurring adjustments,accruals) considered necessary for a fair presentationstatement 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 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 impairmentimpairments of real estate and intangible assets.

In March 2017, we entered a joint venture with a sovereign investor for oneWe 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 properties leasedbusiness, some of which may involve material amounts. Also, the defense and resolution of these claims, lawsuits, and regulatory and other governmental audits, investigations and proceedings may require us to medical providers, medical related business, clinicsincur significant expense. We account for claims and biotech laboratory tenants, or a MOB (two buildings), locatedlitigation losses in Boston, Massachusetts. We have determined that this joint venture is a variable interest entity, or VIE, as defined under the Consolidation Topic ofaccordance with the Financial Accounting Standards Board or FASB, Accounting Standards Codification Topic 450, Contingencies, or ASC. We concluded that we must consolidate this VIE becauseASC 450. Under ASC 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the entity with the power to direct the activities that most significantly impact the VIE’s economic performance and we have the obligation to absorb losses of, and the right to receive benefits from, the VIE thatestimated minimum loss amount, which could be significant tozero, is recorded; and then, as information becomes known, the VIE, and therefore are the primary beneficiary of the VIE. The assets of this VIE were $1,112,959minimum loss amount is updated, as of September 30, 2017 and consist primarily of the net real estate owned by the joint venture. The liabilities of this VIE were $721,769 as of September 30, 2017 and consist primarily of the mortgage debts on the property. The sovereign investor's interestappropriate. A minimum or best estimate amount may be increased or decreased when events result in this consolidated entity is reflected as noncontrolling interest in our condensed consolidated financial statements. See Note 7 for further information about this joint venture.a changed expectation.


Note 2.  Recent Accounting PronouncementsReal Estate Investments
As of March 31, 2022, we wholly owned 378 properties located in 36 states and Washington, D.C. and we owned a 20% equity interest in each of 2 unconsolidated joint ventures that own medical office and life science properties located in 5 states with an aggregate of approximately 2.2 million rentable square feet that were 98% leased with an average (by annualized rental income) remaining lease term of 6.6 years.
On January 1, 2017,Joint Venture Activities:
As of March 31, 2022, we adopted FASB Accounting Standards Update, or ASU, No. 2017-01, Clarifying the Definition of a Business. This update provides additional guidance on evaluating whether a transaction should be accounted forhad equity investments in joint ventures as an acquisition (or disposal) of assets or of a business. This update defines three requirements for a set of assets and activities (collectively referred to as a “set”) to be considered a business: inputs, processes and outputs. As a result of the implementation of this update, certain property acquisitions, which under previous guidance were accounted for as business combinations, are now accounted for as acquisitions of assets. In an acquisition of assets, certain acquisition costs are capitalized as opposed to expensed under previous guidance.follows:

On January 1, 2017, we adopted FASB ASU No. 2016-09, Compensation - Stock Compensation, which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The adoption of ASU No. 2016-09 did not have a material impact in our condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In August 2015, the FASB provided for a one-year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. A substantial portion of our revenue consists of rental income from leasing arrangements, including leases with residents at properties leased to our taxable REIT subsidiaries, or TRSs, which is specifically excluded from ASU No. 2014-09. We are continuing to evaluate ASU No. 2014-09 (and related clarifying guidance issued by the FASB); however, we do

Joint VentureDHC OwnershipDHC Carrying Value of Investment at March 31, 2022Number of PropertiesLocationSquare Feet
Seaport Innovation LLC20%$216,416 1MA1,134,479 
The LSMD Fund REIT LLC20%50,325 10CA, MA, NY, TX, WA1,068,763 
$266,741 112,203,242 
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

The following table provides a summary of the mortgage debts of these joint ventures:
Joint VentureCoupon RateMaturity Date
Principal Balance at March 31, 2022 (1)
Mortgage Notes Payable (secured by one property in Massachusetts) (2)
3.53%8/6/2026$620,000 
Mortgage Notes Payable (secured by nine properties in five states)3.46%2/11/2032189,800 
Mortgage Notes Payable (secured by one property in California) (3)
2.20%2/9/2024266,825 
3.19%$1,076,625 
(1)Amounts are not expect its adoption to have a significant impact onadjusted for our minority equity interest.
(2)Following the amount or timingdeconsolidation in December 2021 of the net assets of our revenue recognitionBoston life science property joint venture, we no longer include this $620,000 of secured debt financing in our condensed consolidated financial statements. We currently expectbalance sheet; however, we continue to adoptprovide certain guaranties on this debt.
(3)The maturity date of February 9, 2024 is subject to 3, one year extension options and requires interest to be paid at SOFR plus a premium of 1.90%. The interest rate is as of March 31, 2022. This joint venture has also purchased an interest rate cap through February 2024 with a SOFR strike rate equal to 4.00%.

In December 2021, we sold an additional 35% equity interest from our then remaining 55% equity interest in our Boston life science property joint venture to another third party institutional investor for $373,847, which includes certain costs associated with the standardformation of this joint venture. Effective as of the date of the sale, we deconsolidated this joint venture and we now account for this joint venture using the modified retrospective approach.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurementequity method of Financial Assets and Financial Liabilities, which changes howentities measure certain equity investments and present changes in the fair value of financial liabilities measuredaccounting under the fair value optionoption. Prior to the deconsolidation of the net assets of this joint venture, the joint venture investor's interest in this consolidated entity was reflected as noncontrolling interest in our consolidated financial statements. After giving effect to the sale, we continue to own a 20% equity interest in this joint venture. Our investment amount was based on a property valuation of $1,700,000, less $620,000 of existing mortgage debts on the property that are attributable to their own credit. This update is effectivethis joint venture assumed. See Note 5 for interimmore information regarding the use of the equity method for this joint venture.
In January 2022, we entered into a joint venture with 2 unrelated third party institutional investors for 10 medical office and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair valuelife science properties we owned, or our 10 medical office and life science properties joint venture, for aggregate proceeds, before closing costs and other adjustments, of approximately $653,300. We deconsolidated the net assets of these investments are recorded through otherproperties and recognized a net gain on sale of $327,542 related to this transaction, which is included in gain on sale of properties in our consolidated statements of comprehensive income. ASU No. 2016-01 states thatincome (loss). The investors acquired a 41% and 39% equity interest in the joint venture and we retained a 20% equity interest in the joint venture. Effective as of the date of the sale, we deconsolidated these changes will be recorded through earnings. We are continuing to evaluateproperties and we now account for this guidance, but we expectjoint venture using the implementationequity method of this guidance will affect how changes inaccounting under the fair value option. The investment amounts are based upon a property valuation of available for sale securities we hold are presented in our condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation anddisclosureapproximately $702,500, less approximately $456,600 of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as eitherfinance or operating leases basedsecured debt on the principle of whether or notproperties incurred by this joint venture. See Note 5 for more information regarding the lease is effectively a financed purchaseuse of the leased asset by the lessee. This classificationwill determine whether the lease expense is recognized based on an effective interestequity method for this joint venture.
Acquisitions and Dispositions:
We did not acquire or on a straight line basis over the termdispose of the lease. A lessee is alsorequired to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a termof 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using anapproach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective forreporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No.2016-02 will have in our condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The guidance is not expected to have a material impact in our condensed consolidated financial statements and related disclosures.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which clarifies how companies should present restricted cash and restricted cash equivalents. Companies will show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon the adoption of ASU No. 2016-18, we will reconcile both cash and cash equivalents and restricted cash and restricted cash equivalents, whereas under the current guidance we explain the changesany properties during the period for cash and cash equivalents only.three months ended March 31, 2022.

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, which clarifies which changes to the terms or conditions of a share based payment award are subject to the guidance on modification accounting under ASC 718. Entities would apply the modification accounting guidance unless the value, vesting requirements and classification of a share based payment award are the same immediately before and after a change to the terms or conditions of the award. ASU No. 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are continuing to evaluate ASU No. 2017-09; however, we do not expect its adoption to have a material impact in our condensed consolidated financial statements.




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

Note 3.  Real Estate Properties
At September 30, 2017, we owned 435 properties (461 buildings) located in 42 states and Washington, D.C.

Acquisitions:
MOBs:
In January 2017, we acquired one MOB (one building) located in Kansas with approximately 117,000 square feet for a purchase price of approximately $15,106, including closing costs of $35.

In July 2017, we acquired one MOB (one building) located in Maryland with approximately 59,000 square feet for a purchase price of approximately $16,601, including closing costs of $383.

Impairment:
We funded these asset acquisitions using cash on hand and borrowings under our revolving credit facility. The allocations of the purchase prices for these acquisitions are as follows:
Date Location Number of Properties Number of Buildings Square Feet  (000’s) 
Cash Paid plus Assumed Debt (1)
 Land Building and Improvements 
Acquired Real Estate Leases (2)
1/17/2017 Kansas 1 1 117
 $15,106
 $1,522
 $7,246
 $6,338
7/12/2017 Maryland 1 1 59
 16,601
 6,138
 6,526
 3,937
    2 2 176
 $31,707
 $7,660
 $13,772
 $10,275
(1)Amount includes the cash we paid and various closing settlement adjustments, as well as closing costs.
(2)The weighted average amortization periods for acquired real estate leases at the time of these acquisitions was 7.8 years.
In October 2017, we acquired two MOBs (two buildings) located in Minnesota and North Carolina with a total of approximately 255,000 square feet for an aggregate purchase price of approximately $38,650, excluding closing costs.    

In August and October 2017, we entered agreements to acquire two MOBs (two buildings) located in California and Kansas with a total of approximately 302,000 square feet for an aggregate purchase price of approximately $71,100, excluding closing costs. These acquisitions are subject to conditions; accordingly, we may not acquire these properties, these acquisitions may be delayed or the terms may change.

In November 2017, we entered a transaction agreement with Five Star Senior Living Inc., or Five Star, pursuant to which we agreed to acquire six senior living communities from Five Star. The aggregate purchase price for these six senior living communities is approximately $104,000, including our assumption of $33,696 of mortgage debt securing certain of these senior living communities with a weighted average annual interest rate of 6.2% and excluding closing costs. The closings of these acquisitions are expected to occur as third party approvals are received between now and the end of the first quarter of 2018. These acquisitions are subject to conditions; accordingly, we may not acquire these senior living communities, these acquisitions may be delayed or the terms may change. See Note 10 for further information regarding this transaction.

Impairment and Held for Sale:
We periodicallyregularly evaluate our assets for impairments.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 assetassets by comparing it to the expected future undiscounted net cash flows to be generated from that asset.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 net cash flows is less than the carrying value, we reduce the net carrying value of the asset to its estimated fair value.

Note 3.  Leases
We did not record any impairment charges forare a lessor of medical office and life science properties, senior living communities and other healthcare related properties. Our leases provide our real estate properties duringtenants with the nine months ended September 30, 2017. See Note 4 for further information regarding other than temporary impairment losses recorded in 2017 oncontractual right to use and economically benefit from all of the premises demised under the leases; therefore, we have determined to evaluate our investments in available for sale securities.



leases as lease arrangements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

Certain of 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.
Note 4.  Investments in AvailableWe increased rental income to record revenue on a straight line basis by $1,745 and $804 for Sale Securities
At September 30, 2017, we owned 2,637,408 shares of class A common stock of The RMR Group Inc., or RMR Inc. We classify these sharesthe three months ended March 31, 2022 and 2021, respectively. Rents receivable, excluding receivables related to our properties classified as availableheld for sale, securitiesif any, include $69,192 and carry them$82,131 of straight line rent receivables at fair valueMarch 31, 2022 and December 31, 2021, respectively, and are included in other assets, net in our condensed consolidated balance sheets, with unrealized gainssheets.
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 losses reported asother income until the specific events that trigger the variable payments have occurred. Such payments totaled $10,708 and $18,228 for the three months ended March 31, 2022 and 2021, respectively, of which tenant reimbursements totaled $10,663 and $18,180, respectively.
Right of Use Asset and Lease Liability. For leases where we are the lessee, we recognized a componentright of shareholders’ equity. Our historical cost basis for these shares is $69,826. At September 30, 2017, our investment in RMR Inc. haduse asset and a fairlease liability equal to the present value of $135,431, resulting in a cumulative unrealized gainthe minimum lease payments with rental payments being applied to the lease liability and the right of $65,605 based on RMR Inc.’s quoted share price onuse asset being amortized over the term of the lease. The Nasdaq Stock Market LLC, orvalues of the Nasdaq, at September 30, 2017 ($51.35 per share).

At September 30, 2017,right of use asset and related liability representing our future obligation under the lease arrangement for which we owned 4,235,000 common sharesare the lessee were $28,740 and $29,074, respectively, as of Five Star. We classify these sharesMarch 31, 2022, and $4,153 and $4,352, respectively, as available for sale securitiesof December 31, 2021. The right of use asset and carry them at fair value in related lease liability are included within other assets, innet and other liabilities, respectively, within our condensed consolidated balance sheets,sheets. In addition, we lease equipment at certain of our managed senior living communities. These leases are short term in nature, are cancelable with unrealized gainsno fee or do not result in an annual expense in excess of our capitalization policy and, losses reported as a component of shareholders’ equity. In performing our periodic evaluation of other than temporary impairmentresult, are not recorded on our investment in Five Star for the second quarter of 2017, we determined that, based upon the length of time and the extent to which the market value of our Five Star investment was below the carrying value of our Five Star investment, the decline in fair value should be deemed to be other than temporary at June 30, 2017. Accordingly, we recorded a loss on impairment of $5,082 to reduce the carrying value of our Five Star investment to its estimated fair value during the second quarter of 2017. We determined the fair value using the closing price of Five Star's common shares on the Nasdaq on June 30, 2017 ($1.50 per share). At September 30, 2017, our Five Star investment had an adjusted cost basis of $6,353 and a fair value of $6,564, resulting in a cumulative unrealized gain of $211 based on Five Star's per share market price at September 30, 2017 ($1.55 per share).condensed consolidated balance sheets.

See Notes 6 and 12 for further information regarding our investments in available for sale securities.

Note 5.4.  Indebtedness
Our principal debt obligations, excluding any debt obligations of our joint ventures, at September 30, 2017March 31, 2022 were: (1) outstanding borrowings under our $1,000,000 unsecured$700,000 revolving credit facility; (2) six public issuances$2,850,000 outstanding principal amount of senior unsecured notes, including: (a) $400,000 principal amount at an annual interest rate of 3.25% due 2019, (b) $200,000 principal amount at an annual interest rate of 6.75% due 2020, (c) $300,000 principal amount at an annual interest rate of 6.75% due 2021, (d) $250,000 principal amount at an annual interest rate of 4.75% due 2024, (e) $350,000 principal amount at an annual interest rate of 5.625% due 2042notes; and (f) $250,000 principal amount at an annual interest rate of 6.25% due 2046; (3) our $350,000 principal amount unsecured term loan due 2020; (4) our $200,000 principal amount unsecured term loan due 2022; and (5) $806,418$61,976 aggregate principal amount of mortgages (excluding premiums, discounts and net debt issuance costs)mortgage notes secured by 24 of our properties (25 buildings) with maturity dates between 2018 and 2043.  The 246 properties. These 6 mortgaged properties (25 buildings) had a carryinggross book value (before accumulated depreciation) of $1,232,275$115,874 at September 30, 2017.March 31, 2022. We also had two2 properties subject to capitalfinance leases with lease obligations totaling $10,892$6,321 at September 30, 2017;March 31, 2022; these two2 properties had a carryinggross book value (beforeand accumulated depreciation)depreciation of $36,234$37,024 and $18,418, respectively, at September 30, 2017,March 31, 2022, and $36,730 and $18,203, respectively, at December 31, 2021, and the capitalfinance leases expire in 2026.

In April 2017, we prepaid a mortgage note secured by 17 of our properties with an outstanding principal balance of approximately $277,837 plus an aggregate premium of $5,449 plus accrued interest, a maturity date in September 2019 and an annual interest rate of 6.71%. In May 2017, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $10,579, a maturity date in August 2017 and an annual interest rate of 6.15%. In June 2017, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $8,807, a maturity date in August 2037 and an annual interest rate of 5.95%. We recorded loss on early extinguishment of debt of $7,353 for the nine months ended September 30, 2017 related to these prepayments.

We have a $1,000,000$700,000 revolving credit facility that is availableused for general business purposes, including acquisitions.purposes. The maturity date of our revolving credit facility is January 2024. Our revolving credit facility generally provides that we can borrow, repay and re-borrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. In August 2017, we amended the agreement governingAs of March 31, 2022, our revolving credit facility. As a result of the amendment, thefacility required interest rate payableto be paid on borrowings underat the facility was reduced from LIBORannual rate of 3.0%, plus a premium of 130 basis points per annum to LIBOR plus a premium of 120 basis points per annum, and the facility fee was reduced fromof 30 basis points per annum to 25 basis points per annum on the total amount of lending commitments under the facility.
The weighted average annual interest rates for borrowings under our revolving credit facility were 2.9% for each of the three months ended March 31, 2022 and 2021. The interest rate premium and facility fee are each subject to adjustment based upon changes to our credit ratings. AlsoAs of March 31, 2022 and April��29, 2022, we were fully drawn under our revolving credit facility.
In February 2022, we and our lenders amended our credit agreement. Pursuant to the amendment:
•the waiver of the fixed charge coverage ratio covenant included in our credit agreement has been extended through December 31, 2022, or the Amendment Period;
•the revolving credit facility commitments have been reduced from $800,000 to $700,000 following our repayment of $100,000, and as a result of the amendment,reduction in commitments, we recorded a loss on modification or early extinguishment of debt of $483 for the stated maturity date of the facility was extended from January 15, 2018 to January 15, 2022, and, subject to the payment of an extension fee and meeting other conditions, we have the option to extend the maturity date of the facility for an additional year. The facility also includes a feature pursuant to which in certain circumstances maximum borrowings

three months ended March 31, 2022;
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

•we have the ability to fund $400,000 of capital expenditures per year and we are restricted in our ability to acquire real property as defined in our credit agreement;
under •the facility may be increased to up to $2,000,000. In connection with this amendment, in August 2017 we recorded loss on early extinguishment of debt of $149 to write off unamortized debt issuance costs.

As of September 30, 2017, the annual interest rate payable on borrowingspremium under our revolving credit facility was 2.4%. The weighted average annual interest rates for borrowingsincreased by 15 basis points; and
•certain covenants and restrictions on distributions to common shareholders, share repurchases, capital expenditures, acquiring additional properties and incurring additional indebtedness (in each case subject to various exceptions), and the minimum liquidity requirement of $200,000 will remain in place during the Amendment Period.
Also in February 2022, we exercised our option to extend the maturity date of our revolving credit facility by one year to January 2024. Pursuant to our credit agreement, the borrowing capacity under our revolving credit facility were 2.5% and 1.8% for the three months ended September 30, 2017 and 2016, respectively, and 2.3% and 1.7% for the nine months ended September 30, 2017 and 2016, respectively. Aswill be reduced to $586,373 as of September 30, 2017, we had $471,000 outstanding and $529,000 available for borrowing,January 2023 and as such, further repayment of November 8, 2017, we had $485,000 outstanding and $515,000 available for borrowing under our revolving credit facility. We incurred interest expense and other associated costs related to our revolving credit facility of $3,512 and $2,024 for the three months ended September 30, 2017 and 2016, respectively, and $8,538 and $9,159 for the nine months ended September 30, 2017 and 2016, respectively.may be required.
Our $350,000 term loan matures in January 2020, and is prepayable without penalty at any time. This term loan requires annual interest to be paid at the rate of LIBOR plus a premium of 140 basis points that is subject to adjustment based upon changesPursuant to our credit ratings. At agreement, we pledged certain equity interests of subsidiaries owning properties to secure our obligations under our credit agreement and agreed to provide, and as of September 30, 2017,2021 had provided, first mortgage liens on 61 medical office and life science properties with an aggregate gross book value of real estate assets of $994,281 as of March 31, 2022 to secure our obligations, which pledges and/or mortgage liens may be removed or new ones may be added during the Amendment Period based on outstanding debt amounts, among other things.
In April 2022, we prepaid a mortgage note secured by 1 of our medical office properties with an outstanding principal balance of approximately $10,934, a maturity date in July 2022 and an annual interest rate payableof 6.28%. We prepaid this mortgage using cash on amounts outstanding under this term loan was 2.6%.  The weighted average annual interest rate for amounts outstanding under this term loan was 2.6% and 1.9% for the three months ended September 30, 2017 and 2016, respectively, and 2.4% and 1.9% for the nine months ended September 30, 2017 and 2016, respectively. We incurred interest expense and other associated costs related to this term loan of $2,363 and $1,707 for the three months ended September 30, 2017 and 2016, respectively, and $6,419 and $4,956 for the nine months ended September 30, 2017 and 2016, respectively. This term loan includes an accordion feature under which maximum borrowings may be increased to up to $700,000 in certain circumstances.hand.

Our $200,000 term loan matures in September 2022, and is prepayable without penalty at any time beginning in September 2017. At September 30, 2017, the annual interest rate payable on amounts outstanding under this term loan was 2.6%. The weighted average annual interest rate for amounts outstanding under this term loan was 2.7% and 2.3% for the three months ended September 30, 2017 and 2016, respectively, and 2.7% and 2.3% for the nine months ended September 30, 2017 and 2016, respectively. We incurred interest expense and other associated costs related to this term loan of $1,404 and $1,173 for the three months ended September 30, 2017 and 2016, respectively, and $4,129 and $3,433 for the nine months ended September 30, 2017 and 2016, respectively. This term loan includes an accordion feature under which maximum borrowings may be increased to up to $400,000 in certain circumstances. In August 2017, we amended thecredit agreement governing this term loan. As a result of the amendment, the interest rate payable was reduced from LIBOR plus a premium of 180 basis points per annum to LIBOR plus a premium of 135 basis points per annum, subject to adjustment based upon changes to our credit ratings. In connection with this amendment, in August 2017 we recorded loss on early extinguishment of debt of $125 to write off unamortized debt issuance costs.
Our revolving credit facility and term loan agreements and our senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our revolving credit facility and term loan agreements,agreement, a change of control of us, as defined, which includes The RMR Group LLC, or RMR, LLC, ceasing to act as our business and property manager. Our revolving credit facility and term loan agreementsagreement and our senior unsecured notes indentures and their supplements also contain a number of covenants, including covenants that restrict our ability to incur debts, and generally require us to maintain certain financial ratios, and our revolving credit facility and term loan agreements restrictagreement restricts our ability to make distributions under certain circumstances. As of March 31, 2022, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our revolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic continued to adversely impact our operations. We are unable to incur additional debt until this ratio is at or above 1.5x on a pro forma basis. We believe we were in compliance with the remaining terms and conditions of the respective covenants under our revolving credit facility and term loan agreementsagreement and our senior unsecured notes indentures and their supplements at September 30, 2017.March 31, 2022. Although we have taken steps to enhance our ability to maintain sufficient liquidity, a protracted negative impact on the economy or the industries in which our properties and businesses operate may cause increased pressure on our ability to satisfy financial and other covenants. Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions. If our operating results and financial condition are significantly negatively impacted by economic conditions or otherwise, we may fail to satisfy covenants and conditions under our credit agreement or fail to satisfy our public debt covenants.




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

Note 6.5.  Fair Value of Assets and Liabilities
The following table below presents certain of our assets that are measured at fair value at September 30, 2017,March 31, 2022 and December 31, 2021, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: asset.
As of March 31, 2022As of December 31, 2021
DescriptionCarrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Recurring Fair Value Measurements Assets:    
Investment in AlerisLife (Level 1) (1)
$22,987 $22,987 $31,540 $31,540 
Investment in unconsolidated joint venture (Level 3) (2)
$216,416 $216,416 $215,127 $215,127 
Investment in unconsolidated joint venture (Level 3) (3)
$50,325 $50,325 $— $— 
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
        Significant
  Total as of Quoted Prices in Active Significant Other Unobservable
  September 30, Markets for Identical Observable Inputs Inputs
Description 2017 Assets (Level 1) (Level 2) (Level 3)
Recurring Fair Value Measurements        
Assets:        
        Investments in available for sale securities (1)
 $141,995
 $141,995
 $—
 $—
(1)
Our investments in available for sale securities include our 2,637,408 shares of RMR Inc. class A common stock and our 4,235,000 Five Star common shares. The fair values of these shares are based upon quoted prices at September 30, 2017 in active markets (Level 1 inputs). See Notes 4 and 12 for further information on our investments in available for sale securities.
(1)Our 10,691,658 shares of common stock of AlerisLife Inc., or AlerisLife, are included in other assets, net in our condensed consolidated balance sheets, and are reported at fair value, which is based upon quoted market prices on The Nasdaq Stock Market LLC, or Nasdaq, (Level 1 inputs). During the three months ended March 31, 2022 and 2021, we recorded unrealized losses of $8,553 and $8,339, respectively, which are included in losses on equity securities, net in our condensed consolidated statements of comprehensive income (loss), to adjust the carrying value of our investment in AlerisLife common shares to their fair value. See Note 11 for further information about our investment in AlerisLife.
(2)The 20% equity interest we own in our Boston life science property joint venture is included in investments in unconsolidated joint ventures in our condensed consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The significant unobservable inputs used in the fair value analysis are a discount rate of 5.58%, an exit capitalization rate of 5.25%, a holding period of approximately 10 years and market rents. The assumptions made in the fair value analysis are based on the location, type and nature of the property, and current and anticipated market conditions, which are derived from appraisers, industry publications and our experience. See Note 2 for further information regarding this joint venture.
(3)The 20% equity interest we own in our 10 medical office and life science properties joint venture is included in investments in unconsolidated joint ventures in our condensed consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The significant unobservable inputs used in the fair value analysis are discount rates of between 5.67% and 8.93%, exit capitalization rates of between 4.75% and 6.00%, holding periods of approximately 10 years and market rents. 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, which are derived from appraisers, industry publications and our experience. See Note 2 for further information regarding this joint venture.
In addition to the assets described in the table above, our financial instruments at September 30, 2017March 31, 2022 and December 31, 20162021 included cash and cash equivalents, restricted cash, other assets, our revolving credit facility, term loans, senior unsecured notes, secured debt and capitalfinance leases and 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:
 As of March 31, 2022As of December 31, 2021
Description
Carrying Amount (1)
Estimated Fair Value
Carrying Amount (1)
Estimated Fair Value
Senior unsecured notes, 4.750% coupon rate, due 2024$249,418 $238,401 $249,348 $257,695 
Senior unsecured notes, 9.750% coupon rate, due 2025988,790 1,056,375 987,903 1,081,990 
Senior unsecured notes, 4.750% coupon rate, due 2028492,517 462,823 492,199 491,480 
Senior unsecured notes, 4.375% coupon rate, due 2031492,342 428,303 492,127 480,763 
Senior unsecured notes, 5.625% coupon rate, due 2042342,279 253,540 342,183 309,260 
Senior unsecured notes, 6.250% coupon rate, due 2046243,121 198,400 243,051 226,500 
Secured debts (2)
68,731 69,379 69,713 71,963 
 $2,877,198 $2,707,221 $2,876,524 $2,919,651 
  As of September 30, 2017 As of December 31, 2016
Description 
Carrying Amount (1)
 Estimated Fair Value 
Carrying Amount (1)
 Estimated Fair Value
Senior unsecured notes $1,724,936
 $1,823,535
 $1,722,758
 $1,755,715
Secured debt (2)
 804,608
 782,175
 1,106,183
 1,090,515
  $2,529,544
 $2,605,710
 $2,828,941
 $2,846,230
(1)Includes unamortized debt issuance costs, premiums and discounts.
(2)We assumed certain of these secured debts in connection with our acquisitions of certain properties. We recorded the assumed mortgage debts at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage debts to adjust interest expense to the estimated market interest rates as of the date of acquisition.
(1)Includes unamortized net debt issuance costs, premiums and discounts.
(2)We assumed certain of these secured debts in connection with our acquisition of certain properties. We recorded the assumed mortgage notes at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage notes to adjust interest expense to the estimated market interest rates as of the date of acquisition.
We estimated the fair value of our two2 issuances of senior unsecured notes due 2042 and 2046 based on the closing price on the Nasdaq (a Level(Level 1 input) as of September 30, 2017.March 31, 2022. We estimated the fair values of our four4 issuances of senior unsecured notes due 2019, 2020, 20212024, 2025, 2028 and 20242031 using an average of the bid and ask price on Nasdaq on or about September 30, 2017March 31, 2022 (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 valuevalues may differ materially from the actual fair value.values.

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DIVERSIFIED HEALTHCARE TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

Note 7.6. Noncontrolling Interest

In March 2017, we entered ainto our Boston life science property joint venture with a sovereign investor for one of our MOBs (two buildings) located in Boston, Massachusetts.venture. The investor contributed approximately $260,891 forowned a 45% equity interest in the joint venture, and we retainedowned the remaining 55% equity interest in the joint venture. Net proceeds fromWe determined that, while we owned a 55% equity interest in this transaction were approximately $255,813, after transaction costs. Wejoint venture, this joint venture was a variable interest entity, or VIE, and that we controlled the activities that most significantly impacted the economic performance of this entity; we therefore consolidated the results of this joint venture in our financial statements. In December 2021, we sold an additional 35% equity interest in our Boston life science property joint venture to another third party institutional investor. After giving effect to the sale, we continue to effectively controlown a 20% equity interest in this propertyjoint venture, but have determined that we are no longer the primary beneficiary. Effective as of the date of the sale, we deconsolidated these properties and therefore continue towe now account for this property on a consolidated basis in our condensed consolidated financial statementsjoint venture using the equity method of accounting under the VIE model.

This transaction was considered a partial sale of real estate that did not result in profit recognition under the full accrual method due to our continuing involvement in the entity. We recognized a noncontrolling interest in our condensed consolidated balance sheets of approximately $181,859 as of completion of the transaction, which was equal to 45% of the aggregate carryingfair value of the total equity of the property immediately prior to the transaction. The difference between the net proceeds received from this transaction and the noncontrolling interest recognized, which was approximately $73,954, has been reflected as an increase in additional paid in capital in our condensed consolidated balance sheets.option. The portion of the joint venture's net income and

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SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

comprehensive income not attributable to us, or $1,379 and $2,865$1,322 for the three and nine months ended September 30, 2017, respectively,March 31, 2021, is reported as a noncontrolling interest in our condensed consolidated statements of comprehensive income. Weincome (loss). This joint venture made aggregate cash distributions to ourthe other joint venture partnerinvestor of $5,105 and $8,587 during$5,694 for the three and nine months ended September 30, 2017, respectively,March 31, 2021, which are reflected as a decrease in total equity attributable to noncontrolling interest in our condensed consolidated balance sheets. Asstatement of September 30, 2017, this joint venture held real estate assets with an aggregate net book value of $989,432, subject to mortgage debts of $620,000.shareholders' equity.

In assessing whether we have a controlling interest in this joint venture arrangement and the requirement to consolidate the accounts of the joint venture entity, we considered the members' rights to residual gains and obligation to absorb losses, which activities most significantly impact the economic performance of the entity and which member has the power to direct those activities.

Note 8.  Shareholders’7.  Shareholders' Equity

Common Share Issuances and Repurchases:

On May 18, 2017,During the three months ended March 31, 2022, we granted 3,000purchased 1,698 of our common shares, valued at $21.25$3.20 per common share, the closing price of our common shares on the Nasdaq on that day, to each of our five Trustees as part of their annual compensation.

On June 30, 2017, we purchased 516 of our common shares, valued at $20.44 per share, the closing price of our common shares on the Nasdaq on that day, from a former employeesemployee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with vesting of awards of our common shares.
On September 14, 2017, we granted an aggregate of 88,100 of our common shares to our officers and certain other employees of RMR LLC, valued at $19.78 per share, the closing price of our common shares on the Nasdaq on that day.

On September 19, 2017, we purchased an aggregate of 16,654 of our common shares, valued at $19.85 per share, the closing price of our common shares on the Nasdaq on that day, from certain employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of prior awards of our common shares.
Distributions:
During the three months ended March 31, 2022, we declared and paid a quarterly distribution to common shareholders as follows:
Declaration DateRecord DatePayment DateDistribution Per ShareTotal Distributions
January 13, 2022January 24, 2022February 17, 2022$0.01 $2,390 
On February 21, 2017,April 14, 2022, we paiddeclared a regular quarterly distribution to common shareholders of $0.39record on April 25, 2022 of $0.01 per share, or approximately $92,642, that was declared on January 13, 2017 and was payable to shareholders of record on January 23, 2017. On May 18, 2017, we paid a regular quarterly distribution to common shareholders of $0.39 per share, or approximately $92,642, that was declared on April 11, 2017 and was payable to shareholders of record on April 21, 2017. On August 17, 2017, we paid a regular quarterly distribution to common shareholders of $0.39 per share, or approximately $92,648, that was declared on July 12, 2017 and was payable to shareholders of record on July 24, 2017. On October 12, 2017, we declared a regular quarterly distribution payable to common shareholders of record on October 23, 2017 of $0.39 per share, or approximately $92,676.$2,390. We expect to pay this distribution on or about November 16, 2017.May 19, 2022.


Note 9.8.  Segment Reporting
As of September 30, 2017, we have fourWe operate in, and report financial information for, the following 2 segments: Office Portfolio and senior housing operating segments, of which three are separate reporting segments.portfolio, or SHOP. We aggregate our triple net leased senior living communities, our managed senior living communities and our MOBs into threeeach of these 2 reporting segments based on their similar operating and economic characteristics. The first reportingOur Office Portfolio segment includes triple netconsists of medical office properties leased senior living communities that provide short term and long term residential careto medical providers and other services for residentsmedical related businesses, as well as life science properties leased to biotech laboratories and with respect to which we receive rents from the operators. The second reportingother similar tenants. Our SHOP segment includesconsists 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 operatorcommunities.
We also report “non-segment” operations, consisting of triple net leased senior living communities and wellness centers that are leased to manage the communities for our account. The third reporting segment includes MOBs where the tenants pay us rent. Our fourth segment includes all of our other operations, including certain properties that offer wellness, fitness and spa services to members and with respect toparty operators from which we receive rents, from operators, which we do not consider to be sufficiently material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
11

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

 For the Three Months Ended March 31, 2022
 Office PortfolioSHOPNon-SegmentConsolidated
Revenues:    
Rental income$54,997 $— $10,288 $65,285 
Residents fees and services— 245,448 — 245,448 
Total revenues54,997 245,448 10,288 310,733 
Expenses:    
Property operating expenses23,447 245,295 — 268,742 
Depreciation and amortization18,390 35,983 2,886 57,259 
General and administrative— — 7,285 7,285 
Acquisition and certain other transaction related costs— — 928 928 
Total expenses41,837 281,278 11,099 334,214 
Gain on sale of properties327,542 252 — 327,794 
Losses on equity securities, net— — (8,553)(8,553)
Interest and other income— 199 196 395 
Interest expense(365)(494)(56,272)(57,131)
Loss on modification or early extinguishment of debt— — (483)(483)
Income (loss) from continuing operations before income tax expense and equity in earnings of investees340,337 (35,873)(65,923)238,541 
Income tax expense— — (1,472)(1,472)
Equity in earnings of investees3,354 — — 3,354 
Net income (loss)$343,691 $(35,873)$(67,395)$240,423 
Under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, the U.S. Department of Health and Human Services, or HHS, established a Provider Relief Fund. Retention and use of the funds received under the CARES Act are subject to certain terms and conditions. The terms and conditions require that the funds be utilized to compensate for lost revenues that are attributable to the COVID-19 pandemic and for eligible costs to prevent, prepare for and respond to the COVID-19 pandemic that are not covered by other sources. Further, fund recipients are required to be participating in Medicare at the time of distribution and are subject to certain other terms and conditions, including quarterly reporting requirements. In addition, fund recipients are required to have billed Medicare during 2019 and to continue to provide care after January 31, 2020 for diagnosis, testing or care for individuals with possible or actual COVID-19 cases. Any funds not used in accordance with the terms and conditions must be returned to HHS. We recognize income from government grants on a systematic and rational basis over the period in which we recognize the related expenses or loss of revenues for which the grants are intended to compensate when there is reasonable assurance that we will comply with the applicable terms and conditions of the grant and there is reasonable assurance that the grant will be received. We have recognized $199 and $2,433 as other income in our condensed consolidated statements of comprehensive income (loss) with respect to our SHOP segment for the three months ended March 31, 2022 and 2021, respectively.
 As of March 31, 2022
 Office PortfolioSHOPNon-SegmentConsolidated
Total assets$1,991,516 $2,981,824 $1,802,039 $6,775,379 

12
  For the Three Months Ended September 30, 2017
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Revenues:  
  
  
  
  
Rental income $67,662
 $—
 $96,116
 $4,570
 $168,348
Residents fees and services —
 98,331
 —
 —
 98,331
Total revenues 67,662
 98,331
 96,116
 4,570
 266,679
           
Expenses:  
  
  
  
  
Property operating expenses —
 75,556
 29,158
 —
 104,714
Depreciation and amortization 20,629
 12,691
 32,351
 948
 66,619
General and administrative —
 —
 —
 19,883
 19,883
Total expenses 20,629
 88,247
 61,509
 20,831
 191,216
           
Operating income (loss) 47,033
 10,084
 34,607
 (16,261) 75,463
           
Dividend income —
 —
 —
 659
 659
Interest and other income —
 —
 —
 128
 128
Interest expense (655) (1,172) (6,172) (32,106) (40,105)
Loss on early extinguishment of debt —
 —
 —
 (274) (274)
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee 46,378
 8,912
 28,435
 (47,854) 35,871
Income tax expense —
 —
 —
 (109) (109)
Equity in earnings of an investee —
 —
 —
 31
 31
Net income (loss) 46,378
 8,912
 28,435
 (47,932) 35,793
Net income attributable to noncontrolling interest —
 —
 (1,379) —
 (1,379)
Net income (loss) attributable to common shareholders $46,378
 $8,912
 $27,056
 $(47,932) $34,414
           
  As of September 30, 2017
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Total assets $2,270,952
 $1,241,190
 $3,290,138
 $385,461
 $7,187,741


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

 For the Three Months Ended March 31, 2021
 Office PortfolioSHOPNon-SegmentConsolidated
Revenues:    
Rental income$93,323 $— $9,435 $102,758 
Residents fees and services— 259,966 — 259,966 
Total revenues93,323 259,966 9,435 362,724 
Expenses:    
Property operating expenses31,293 256,098 — 287,391 
Depreciation and amortization31,938 31,361 2,854 66,153 
General and administrative— — 7,542 7,542 
Impairment of assets— (174)— (174)
Total expenses63,231 287,285 10,396 360,912 
Loss on sale of properties(122)— — (122)
Losses on equity securities, net— — (8,339)(8,339)
Interest and other income— 2,433 402 2,835 
Interest expense(5,939)(528)(53,624)(60,091)
Loss on modification or early extinguishment of debt— — (2,040)(2,040)
Income (loss) from continuing operations before income tax expense24,031 (25,414)(64,562)(65,945)
Income tax expense— — (238)(238)
Net income (loss)24,031 (25,414)(64,800)(66,183)
Net income attributable to noncontrolling interest(1,322)— — (1,322)
Net income (loss) attributable to common shareholders$22,709 $(25,414)$(64,800)$(67,505)
 As of December 31, 2021
Office PortfolioSHOPNon-SegmentConsolidated
Total assets$2,282,652 $2,995,819 $1,345,043 $6,623,514 


Note 9. Senior Living Community Management Agreements
Our managed senior living communities are operated by third parties pursuant to management agreements. Five Star Senior Living, or Five Star, which is an operating division of AlerisLife, manages certain of our SHOP communities.
2021 Amendments to our Management Arrangements with Five Star. On June 9, 2021, we amended our management arrangements with Five Star. The principal changes to the management arrangements included:
•that Five Star agreed to cooperate with us in transitioning 108 of our senior living communities with approximately 7,500 living units to other third party managers without our payment of any termination fee to Five Star;
•that we no longer have the right to sell up to an additional $682,000 of senior living communities currently managed by Five Star and terminate Five Star's management of those communities without our payment of a fee to Five Star upon sale;
•that Five Star is continuing to manage 120 of our senior living communities, and that the skilled nursing units in all of our continuing care retirement communities that Five Star is continuing to manage, which then included approximately 1,500 living units, were closed and are being evaluated and repositioned;
13
  For the Three Months Ended September 30, 2016
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Revenues:  
  
  
  
  
Rental income $66,520
 $—
 $94,404
 $4,579
 $165,503
Residents fees and services —
 98,480
 —
 —
 98,480
Total revenues 66,520
 98,480
 94,404
 4,579
 263,983
           
Expenses:  
  
  
  
  
Property operating expenses 47
 74,763
 28,537
 —
 103,347
Depreciation and amortization 19,727
 20,747
 30,922
 948
 72,344
General and administrative —
 —
 —
 12,107
 12,107
Acquisition and certain other transaction related costs —
 —
 —
 824
 824
Impairment of assets 2,191
 2,394
 (7) —
 4,578
Total expenses 21,965
 97,904

59,452

13,879

193,200
           
Operating income (loss) 44,555
 576
 34,952
 (9,300) 70,783
           
Dividend income —
 —
 —
 659
 659
Interest and other income —
 —
 —
 89
 89
Interest expense (6,228) (2,104) (5,599) (29,507) (43,438)
Loss on early extinguishment of debt —
 (84) —
 —
 (84)
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee 38,327
 (1,612) 29,353
 (38,059) 28,009
Income tax expense —
 —
 —
 (119) (119)
Equity in earnings of an investee —
��—
 —
 13
 13
Net income (loss) $38,327
 $(1,612) $29,353
 $(38,165) $27,903
           
  As of December 31, 2016
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Total assets $2,289,045
 $1,260,032
 $3,333,141
 $345,536
 $7,227,754













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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

•that beginning in 2025, we will have the right to terminate up to 10% of the senior living communities that Five Star is continuing to manage, based on total revenues per year for failure to meet 80% of a target earnings before interest, taxes, depreciation and amortization for the applicable period;
•that the incentive fee that Five Star may earn in any calendar year for the senior living communities that Five Star is continuing to manage is no longer subject to a cap and that any senior living communities that are undergoing a major renovation or repositioning are excluded from the calculation of the incentive fee;
•that RMR will oversee any major renovation or repositioning activities at the senior living communities that Five Star is continuing to manage; and
•that the term of our management agreements with Five Star for our senior living communities that Five Star is continuing to manage was extended by two years to December 31, 2036.
Pursuant to these changes, we and Five Star entered into an amended and restated master management agreement, or the Master Management Agreement, for the senior living communities that Five Star is continuing to manage, and interim management agreements for the senior living communities that we and Five Star agreed to transition to new third party managers. These agreements replaced our prior master leases and management and pooling agreements with Five Star. In addition, AlerisLife delivered to us a related amended and restated guaranty agreement pursuant to which AlerisLife is continuing to guarantee the payment and performance of each of its applicable subsidiary's obligations under the applicable management agreements.
As of December 31, 2021, we had transitioned 107 of the 108 senior living communities, containing 7,340 living units, from Five Star to new third party managers. The remaining senior living community was closed in February 2022 and we are assessing opportunities to redevelop that property. We continue to lease our senior living communities that have been transitioned to new managers to our taxable REIT subsidiaries, or TRSs. We incurred and expect to continue to incur costs related to retention and other transition costs for these communities. For the three months ended March 31, 2022, we recorded $928 of these costs to acquisition and certain other transaction related costs in our condensed consolidated statements of comprehensive income (loss).
Our Senior Living Communities Managed by Five Star. Five Star managed 120 and 235 of our senior living communities as of March 31, 2022 and 2021, respectively. We lease our senior living communities that are managed by Five Star to our TRSs.
We incurred management fees payable to Five Star of $8,932 and $13,850 for the three months ended March 31, 2022 and 2021, respectively. For the three months ended March 31, 2022 and 2021, $8,142 and $13,016, respectively, of the total management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $790 and $834, 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.
14
  For the Nine Months Ended September 30, 2017
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Revenues:  
  
  
  
  
Rental income $202,340
 $—
 $285,413
 $13,684
 $501,437
Residents fees and services —
 294,816
 —
 —
 294,816
Total revenues 202,340
 294,816
 285,413
 13,684
 796,253
           
Expenses:  
  
  
  
  
Property operating expenses —
 224,585
 83,980
 —
 308,565
Depreciation and amortization 61,434
 49,295
 95,890
 2,844
 209,463
General and administrative —
 —
 —
 57,889
 57,889
Acquisition and certain other transaction related costs —
 —
 —
 292
 292
Impairment of assets —
 —
 —
 5,082
 5,082
Total expenses 61,434
 273,880
 179,870
 66,107
 581,291
           
Operating income (loss) 140,906
 20,936
 105,543
 (52,423) 214,962
           
Dividend income —
 —
 —
 1,978
 1,978
Interest and other income —
 —
 —
 323
 323
Interest expense (8,205) (3,523) (18,742) (93,924) (124,394)
Loss on early extinguishment of debt (7,294) —
 (59) (274) (7,627)
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee 125,407
 17,413
 86,742
 (144,320) 85,242
Income tax expense —
 —
 —
 (300) (300)
Equity in earnings of an investee —
 —
 —
 533
 533
Net income (loss) 125,407
 17,413
 86,742
 (144,087) 85,475
Net income attributable to noncontrolling interest —
 —
 (2,865) —
 (2,865)
Net income (loss) attributable to common shareholders $125,407
 $17,413
 $83,877
 $(144,087) $82,610
           
  As of September 30, 2017
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Total assets $2,270,952
 $1,241,190
 $3,290,138
 $385,461
 $7,187,741













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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

  For the Nine Months Ended September 30, 2016
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Revenues:  
  
  
  
  
Rental income $198,269
 $—
 $278,964
 $13,689
 $490,922
Residents fees and services —
 292,803
 —
 —
 292,803
Total revenues 198,269
 292,803
 278,964
 13,689
 783,725
           
Expenses:  
  
  
  
  
Property operating expenses 833
 218,582
 79,361
 —
 298,776
Depreciation and amortization 58,401
 60,905
 92,788
 2,844
 214,938
General and administrative —
 —
 —
 34,931
 34,931
Acquisition and certain other transaction related costs —
 —
 —
 1,443
 1,443
Impairment of assets 6,583
 2,394
 7,953
 —
 16,930
Total expenses 65,817
 281,881
 180,102
 39,218
 567,018
           
Operating income (loss) 132,452
 10,922
 98,862
 (25,529) 216,707
           
Dividend income —
 —
 —
 1,449
 1,449
Interest and other income —
 —
 —
 330
 330
Interest expense (18,892) (7,332) (7,398) (90,215) (123,837)
Loss on early extinguishment of debt —
 (90) —
 —
 (90)
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee 113,560
 3,500
 91,464
 (113,965) 94,559
Income tax expense —
 —
 —
 (318) (318)
Equity in earnings of an investee —
 —
 —
 107
 107
Income (loss) from before gain on sale of properties 113,560
 3,500
 91,464
 (114,176) 94,348
Gain on sale of properties 4,061
 —
 —
 —
 4,061
Net income (loss) $117,621
 $3,500
 $91,464
 $(114,176) $98,409
           
  As of December 31, 2016
  Triple Net Leased Senior Living Communities Managed Senior Living Communities MOBs All Other Operations Consolidated
Total assets $2,289,045
 $1,260,032
 $3,333,141
 $345,536
 $7,227,754

Note 10. LeasesWe incurred fees of $1,916 and Management Agreements with Five Star
Our Senior Living Communities Leased by Five Star. We are Five Star’s largest landlord and Five Star is our largest tenant. As of September 30, 2017 and 2016, we leased 185 and 183 senior living communities to Five Star, respectively. We lease senior living communities to Five Star pursuant to five leases with Five Star. We recognized total rental income from Five Star of $51,333, and $50,417$5,441 for the three months ended September 30, 2017March 31, 2022 and 2016,2021, respectively, and $153,441 and $146,758 for the nine months ended September 30, 2017 and 2016, respectively. These amounts exclude percentage rent payments we received from Five Star of $1,353 and $1,367 for the three months ended September 30, 2017 and 2016, respectively, and $4,190 and $4,228 for the nine months ended September 30, 2017 and 2016, respectively. We determine actual percentage rent due under our Five Star leases annually and recognize any resulting amount as rental income at year end when all contingencies are met. As of September 30,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

2017 and December 31, 2016, we had rents receivable from Five Star of $17,120 and $18,320, respectively, which amounts are included in other assets in our condensed consolidated balance sheets. Rental income from Five Star represented 19.2% and 19.3% of our total revenues for the three and nine months ended September 30, 2017, respectively, and the properties Five Star leases from us represented 27.5% of our total gross book value of real estate assets as of September 30, 2017.
Pursuant to the terms of our leases with Five Star, for the nine months ended September 30, 2017 and 2016, we funded $30,698 and $15,306, respectively, of improvements to communities leased to Five Star. As a result, the annual rent payable to us by Five Star increased by approximately $2,464 and $1,228, respectively. During the quarter ended June 30, 2017, we and Five Star agreed to amend the applicable lease for certain construction, expansion and development projects at two senior living communities we own and lease to Five Star. If and when Five Star requests that we purchase improvements related to these specific projects from them, Five Star’s annual rent payable to us will increase by an amount equal to the interest rate then applicable to our borrowings under our revolving credit facility plus 2% per annum of the amount we purchased. This amount of increased rent will apply until 12 months after a certificate of occupancy is issued with respect to the project; thereafter, Five Star’s annual rent payable to us will be revised to equal the amount determined pursuant to the capital improvement formula specified in the applicable lease.

In August 2017, we acquired a land parcel fromrehabilitation services Five Star adjacent to a senior living community located in Delaware that we lease to Five Star for $750, excluding closing costs. This land parcel was added to the applicable lease and Five Star’s annual minimum rent payable to us increased by $33 in accordance with the terms of that lease.

In June 2016, we acquired seven senior living communities from Five Star for an aggregate purchase price of $112,350, and we simultaneously leased these communities back to Five Star under a new long term lease agreement.

Our Senior Living Communities Managed by Five Star. Five Star managed 68 and 63 senior living communities for our account as of September 30, 2017 and 2016, respectively. We leaseprovided at our senior living communities that are managedpayable by Five Star and include assisted living units or skilled nursing facility, or SNF, units to our TRSs and Five Star manages these communities pursuant to long term management agreements. We incurred management fees payable to Five Star of $3,414 and $3,070 for the three months ended September 30, 2017 and 2016, respectively, and $10,531 and $8,689 for the nine months ended September 30, 2017 and 2016, respectively.us. These amounts are included in property operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements.statements of comprehensive income (loss).
In additionWe lease to management services to us, Five Star also providesspace at certain other services to residents at some of theour senior living communities, which it manages for us, such as rehabilitation services. At senior living communities Five Star manages for us where Five Star provides rehabilitation services on an outpatient basis, the residents, third party payers or government programs pay Five Star for those rehabilitation services. At senior living communities Five Star manages for us where Five Star provides both inpatient anduses to provide certain outpatient rehabilitation services, we generally pay Five Star for these services and charges for these services are included in amounts charged to residents, third party payers or government programs.wellness services. We incurred fees of $1,884recorded $388 and $1,866$397 for the three months ended September 30, 2017March 31, 2022 and 2016,2021, respectively, and $5,713 and $5,755with respect to these leases.
Our Senior Living Communities Managed by Other Third Party Managers. We incurred management fees payable to the new third party managers of $5,108 for the ninethree months ended September 30, 2017 and 2016, respectively, for rehabilitation services Five Star provided at senior living communities it manages for us and thatMarch 31, 2022. These amounts are payable by us; we include these amountsincluded in property operating expenses in our condensed consolidated statementfinancial statements.
The following table presents residents fees and services revenue from all of comprehensive income.

In November 2017, we entered a transaction agreement with Five Star pursuant to which we agreed to acquire sixour managed senior living communities from Five Star. We will enter managementdisaggregated by the type of contract and pooling agreements with Five Star as we acquire these communities for Five Star to manage these senior living communities for us. The aggregate purchase price for these six senior living communities is approximately $104,000, including our assumption of approximately $33,696 of mortgage debt securing certain of these senior living communities and excluding closing costs. These acquisitions are subject to conditions, including our assumption of certain applicable mortgage debt and receipt of any applicable regulatory approvals. We expect to complete these acquisitions as third party approvals are received between now and the end of the first quarter of 2018; however, the conditions to our acquisitions of these senior living communities may not be met and some or all of these acquisitions and related management and pooling arrangements may not occur, may be delayed or the terms may change.payer:

Three Months Ended March 31,
Revenue from contracts with customers:20222021
Basic housing and support services$192,874 $188,029 
Medicare and Medicaid programs19,817 35,948 
Private pay and other third party payer SNF services32,757 35,989 
Total residents fees and services$245,448 $259,966 
The management agreements we and Five Star will enter in connection with our acquisitions of these senior living communities will be combined pursuant to two new pooling agreements to be entered between us and Five Star. The first new pooling agreement will combine the management agreements for five of these senior living communities. Pursuant to the terms of the management and pooling agreements to be entered for these five senior living communities, we will pay Five Star a


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

management fee equal to 5% of the gross revenues realized at these communities plus reimbursement for Five Star’s direct costs and expenses related to its operation of these communities, as well as an annual incentive fee equal to 20% of the annual net operating income of such communities remaining after we realize an annual minimum return equal to 7% of our invested capital for these senior living communities. The second new pooling agreement will include one management agreement for a senior living community that is subject to an ongoing construction, expansion and development project. The terms of the management and pooling agreements to be entered for this senior living community will be substantially the same as the terms of the management and pooling agreements for the other five senior living communities, except that our annual minimum return on invested capital related to the ongoing, construction and development project at this community will be an amount equal to the interest rate then applicable to borrowings under our revolving credit facility plus 2% per annum. This amount of minimum return will apply until the earlier of 12 months after a certificate of occupancy is issued with respect to the project and the third anniversary of our acquisition of this community; thereafter, the amount of annual minimum return on invested capital related to this project will be 7% of our invested capital. Also pursuant to the terms of the management and pooling agreements to be entered for these six senior living communities, we will pay Five Star a fee for its management of capital expenditure projects at these senior living communities equal to 3% of amounts funded by us. The terms of these management and pooling agreements will expire in 2041 and will be subject to automatic renewals, unless earlier terminated or timely notices of nonrenewal are delivered.

Also in November 2017, we amended our preexisting pooling agreements with Five Star, among other things, to provide that, with respect to our right to terminate all of the management agreements covered by a preexisting pooling agreement if we do not receive our annual minimum return under such agreement in each of three consecutive years, the commencement year for the measurement period for determining whether the specified annual minimum return under the applicable pooling agreement has been achieved will be 2017.

During the quarter ended June 30, 2017, we and Five Star agreed to amend the applicable management and pooling agreements for a construction, expansion and development project at a senior living community that we own and that is managed by Five Star. Our minimum return on invested capital for this specific project will increase by an amount equal to the interest rate then applicable to our borrowings under our revolving credit facility plus 2% per annum. This amount of increased minimum return will apply until 12 months after a certificate of occupancy is issued with respect to the project; thereafter, the amount of annual minimum return on invested capital will be revised to equal the amount determined pursuant to the applicable management and pooling agreements. We and Five Star also agreed that the commencement of the measurement period for determining whether the specified annual minimum return under the applicable management and pooling agreements has been achieved will be deferred until 12 months after a certificate of occupancy is issued with respect to the project.
Simultaneously with the June 2016 sale and leaseback transaction, we and Five Star terminated three of our four then existing pooling agreements and entered 10 new pooling agreements that combine our management agreements with Five Star for senior living communities that include assisted living units or SNF units. Pursuant to these management agreements and the pooling agreements, Five Star receives management fees equal to either 3% or 5% of the gross revenues realized at the applicable communities, reimbursement for its direct costs and expenses related to such communities, annual incentive fees if certain operating results at those communities are achieved and fees for its supervision of capital expenditure projects at those communities equal to 3% of amounts funded by us.
Under the pooling agreements, the calculations of Five Star's fees and of our annual minimum returns related to management agreements that include assisted living units that became effective before May 2015 and had been pooled under one of the previously existing pooling agreements are generally the same as they were under the previously existing pooling agreements. However, for certain communities, the pooling agreements reduced our annual minimum returns, and, with respect to 10 communities, reset the annual minimum returns we receive before Five Star is paid incentive fees to specified amounts. For those management agreements that include assisted living units that became effective from and after May 2015, the pooling agreements increased the management fees Five Star receives from 3% to 5% of the gross revenues realized at the applicable communities, and changed the potential annual incentive fees from 35% to 20% of the annual net operating income, or NOI, of the applicable communities remaining after we realize our requisite annual minimum returns.

Note 11.10. Business and Property Management Agreements with RMR LLC
We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC.RMR. We have two2 agreements with RMR LLC 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 our MOBs. 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.
We also have a subsidiary levelrecognized net business management fees of $4,813 and $5,317 for the three months ended March 31, 2022 and 2021, respectively. Based on our common share total return, as defined in our business management agreement, as of each of March 31, 2022 and 2021, no estimated incentive fees are included in the net business management fees we recognized for the three months ended March 31, 2022 or 2021. The actual amount of annual incentive fees for 2022, 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, 2022, and will be payable in January 2023. We did not incur any incentive fee payable for the year ended December 31, 2021. We recognize business management and incentive fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss). RMR provides management services to our joint ventures. See Note 11 for further information regarding our joint ventures' management arrangements with RMR LLCand the related impact on our management fees payable to oneRMR.
We and RMR amended our business management agreement effective August 1, 2021 to provide that (i) for periods beginning on and after August 1, 2021, the MSCI U.S. REIT/Health Care REIT Index will be used to calculate benchmark returns per share for purposes of determining any incentive management fee payable by us to RMR, and (ii) for periods prior to August 1, 2021, the SNL U.S. REIT Healthcare Index will continue to be used. This change of index was due to S&P Global ceasing to publish the SNL U.S. REIT Healthcare Index.
We recognized aggregate net property management and construction supervision fees of $2,391 and $3,154 for the three months ended March 31, 2022 and 2021, respectively. Of those amounts, for the three months ended March 31, 2022 and 2021, $1,349 and $2,485, respectively, of property management fees were expensed to property operating expenses in our MOBs located in Boston, Massachusetts, which we entered in connection with the joint venture arrangement for that MOB. Under that agreement,

condensed consolidated statements of comprehensive income (loss) and $1,042 and $669, respectively, were capitalized as building
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(dollar amounts in thousands, except per share data or as otherwise stated)

improvements in our condensed consolidated balance sheets. The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.
We are generally responsible for all our subsidiary paysoperating expenses, including certain expenses incurred or arranged by RMR LLC certain businesson our behalf. We are generally not responsible for payment of RMR's employment, office or administrative expenses incurred to provide management fees directly, which feesservices 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 credited againstgenerally incorporated into the business management fees payable by us to RMR LLC.
Pursuantrents charged to our business management agreement withtenants, including certain payroll and related costs incurred by RMR. We reimbursed RMR LLC, we recognized net business management fees of $17,744$2,964 and $9,609$3,297 for these expenses and costs for the three months ended September 30, 2017March 31, 2022 and 2016, respectively, and $50,956 and $27,199 for the nine months ended September 30, 2017 and 2016, respectively. The business management fees for the three and nine months ended September 30, 2017 also include $725 and $1,512, respectively, of management fees related to our subsidiary level management agreement with RMR LLC entered in connection with our joint venture arrangement. The business management fees for the three and nine months ended September 30, 2017 included estimated annual incentive fees for 2017 of $8,022 and $22,048, respectively, based on our common share total return, as defined, as of September 30, 2017. Although we recognized estimated incentive fees in accordance with GAAP, the actual amount of annual incentive fees payable to RMR LLC for 2017, if any, will be based on our common share total return, as defined, for the three year period ending December 31, 2017, and will be payable in 2018. The net business management fees we recognized for the 2017 and 2016 periods are included in general and administrative expense in our consolidated statements of comprehensive income.
Pursuant to our property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $2,736 and $2,961 for the three months ended September 30, 2017 and 2016, respectively, and $8,034 and $8,193 for the nine months ended September 30, 2017 and 2016,2021, respectively. These amounts are included in property operating expenses or have been capitalized,general and administrative expenses, as appropriate, in our condensed consolidated financial statements.
We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses, including certain payroll and related costs incurred by RMR LLC, are generally incorporated into rents charged to our tenants. We reimbursed RMR LLC $2,353 and $2,482 for property management related expenses for the three months ended September 30, 2017 and 2016, respectively, and $7,116 and $6,781 for the nine months ended September 30, 2017 and 2016, respectively, which amounts are included in property operating expensesapplicable, in our condensed consolidated statements of comprehensive income. In addition,income (loss) for these periods.
On June 9, 2021, we are responsibleand RMR amended our property management agreement to, among other things, provide for RMR's oversight of any major capital projects and repositionings at our sharesenior living communities, including our senior living communities which Five Star is continuing to manage, and that RMR will receive the same fee previously paid to Five Star for such services, which is equal to 3% of RMR LLC's costs for providing our internal audit function. The amounts recognized as expense for internal audit costs were $72 and $34 for the three months ended September 30, 2017 and 2016, respectively, and $206 and $168 for the nine months ended September 30, 2017 and 2016, respectively, which amounts are included in general and administrative expense in our condensed consolidated statementscost of comprehensive income.any such major capital project or repositioning.


Note 12.11. Related Person Transactions
We have relationships and historical and continuing transactions with Five Star, RMR, LLC,The RMR Group Inc., or RMR Inc., Affiliates Insurance Company, or AIC,AlerisLife (including Five Star) and others related to them, including other companies to which RMR LLC providesor its subsidiaries provide management services and some of which have trustees, directors andor officers who are also our Trustees or officers. RMR Inc. is the managing member of RMR. The Chair of our Board 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., the 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 chair of the board of directors and a managing director of AlerisLife. Jennifer F. Francis, our other Managing Trustee and our President and Chief Executive Officer, and our Chief Financial Officer and Treasurer are also employees and officers of RMR. Jennifer B. Clark, our Secretary and former Managing Trustee, also serves as a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR, an officer of ABP Trust and a managing director and the secretary of AlerisLife. Certain of AlerisLife's officers are officers and employees of RMR. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR or its subsidiaries provide management services. Adam Portnoy serves as the chair of the board and as a managing director or managing trustee of these companies. Other officers of RMR, including Ms. Clark and certain of our officers, serve as managing trustees, managing directors 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.
Five Star.AlerisLife. We are currently one of Five Star’sAlerisLife's largest stockholders.stockholder. As of September 30, 2017,March 31, 2022, we owned 4,235,00010,691,658 of Five Star’sAlerisLife's common shares, or approximately 8.5%32.8% of Five Star’sAlerisLife's outstanding common shares. Five Star is our largest tenant andan operating division of AlerisLife. Five Star manages certain of the manager of our managed senior living communities. As of September 30, 2017, our Managing Trustees,communities we own pursuant to the controlling shareholders ofMaster Management Agreement. RMR LLC's parent, beneficially owned, directly and indirectly, 36.7% of Five Star's outstanding common shares. RMR LLC provides management services to both us and Five Star. See Note 109 for further information regarding our relationships, agreements and transactions with AlerisLife (including Five StarStar) and Note 45 for further information regarding our investment in Five Star.AlerisLife.
As of March 31, 2022, ABP Acquisition LLC, a subsidiary of ABP Trust, the controlling shareholder of RMR Inc., together with ABP Trust, owned approximately 6.2% of AlerisLife's outstanding common shares.
Our Manager,Joint Ventures. We have 2 separate joint venture arrangements with 2 third party institutional investors, our Boston life science property joint venture and our 10 medical office and life science properties joint venture, each in which we own a 20% equity interest. We initially entered into our Boston life science property joint venture prior to January 1, 2021, and we entered into our 10 medical office and life science properties joint venture in January 2022. RMR LLC. See Note 11 for further information regardingprovides 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 LLC.
We have historically granted share awardsfor the services it provides regarding the joint ventures. Prior to certainDecember 23, 2021, our Boston life science property joint venture was our consolidated subsidiary and, as such, we were previously obligated to pay management fees to RMR LLC employees under our equity compensation plans. In September 2017 and 2016, we granted annual share awards of 88,100 and 79,650 of our common shares, respectively, to our officers and certain other employees ofmanagement agreements with RMR LLC. In September 2017 and 2016, we purchased 16,654 and 17,667 of our common shares, respectively, at the closing price of our common shares on the Nasdaq on the date of purchase, from certain employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. We include the amounts recognized as expense for share awards to RMR LLC employees in general and administrative expenses in our condensed consolidated statements of comprehensive income.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

the services it provided regarding that joint venture; however, that joint venture paid management fees directly to RMR, Inc.and any such fees paid by that joint venture were credited against the fees payable by us to RMR. In addition, we wholly owned the 10 medical office and life science properties until the contribution of these properties to the applicable joint venture in January 2022 and we paid management fees to RMR LLC is a subsidiary of RMR Inc. and RMR Inc. isfor the managing member of RMR LLC. The controlling shareholder of RMR Inc., ABP Trust, is owned by our Managing Trustees.management services it provided to us for those properties up until that time. As of September 30, 2017,March 31, 2022, we owned 2,637,408 sharesowed $185 to our 10 medical office and life science properties joint venture for rents that we collected on behalf of class A common stockthat joint venture. In addition, in connection with the closing of our 10 medical office and life science properties joint venture, we paid mortgage escrow amounts and closing costs of $11,113 that were payable by that joint venture. Those costs are presented as other assets, net, in our condensed consolidated balance sheet.
Our Manager, RMR. We have 2 agreements with RMR Inc.to provide management services to us. See Note 410 for further information regarding our investment in RMR Inc.
AIC. We, ABP Trust, Five Star and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC; we also have a one year standalone insurance policy that provides coverage for our MOB (two buildings) located in Boston, Massachusetts that is owned in our joint venture arrangement, which we obtained as a part of this insurance program. We (including our consolidated joint venture) currently expect to pay aggregate annual premiums, including taxes and fees, of approximately $2,433 in connectionagreements with this insurance program for the policy year ending June 30, 2018, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program.
As of September 30, 2017 and December 31, 2016, our investment in AIC had a carrying value of $7,945 and $7,116, respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income related to our investment in AIC, which amounts are presented as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Our other comprehensive income includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC.RMR.
For further information about these and other such relationships and certain other related person relationships and transactions, please refer tosee our Annual Report.


Note 13.12.  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 certainour 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. During the three months ended September 30, 2017March 31, 2022 and 2016,2021, we recognized income tax expense of $109$1,472 and $119, respectively, and during the nine months ended September 30, 2017 and 2016, we recognized income tax expense of $300 and $318,$238, respectively.


Note 14.13. Weighted Average Common Shares
Shares (share amounts in thousands)
The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):
 Three Months Ended March 31,
 20222021
Weighted average common shares for basic earnings per share238,149 237,834 
Effect of dilutive securities: unvested share awards49 — 
Weighted average common shares for diluted earnings per share (1)
238,198 237,834 
(1) For the three months ended March 31, 2021, 20 unvested common shares were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.
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  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Weighted average common shares for basic earnings per share 237,421
 237,347
 237,404
 237,329
Effect of dilutive securities: unvested share awards 39
 49
 41
 40
Weighted average common shares for diluted earnings per share 237,460
 237,396
 237,445
 237,369

Table of Contents

Item 2.  Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and with our Annual Report.

OVERVIEW
We are a REIT that is organized under Maryland law. At September 30, 2017,law and which owns medical office and life science properties, senior living communities and other healthcare related properties throughout the United States. As of March 31, 2022, we wholly owned 435378 properties, (461 buildings)including seven closed senior living communities, located in 4236 states and Washington, D.C. At September 30, 2017,March 31, 2022, the undepreciated carryinggross book value of our real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations and less impairment write downs, was $8.5$6.8 billion. For
As of March 31, 2022, we owned a 20% equity interest in each of two unconsolidated joint ventures that own medical office and life science properties located in five states with an aggregate of approximately 2.2 million rentable square feet that was 98% leased with an average (by annualized rental income) remaining lease term of 6.6 years.
Our business is focused on healthcare related properties, including medical office and life science properties, senior living communities, wellness centers and other medical and healthcare related properties. We believe that the three months ended September 30, 2017, 97%healthcare sector and many of our NOI came from properties where a majoritytenants, managers and operators provide essential services across the United States. Due to restrictions intended to prevent the spread of the revenuesvirus that causes COVID-19, certain of our medical office and wellness center tenants, which include physician practices that had discontinued non-essential surgeries and procedures and fitness centers that had been ordered closed by state executive orders, experienced disruptions to their businesses. Our senior living community operators also experienced disruptions, including limitations on in-person tours and new admissions, and experienced challenges in attracting new residents to their communities in addition to experiencing increased expenses due to increased labor costs, including higher health benefits costs, and increased costs and consumption of supplies, including personal protective equipment.
We are paidclosely monitoring the impacts of the COVID-19 pandemic and the current inflationary market conditions on all aspects of our business, including, but not limited to, labor availability, wage inflation and cost pressures from supply chain disruptions and commodity price inflation in our residents’SHOP segment. We expect to continue to have elevated labor costs on a per resident basis.
We believe that we are well positioned to weather the present disruptions facing the real estate industry and, tenants’ private resources.in particular, the real estate healthcare industry, including senior living.
In the first quarter of 2021, following the holiday season, the reopening of economies and the easing of restrictions, the United States experienced peak numbers of COVID-19 infections. In some cases, certain states and municipalities again required the closure of certain business activities and imposed certain other restrictions. It is unclear whether the number of COVID-19 infections will further increase or amplify in the United States or elsewhere and, if so, what the impact of that would be on human health and safety, the economy, or our managers', operators' and tenants' businesses. As a result of these uncertainties, we are unable to determine what the ultimate impacts will be on our, our tenants', our managers', our operators' and other stakeholders' businesses, operations, financial results and financial position. For further information and risks relating to the COVID-19 pandemic and its aftermath on us and our business, see Part I, Item 1, "Business" and Part I, Item 1A, "Risk Factors" in our Annual Report.
PORTFOLIO OVERVIEW
The following tables present an overview of our portfolio (dollars in thousands, except investment per unit or square foot or unit data):
As of March 31, 2022Number
of Properties		Square Feet or Number of Units 
Gross Book Value of Real Estate Assets(1)
% of Total Gross Book Value of Real Estate Assets
Investment per Square Foot or Unit(2)
Q1 2022 Revenues% of
Q1 2022 Revenues
Q1 2022 NOI (3)
% of Q1 2022 NOI
Office Portfolio (4)
104 8,724,331 sq. ft.$2,170,756 32.0 %$249 $54,997 17.7 %$31,550 75.1 %
SHOP234 25,088 units4,190,563 61.7 %$167,035 245,448 79.0 %153 0.4 %
Triple net leased senior living communities30 2,424 units252,906 3.7 %$104,334 6,470 2.1 %6,470 15.4 %
Wellness centers10 812,000 sq. ft.178,110 2.6 %$219 3,818 1.2 %3,818 9.1 %
Total378  $6,792,335 100.0 %$310,733 100.0 %$41,991 100.0 %
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    Number of       Investment per  % of  % of
  Number of Units or   Carrying Value % of Total Unit or Q3 2017Q3 2017 Q3 2017Q3 2017
(As of September 30, 2017) Properties Square Feet   
of Investment (1)
 Investment 
Square Foot (2)
 RevenuesRevenues 
NOI (3)
NOI (3)
Facility Type  
  
    
  
  
     
 
Independent living (4)
 68
 16,452
   $2,373,413
 28.0% $144,263
 $88,539
33.2% $45,939
28.4%
Assisted living (4)
 197
 14,444
   2,121,398
 25.1% $146,871
 73,213
27.5% 40,257
24.9%
Skilled nursing facilities (4)
 39
 4,131
   188,514
 2.2% $45,634
 4,241
1.6% 4,241
2.6%
Subtotal senior living communities 304
 35,027
   4,683,325
 55.3% $133,706
 165,993
62.3% 90,437
55.9%
MOBs (5)
 121
 11,611,203
 sq. ft.   3,602,819
 42.6% $310
 96,116
36.0% 66,958
41.3%
Wellness centers 10
 812,000
 sq. ft. 178,172
 2.1% $219
 4,570
1.7% 4,570
2.8%
Total 435
  
   $8,464,316
 100.0%  
 $266,679
100.0% $161,965
100.0%
                   
Tenant / Operator / Managed Properties  
  
    
  
  
     
 
                   
Five Star 185
 20,187
   $2,326,945
 27.5% $115,269
 $51,337
19.2% $51,337
31.7%
Sunrise / Marriott (6)
 4
 1,619
   126,326
 1.5% $78,027
 3,132
1.2% 3,132
1.9%
Brookdale 18
 894
   69,669
 0.8% $77,930
 1,810
0.7% 1,810
1.1%
11 private senior living companies (combined) 29
 3,520
   569,006
 6.7% $161,649
 11,383
4.3% 11,383
7.0%
Subtotal triple net leased senior living communities 236
 26,220
   3,091,946
 36.5% $117,923
 67,662
25.4% 67,662
41.7%
Managed senior living communities (7)
 68
 8,807
   1,591,379
 18.8% $180,695
 98,331
36.9% 22,775
14.2%
Subtotal senior living communities 304
 35,027
   4,683,325
 55.3% $133,706
 165,993
62.3% 90,437
55.9%
MOBs (5)
 121
 11,611,203
 sq. ft. 3,602,819
 42.6% $310
 96,116
36.0% 66,958
41.3%
Wellness centers 10
 812,000
 sq. ft. 178,172
 2.1% $219
 4,570
1.7% 4,570
2.8%
Total 435
  
   $8,464,316
 100.0%  
 $266,679
100.0% $161,965
100.0%
 Occupancy
As of and For the Three Months Ended March 31,
 20222021
Office Portfolio (5)
89.3 %92.3 %
SHOP73.0 %69.5 %
Triple net leased senior living communities (6)(7)
80.1 %76.4 %
Wellness centers (7)
100.0 %100.0 %

(1)Represents gross book value of real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations and less impairment write downs, if any.
Tenant / Managed Property Operating Statistics(8)(2)Represents gross book value of real estate assets divided by number of rentable square feet or living units, as applicable, at March 31, 2022.
(3)We calculate our NOI on a consolidated basis and by reportable segment. Our definition of NOI and our reconciliation of net income (loss) to NOI are included below under the heading “Non-GAAP Financial Measures”.
  Rent Coverage Occupancy
  2017 2016 2017 2016
Five Star 1.16x 1.23x 83.0% 84.2%
Sunrise / Marriott (6)
 2.07x 1.94x 92.7% 90.3%
Brookdale 2.44x 2.71x 83.2% 86.6%
11 private senior living companies (combined) 1.23x 1.26x 88.5% 88.4%
Subtotal triple net leased senior living communities 1.26x 1.33x 84.3% 85.3%
Managed senior living communities (7)
 NA
 NA
 86.3% 87.5%
Subtotal senior living communities 1.26x 1.33x 84.8% 85.8%
MOBs (5)
 NA
 NA
 95.8% 95.9%
Wellness centers 1.80x 1.90x 100.0% 100.0%
Total 1.29x 1.36x  
  
(4)Our medical office and life science property leases include some triple net leases where, in addition to paying fixed rents, the tenants assume the obligation to operate and maintain the properties at their expense, and some net and modified gross leases where we are responsible for the operation and maintenance of the properties and we charge tenants for some or all of the property operating costs. A small percentage of our medical office and life science property leases are full-service leases where we receive fixed rent from our tenants and no reimbursement for our property operating costs.

(1)Represents gross book value of real estate assets before depreciation and purchase price allocations, less impairment write downs, if any.
(2)Represents carrying value of investment divided by number of living units or rentable square feet, as applicable, at September 30, 2017.
(3)NOI(5)Medical office and life science property occupancy data is defined and calculated by reportable segment. Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures”.
(4)Senior living communities are categorized by the type of living units which constitute a majority of the living units at the community.
(5)These 121 MOB properties are comprised of 147 buildings.  Our MOB leases include some triple net leases where, in addition to paying fixed rents, the tenants assume the obligation to operate and maintain the properties at their expense, and some net and modified gross leases where we are responsible for the operation and maintenance of the properties, and we charge tenants for some or all of the property operating costs.  A small percentage of our MOB leases are so-called "full-service" leases where we receive fixed rent from our tenants and no reimbursement for our property operating costs.
(6)Marriott International, Inc. guarantees the lessee’s obligations under these leases.
(7)These senior living communities are managed by Five Star. The occupancy for the 12 month period ended, or, if shorter, from the date of acquisitions through, September 30, 2017 was 86.1%.
(8)Operating data for MOBs are presented as of September 30, 2017 and 2016 and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease by tenants; operating data for other properties, tenants and managers are presented based upon the operating results provided by our tenants and managers for the 12 months ended June 30, 2017 and 2016, or the most recent prior period for which tenant operating results are made available to us. Rent coverage is calculated as operating cash flows from our tenants’ facility operations of our properties, before subordinated charges, if any, divided by rents payable to us. We have not independently verified tenant operating data. Excludes data for periods prior to our ownership of certain properties, as well as data for properties sold during the periods presented.

The following tables set forth information regarding our lease expirations as of September 30, 2017 (dollars in thousands):March 31, 2022 and 2021 and includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants and (iii) space being fitted out for occupancy.
(6)Excludes data for periods prior to our ownership of certain properties, data for properties sold or classified as held for sale, if any, and data for which there was a transfer of operations during the periods presented.
          Percent of Cumulative
  
Annualized Rental Income(1) (2)
 Total Percentage of
  Triple Net Leased       Annualized Annualized
  Senior Living   Wellness   Rental Income Rental Income
Year Communities MOBs Centers Total 
Expiring (2)
 
Expiring (2)
2017 $—
 $8,950
 $—
 $8,950
 1.3% 1.3%
2018 —
 20,318
 —
 20,318
 3.0% 4.3%
2019 590
 42,292
 —
 42,882
 6.4% 10.7%
2020 —
 32,460
 —
 32,460
 4.8% 15.5%
2021 1,424
 22,359
 —
 23,783
 3.5% 19.0%
2022 —
 27,196
 —
 27,196
 4.1% 23.1%
2023 28,281
 12,141
 7,546
 47,968
 7.1% 30.2%
2024 69,005
 38,598
 —
 107,603
 16.1% 46.3%
2025 —
 12,862
 —
 12,862
 1.9% 48.2%
Thereafter 181,965
 154,707
 10,550
 347,222
 51.8% 100.0%
Total $281,265
 $371,883
 $18,096
 $671,244
 100.0%  
Average remaining lease term(7)Operating data for triple net leased senior living communities MOBsleased to third party operators and wellness center properties (weightedcenters are presented based upon the operating results provided by annualized rental income):  8.2 years (2)

(1)Annualized rental income is rents pursuant to existing leases as of September 30, 2017, including estimated percentage rents, straight line rent adjustments, estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our MOBs and wellness centers. Rental income amounts also include 100% of rental income as reported under GAAP from a property owned by a joint venture in which we own a 55% equity interest.
(2)Excludes rent received from our managed senior living communities leased to our TRSs.  If the NOI from our TRSs (three months ended September 30, 2017, annualized) were included in the foregoing table, the percent of total annualized rental income expiring in each of the following years would be: 2017 — 1.2%; 2018 — 2.7%; 2019 — 5.6%; 2020 — 4.3%; 2021 — 3.1%; 2022 — 3.6%; 2023 — 6.3%; 2024 — 14.1%; 2025 —  1.7%; and thereafter — 57.4%. In addition, if our leases to our TRSs using the terms of the management agreements for these communities were included in the foregoing table, the average remaining lease term for all properties (weighted by annualized rental income) would be 8.9 years.

          Percent of Cumulative
          Total Percentage of 
  
Number of Tenants (1)
 Number of Number of
  Senior Living   Wellness   Tenancies Tenancies
Year Communities MOBs Centers Total 
Expiring (1)
 
Expiring (1)
2017 —
 69
 —
 69
 10.2% 10.2%
2018 —
 89
 —
 89
 13.1% 23.3%
2019 1
 97
 —
 98
 14.5% 37.8%
2020 —
 91
 —
 91
 13.4% 51.2%
2021 1
 73
 —
 74
 10.9% 62.1%
2022 —
 79
 —
 79
 11.7% 73.8%
2023 2
 31
 1
 34
 5.0% 78.8%
2024 3
 34
 —
 37
 5.5% 84.3%
2025 —
 26
 —
 26
 3.7% 88.0%
Thereafter 11
 69
 1
 81
 12.0% 100.0%
Total 18
 658
 2
 678
 100.0%  
(1)Excludes our managed senior living communities leased to our TRSs.

  Number of Living Units or Square Feet with Leases Expiring
  
Living Units (1)
 
Square Feet (2)
  Triple Net              
  Leased Senior Percent of Cumulative   Wellness   Percent of Cumulative
  Living Total Living Percentage of   Centers   Total Percent of
  Communities Units Living Units MOBs (Square Total Square Square Feet Total Square
Year (Units) Expiring Expiring (Square Feet) Feet) Feet Expiring Feet Expiring
2017 —
 —% —% 198,077
 —
 198,077
 1.7% 1.7%
2018 —
 —% —% 698,609
 —
 698,609
 5.9% 7.6%
2019 175
 0.7% 0.7% 1,324,791
 —
 1,324,791
 11.1% 18.7%
2020 —
 —% 0.7% 1,453,739
 —
 1,453,739
 12.2% 30.9%
2021 361
 1.4% 2.1% 697,422
 —
 697,422
 5.8% 36.7%
2022 —
 —% 2.1% 1,055,166
 —
 1,055,166
 8.8% 45.5%
2023 2,263
 8.6% 10.7% 801,553
 354,000
 1,155,553
 9.7% 55.2%
2024 6,561
 25.0% 35.7% 1,461,589
 —
 1,461,589
 12.2% 67.4%
2025 —
 —% 35.7% 537,584
 —
 537,584
 4.5% 71.9%
Thereafter 16,860
 64.3% 100.0% 2,894,849
 458,000
 3,352,849
 28.1% 100.0%
Total 26,220
 100.0%   11,123,379
 812,000
 11,935,379
 100.0%  
(1)Excludes 8,806 living units from our managed senior living communities leased to our TRSs. If the number of living units included in our TRS leases using the terms of the management agreements for these communities were included in the foregoing table, the percent of total living units expiring in each of the following years would be: 2017 — 0.0%; 2018 — 0.0%; 2019 — 0.5%; 2020 — 0.0%; 2021 — 1.0%; 2022 — 0.0%; 2023 — 6.5%; 2024 — 18.7%; 2025 — 0.0%; and thereafter — 73.3%.
(2)Includes 100% of square feet from a property owned by a joint venture in which we own a 55% equity interest.
our tenants for the three months ended December 31, 2021 and 2020, or the most recent prior period for which tenant operating results are made available to us. We have not independently verified tenant operating data.
During the three months ended September 30, 2017,March 31, 2022, we entered MOB lease renewals for 352,000 leasableinto new and renewal leases at our medical office and life science properties in our Office Portfolio segment as summarized in the following table (dollars and square feet and new leases for 50,000 leasable square feet. The weighted average annual rental rate for leases entered during the quarter was $24.61in thousands, except per square foot and these rental rates were, on a weighted average basis, 0.6% above previous rents charged for the same space.  Average lease terms for leases entered during the third quarter of 2017 were 7.2 yearsamounts):
Three Months Ended March 31, 2022
 New LeasesRenewalsTotal
Square feet leased during the quarter120 81 201 
Weighted average rental rate change (by rentable square feet)15.1 %0.5 %8.2 %
Weighted average lease term (years) (1)
9.9 4.1 7.4 
Total leasing costs and concession commitments (2)
$11,330 $1,208 $12,538 
Total leasing costs and concession commitments per square foot (2)
$94.34 $14.91 $62.35 
Total leasing costs and concession commitments per square foot per year (2)
$9.52 $3.62 $8.45 
(1)Weighted based on annualized rental income pursuant to existing leases as of September 30, 2017,March 31, 2022, including straight line rent adjustments and estimated recurring expense reimbursements, and excluding lease value amortization. Commitments
(2)Includes commitments made for tenant improvement costs, leasing commission costsexpenditures and concessions, for leases we entered during the third quartersuch as tenant improvements, leasing commissions, tenant reimbursements and free rent.
19
Table of 2017 totaled $7.0 million, or $17.29 per square foot on average (approximately $2.40 per square foot per yearContents
Lease Expiration Schedules
As of theMarch 31, 2022, lease term).


GENERAL INDUSTRY TRENDS

We believe that the primary market for senior living services is individuals age 75 and older, and, according to U.S. Census data, that group is projected to be among the fastest growing age cohort in the United States over the next 20 years. Also, as a result of medical advances, seniors are living longer. Due to these demographic trends, we expect the demand for senior living services to increase for the foreseeable future. Despite this trend, future economic downturns, softness in the U.S. housing market, higher levels of unemployment among our potential residents’ family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics could adversely affect the ability of seniors to afford the resident fees or entrance feesexpirations at our senior living communities.medical office and life science properties in our Office Portfolio segment are as follows (dollars in thousands):

YearNumber of TenantsSquare Feet LeasedPercent of TotalCumulative Percent of Total
Annualized  Rental Income(1)
Percent of TotalCumulative Percent of Total
202271758,676 9.7 %9.7 %$19,222 8.7 %8.7 %
202346658,560 8.5 %18.2 %17,185 7.8 %16.5 %
202473978,491 12.6 %30.8 %26,620 12.1 %28.6 %
202567692,919 8.9 %39.7 %16,337 7.4 %36.0 %
202663792,127 10.2 %49.9 %23,588 10.7 %46.7 %
202751682,386 8.8 %58.7 %17,089 7.8 %54.5 %
202831861,190 11.1 %69.8 %21,717 9.9 %64.4 %
202932321,870 4.1 %73.9 %10,206 4.6 %69.0 %
203018388,369 5.0 %78.9 %7,710 3.5 %72.5 %
2031 and thereafter471,653,451 21.1 %100.0 %60,586 27.5 %100.0 %
Total4997,788,039 100.0 %$220,260 100.0 %
Weighted average remaining lease term (in years)5.3 5.8 
The(1)Annualized rental income is based on rents pursuant to existing leases as of March 31, 2022, including straight line rent adjustments and estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our medical advances which are increasing averageoffice and life spans are also causing some seniors to defer considering relocating toscience properties.
Lease expiration data for our triple net leased senior living communities but we doleased to third party operators and wellness centers has not believe this factor is sufficientbeen provided because there were no changes to offset the long term positive demographic trends causing increased demand for senior living communities for the foreseeable future.

In recent years, a significant number of new senior living communities have been developed and continue to be developed. Although there are indications that the rate of newly started developments has recently declined, the increased supply of senior living communities that has resultedlease expiration schedules from recent development activity has increased competitive pressures on our tenants and manager, particularly in certain geographic markets where we own senior living communities, including Arizona, Georgia and Texas, and we expect these competitive challenges to continue for at least the next few years. These competitive challenges may prevent our tenants and manager from maintaining or improving occupancy and rates at our senior living communities, which may increase the risk of default under our leases, reduce the rents and returns we may receive and earn from our leased and managed senior living communities and adversely affect the profitability of our senior living communities, and may cause the value of our properties to decline. In response to these competitive pressures, we have invested capital in our existing senior living communities and expect to continue to do so in order that our communities may remain competitive with newer communities.

The senior living industry is subject to extensive and frequently changing federal, state and local laws and regulations. For further information regarding these laws and regulations, and possible legislative and regulatory changes, see "Impact of Government Reimbursement" elsewhere in this Quarterly Report as well asthose reported in our Annual Report.

Our MOBs have been impacted by at least two major industry trendsReport, except for the pasttransfer of operations of one senior living community previously managed by Five Star under our TRS structure to a third party operator in January 2022 for a 10 years which are continuing at this time and that have impacted our investment activities.year lease term expiring in 2031.

20
First, medical properties are being consolidated onto hospital campuses and/or under common ownership with hospitals. This has caused the number of free standing medical office buildings to decline. At the same time the number of medical office buildings on hospital campuses has increased and the number of multi-practice medical buildings that are anchor leased by hospital systems who employ doctors has increased.


Second, various advances in medical science have caused a large investment in new bio-medical research companies that require office, lab and medical products manufacturing space. We believe that about half of our total investments in MOBs may be considered biotech and life science properties.

RESULTS OF OPERATIONS (dollars and square feet in thousands, unless otherwise noted)
We have four operating segments, of which three are separate reporting segments.operate in, and report financial information for, the following two segments: Office Portfolio and SHOP. We aggregate our triple net leased senior living communities, our managed senior living communities and our MOBs into threeeach of these two reporting segments based on their similar operating and economic characteristics. The first reportingOur Office Portfolio segment includes triple netconsists of medical office properties leased senior living communities that provide short term and long term residential careto medical providers and other services for residentsmedical related businesses, as well as life science properties leased to biotech laboratories and with respect to which we receive rents from the operators. The second reportingother similar tenants. Our SHOP segment includesconsists 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 operatorcommunities.
We also report “non-segment” operations, consisting of triple net leased senior living communities and wellness centers that are leased to manage the communities for our account. The third reporting segment includes MOBs where the tenants pay us rent. Our fourth segment includes all of our other operations, including certain properties that offer wellness, fitness and spa services to members and with respect toparty operators from which we receive rents, from operators, which we do not consider to be sufficiently material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
The following table summarizes the results of operations of each of our segments for the three months ended March 31, 2022 and 2021:

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
Revenues:  
  
  
  
Triple net leased senior living communities $67,662
 $66,520
 $202,340
 $198,269
Managed senior living communities 98,331
 98,480
 294,816
 292,803
MOBs 96,116
 94,404
 285,413
 278,964
All other operations 4,570
 4,579
 13,684
 13,689
Total revenues $266,679
 $263,983
 $796,253
 $783,725
         
Net income (loss) attributable to common shareholders:  
  
  
  
Triple net leased senior living communities $46,378
 $38,327
 $125,407
 $117,621
Managed senior living communities 8,912
 (1,612) 17,413
 3,500
MOBs 27,056
 29,353
 83,877
 91,464
All other operations (47,932) (38,165) (144,087) (114,176)
Net income attributable to common shareholders $34,414
 $27,903
 $82,610
 $98,409
Three Months Ended March 31,
20222021
Revenues:
Office Portfolio$54,997 $93,323 
SHOP245,448 259,966 
Non-Segment10,288 9,435 
Total revenues$310,733 $362,724 
Net income (loss) attributable to common shareholders:
Office Portfolio$343,691 $22,709 
SHOP(35,873)(25,414)
Non-Segment(67,395)(64,800)
Net income (loss) attributable to common shareholders$240,423 $(67,505)
The following sections analyze and discuss the results of operations of each of our segments for the periods presented.
21

Three Months Ended September 30, 2017March 31, 2022 Compared to Three Months Ended September 30, 2016March 31, 2021 (dollars and square feet in thousands, except average monthly rate):

Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the three months ended September 30, 2017March 31, 2022 to the three months ended September 30, 2016.

Triple net leased senior living communities:    
  All Properties 
Comparable Properties (1)
  As of and for the Three Months As of and for the Three Months
  Ended September 30, Ended September 30,
  2017 2016 2017 2016
Total properties 236
 234
 234
 234
# of units 26,220
 26,094
 26,094
 26,094
Tenant operating data (2)
        
Occupancy 84.3% 85.3% 84.3% 85.3%
Rent coverage 1.26x 1.33x 1.26x 1.33x
(1)Consists of triple net leased senior living communities we have owned continuously since July 1, 2016 and excludes communities held for sale, if any.
(2)All tenant operating data presented are based upon the operating results provided by our tenants for the 12 months ended June 30, 2017 and 2016 or the most recent prior period for which tenant operating results are made available to us.  Rent coverage is calculated as operating cash flows from our triple net lease tenants’ operations of our properties, before subordinated charges, if any, divided by triple net lease minimum rents payable to us.  We have not independently verified tenant operating data.  Excludes data for historical periods prior to our ownership of certain properties, as well as for properties sold during the periods presented.

Triple net leased senior living communities, all properties:
  Three Months Ended September 30,    
  2017 2016 Change % Change
Rental income $67,662
 $66,520
 $1,142
 1.7 %
Property operating expenses —
 (47) (47) (100.0)%
Net operating income (NOI) 67,662
 66,473
 1,189
 1.8 %
         
Depreciation and amortization expense (20,629) (19,727) 902
 4.6 %
Impairment of assets —
 (2,191) (2,191) (100.0)%
Operating income 47,033
 44,555
 2,478
 5.6 %
         
Interest expense (655) (6,228) (5,573) (89.5)%
Net income $46,378
 $38,327
 $8,051
 21.0 %
Except as noted below under “Rental income,” we have not included a discussion and analysis of the results of our comparable properties data for the triple net leased senior living communities segment as we believe that such a comparison is generally consistent with the comparison of results for all our triple net leased senior living communities from quarter to quarter and a separate, comparable properties comparison is not meaningful.
Rental income. Rental income increased primarily due to rents from triple net leased senior living communities we acquired since July 1, 2016, and also due to increased rents resulting from our purchase of improvements since July 1, 2016. These increases were partially offset by reduced rental income resulting from our sale of one senior living community since July 1, 2016. Rental income includes non-cash straight line rent adjustments totaling $750 and $865 for the three months ended September 30, 2017 and 2016, respectively. Rental income increased year over year on a comparable property basis by $757, primarily as a result of our purchase of improvements at certain of these communities that we have owned continuously since July 1, 2016 and the resulting increased rent, pursuant to the terms of the applicable leases.
Property operating expenses. In the third quarter of 2016, we recorded $47 of property operating expenses related to bad debt reserves associated with a lease default at a triple net leased senior living community we acquired in 2015 which was previously leased to a third party private operator. In July 2016, we terminated this lease and entered a management agreement with Five Star to manage this community for our account under a TRS structure.
Net operating income.  We typically incur minimal property operating expenses at these communities, as the majority of those expenses are paid by our tenants. NOI increased due to the increase in rental income and the decrease in property operating expenses described above.  The reconciliation of NOI to net income for our triple net leased senior living communities segment is shown in the table above.March 31, 2021. Our definition of NOI and our reconciliation of net income (loss) to consolidated NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”
Three Months Ended March 31,
20222021$ Change% Change
NOI by segment:
Office Portfolio$31,550 $62,030 $(30,480)(49.1)%
SHOP153 3,868 (3,715)(96.0)%
Non-Segment10,288 9,435 853 9.0 %
Total NOI41,991 75,333 (33,342)(44.3)%
Depreciation and amortization57,259 66,153 (8,894)(13.4)%
General and administrative7,285 7,542 (257)(3.4)%
Acquisition and certain other transaction related costs928 — 928 nm
Impairment of assets— (174)174 (100.0)%
Gain (loss) on sale of properties327,794 (122)327,916 nm
Losses on equity securities, net(8,553)(8,339)(214)2.6 %
Interest and other income395 2,835 (2,440)(86.1)%
Interest expense(57,131)(60,091)2,960 (4.9)%
Loss on modification or early extinguishment of debt(483)(2,040)1,557 (76.3)%
Income (loss) from continuing operations before income tax expense and equity in earnings of investees238,541 (65,945)304,486 nm
Income tax expense(1,472)(238)(1,234)nm
Equity in earnings of investees3,354 — 3,354 nm
Net income (loss)240,423 (66,183)306,606 nm
Net income attributable to noncontrolling interest— (1,322)1,322 (100.0)%
Net income (loss) attributable to common shareholders$240,423 $(67,505)$307,928 nm
    nm - not meaningful
DepreciationOffice Portfolio:
 
Comparable Properties (1)
All Properties
 As of March 31,As of March 31,
 2022202120222021
Total buildings95 95 104 122 
Total square feet (2)
8,020 8,020 8,724 11,190 
Occupancy (3)
92.5 %92.8 %89.3 %92.3 %
(1)Consists of medical office and amortization expense.  Depreciationlife science properties that we have owned and amortization expensewhich have been in service continuously since January 1, 2021; excludes properties classified as held for sale or out of service undergoing redevelopment, if any, and medical office and life science properties owned by unconsolidated joint ventures in each of which we own an equity interest.
(2)Prior periods exclude space remeasurements made subsequent to those periods.
(3)All property occupancy for medical office and life science properties includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants, and (iii) space being fitted out for occupancy. Comparable property occupancy excludes out of service assets undergoing redevelopment and medical office and life science properties owned by unconsolidated joint ventures in each of which we own an equity interest.
22

Three Months Ended March 31,
Comparable (1)
Non-Comparable
 Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20222021ChangeChange2022202120222021ChangeChange
Rental income$48,428 $48,123 $305 0.6 %$6,569 $45,200 $54,997 $93,323 $(38,326)(41.1)%
Property operating expenses(19,868)(19,174)694 3.6 %(3,579)(12,119)(23,447)(31,293)(7,846)(25.1)%
NOI$28,560 $28,949 $(389)(1.3)%$2,990 $33,081 $31,550 $62,030 $(30,480)(49.1)%
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2021; excludes properties classified as held for sale or out of service undergoing redevelopment, if any, and medical office and life science properties owned by unconsolidated joint ventures in each of which we own an equity interest.
Rental income. Rental income decreased primarily due to the deconsolidation of 11 medical office and life science properties currently owned by unconsolidated joint ventures in each of which we own a 20% equity interest and our disposition of five properties since January 1, 2021 and assets being taken out of service and/or undergoing redevelopment, partially offset by an increase in rental income at our comparable properties. Rental income increased at our comparable properties primarily as a resultdue to higher average rents achieved from our new and renewal leasing activity and increased parking revenue at certain of our acquisitionscomparable properties as certain states and our purchase of improvements since July 1, 2016.

Impairment of assets. Impairment of assets charges recorded in 2016 relatemunicipalities have eased restrictions related to the reduction ofCOVID-19 pandemic, tenants' employees have increasingly returned to the carrying value of a SNF that we sold during the third quarter of 2016 to its sale price less cost to sell.

Interest expense.  Interestoffice and commercial activity has increased, partially offset by decreases in tax escalation income and other property operating expense relates to mortgage debts and capital leases secured byreimbursements at certain of our comparable properties.
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 communities.properties. The decrease in interest expenseproperty operating expenses is primarily due to the deconsolidation of 11 medical office and life science properties currently owned by unconsolidated joint ventures in each of which we own a 20% equity interest and our prepaymentdisposition of $320,379five properties since January 1, 2021 and assets being taken out of service and/or undergoing redevelopment, partially offset by an increase in aggregate principal amountproperty operating expenses at our comparable properties. Property operating expenses at our comparable properties increased primarily due to increases in utility expenses, landscaping expenses and other direct costs, partially offset by decreases in real estate taxes at certain of mortgage debts since July 1, 2016 with a weighted average annual interest rate of 6.7%, as well as regularly scheduled amortization of mortgage debts which secure these communities.our comparable properties.

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

SHOP:
Managed senior living communities:
 
Comparable Properties (1)
All Properties
 As of and For the Three MonthsAs of and For the Three Months
 Ended March 31,Ended March 31,
 2022202120222021
Total properties120 120 234 235 
Number of units17,899 17,899 25,088 26,963 
Occupancy74.1 %72.7 %73.0 %69.5 %
Average monthly rate (2)
$4,084 $4,051 $4,472 $4,623 
  All Properties 
Comparable Properties (1)
  As of and for the Three Months As of and for the Three Months
  Ended September 30, Ended September 30,
  2017 2016 2017 2016
Total properties 68
 68
 62
 62
# of units 8,807
 8,797
 8,242
 8,242
Occupancy 85.8% 86.7% 86.0% 86.9%
Average monthly rate (2)
 $4,243
 $4,208
 $4,268
 $4,223
(1)(1)Consists of managed senior living communities owned and managed by the same operator continuously since July 1, 2016 and excludes communities classified as held for sale, if any.
(2)Average monthly rate is calculated by taking the average daily rate, which is defined as total residents fees and services divided by occupied units during the period, and multiplying it by 30 days.
Managed senior living communities all properties:    that we have owned and which have been operated by the same operator continuously since January 1, 2021; excludes communities classified as held for sale or closed, if any.
(2)Average monthly rate is calculated by taking the average daily rate, which is defined as total residents fees and services divided by occupied units during the period, and multiplying it by 30 days.
Three Months Ended March 31,
Comparable (1)
Non-Comparable
Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20222021ChangeChange2022202120222021ChangeChange
Residents fees and services$162,540 $185,317 $(22,777)(12.3)%$82,908 $74,649 $245,448 $259,966 $(14,518)(5.6)%
Property operating expenses(153,055)(174,960)(21,905)(12.5)%(92,240)(81,138)(245,295)(256,098)(10,803)(4.2)%
NOI$9,485 $10,357 $(872)(8.4)%$(9,332)$(6,489)$153 $3,868 $(3,715)(96.0)%
23

  Three Months Ended September 30,    
  2017 2016 Change % Change
Residents fees and services $98,331
 $98,480
 $(149) (0.2)%
Property operating expenses (75,556) (74,763) 793
 1.1 %
Net operating income (NOI) 22,775
 23,717
 (942) (4.0)%
         
Depreciation and amortization expense (12,691) (20,747) (8,056) (38.8)%
Impairment of assets —
 (2,394) (2,394) (100.0)%
Operating income 10,084
 576
 9,508
 1,650.7 %
         
Interest expense (1,172) (2,104) (932) (44.3)%
Loss on early extinguishment of debt —
 (84) (84) (100.0)%
Net income (loss) $8,912
 $(1,612) $10,524
 (652.9)%
(1)Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2021; excludes communities classified as held for sale or closed, if any.
Residents fees and services. Residents fees and services are the revenues earned at our managed senior living communities. We recognize these revenues as services are provided and related fees are accrued. Residents fees and services decreased primarily due to a decline in occupancy forthe closure of skilled nursing units at certain of our comparable properties during the three months ended SeptemberJune 30, 2017 compared2021. Additionally, residents fees and services decreased due to the three months ended September 30, 2016,our closure of one property since January 1, 2021. Decreases to residents fees and services were partially offset by an increaseincreases in occupancy and average monthly rates during these periods.rate at certain of our comparable properties.
Property operating expenses. Property operating expenses consist of management fees, real estate taxes, utility expense,expenses, insurance, salaries and benefit costs of property level personnel, repairs and maintenance expense, management fees, cleaning expense and other direct costs of operating these communities. Property operating expenses increaseddecreased primarily due to increased salaries and benefit costs associated with increased staffing required as a resultthe closure of the hurricanes that occurred in the southeastern United States and Texas in the third quarter of 2017, as well as increased real estate taxesskilled nursing units at certain of these communities.
Netour comparable properties during the three months ended June 30, 2021. Additionally, property operating income.  NOIexpenses decreased due to the increases inour closure of one property since January 1, 2021. Decreases to property operating expenses as well as the decrease in residents fees and services described above.  The reconciliation of NOI to net income for our managed senior living communities segment is shown in the table above.  Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”
Depreciation and amortization expense.  Depreciation and amortization expense includes the depreciation of owned property and equipment as well as the amortization expense related to in place resident agreements assumed upon the acquisition of a community. Depreciation and amortization expense decreased as a result of certain of our in place resident agreements becoming fully amortized since July 1, 2016,were partially offset by an increase in depreciation expense due to our purchase of improvements since July 1, 2016.

Impairment of assets. Impairment of assets charges recorded in 2016 relate to the reduction of the carrying value of a senior living community that we sold in December 2016 to its estimated fair value less cost to sell.
Interest expense. Interest expense relates to mortgage debts secured by certain of these communities.  The decrease in interest expense is due to our prepayment of $97,255 in aggregate principal amount of mortgage debts since July 1, 2016 with a weighted average annual interest rate of 6.0%, as well as regularly scheduled amortization of mortgage debts which secure these communities.

Loss on early extinguishment of debt. We recognized a loss on early extinguishment of debt in connection with our prepayment of mortgage debts during the third quarter of 2016.
Managed senior living communities, comparable properties (managed senior living communities owned and managed by the same operator continuously since July 1, 2016 excluding communities classified as held for sale, if any):
  Three Months Ended September 30,    
  2017 2016 Change % Change
Residents fees and services $92,790
 $92,742
 $48
 0.1 %
Property operating expenses (70,879) (69,961) 918
 1.3 %
Net operating income (NOI) 21,911
 22,781
 (870) (3.8)%
         
Depreciation and amortization expense (11,040) (16,965) (5,925) (34.9)%
Operating income 10,871
 5,816
 5,055
 86.9 %
         
Interest expense (697) (1,624) (927) (57.1)%
Loss on early extinguishment of debt —
 (84) (84) (100.0)%
Net income $10,174
 $4,108
 $6,066
 147.7 %
Residents fees and services. Residents fees and services are the revenues earned at our managed senior living communities.  We recognize these revenues as services are provided and related fees are accrued.  Residents fees and services increased modestly year over yearlabor costs on a comparable propertyper resident basis primarily duefor both permanent and agency labor. We expect to an increase in average monthly rates, partially offset bycontinue to have elevated labor costs on a decline in occupancy.per resident basis.
Property operating expenses.  Property operating expenses consist of management fees, real estate taxes, utility expense, insurance, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these communities. Property operating expenses increased primarily due to increased salaries and benefit costs associated with increased staffing required as a result of the hurricanes that occurred in the southeastern United States and Texas in the third quarter of 2017, as well as increased real estate taxes at certain of these communities.
Net operating income. The decreasechange in NOI reflects the net changes in residents fees and services and property operating expenses described above.  The reconciliation
Non-Segment(1):
 
Comparable Properties (2)
All Properties
 As of and For the Three Months Ended March 31,As of and For the Three Months Ended March 31,
 2022202120222021
Total properties:
Triple net leased senior living communities29 29 30 29 
Wellness centers10 10 10 10 
Rent coverage:
Triple net leased senior living communities (3)
1.21 x1.48 x1.21 x1.48 x
Wellness centers (3)
1.12 x0.91 x1.12 x0.91 x
(1)Non-segment operations consists of NOI to net income forall of our managedother operations, including certain senior living communities leased to third party operators and wellness centers, which segment comparable properties, is shown in the table above.  Our definition of NOIwe do not consider to be sufficiently material to constitute a separate reporting segment, and our reconciliation of netany other income to consolidated NOIor expenses that are included below under the heading “Non-GAAP Financial Measures.”
Depreciation and amortization expense.  Depreciation and amortization expense includes the depreciation of owned property and equipment as well as the amortization expense related to in place resident agreements assumed upon the acquisition of a community. Depreciation and amortization expense decreased as a result of certain of our in place resident agreements becoming fully amortized since July 1, 2016, partially offset by an increase in depreciation expense due to our purchase of improvements since July 1, 2016.
Interest expense. Interest expense relates to mortgage debts secured by certain of these communities.  The decrease in interest expense is due to our prepayment of $97,255 in aggregate principal amount of mortgage debts since July 1, 2016 with a weighted average annual interest rate of 6.0%, as well as regularly scheduled amortization of mortgage debts which secure these communities.

Loss on early extinguishment of debt. We recognized a loss on early extinguishment of debt in connection with our prepayment of mortgage debts during the third quarter of 2016.


MOBs:
  All Properties 
Comparable Properties (1)
  As of and for the Three Months As of and for the Three Months
  Ended September 30, Ended September 30,
  2017 2016 2017 2016
Total properties 121
 119
 118
 118
Total buildings 147
 145
 144
 144
Total square feet (2)
 11,611
 11,401
 11,340
 11,335
Occupancy (3)
 95.8% 95.9% 95.7% 96.4%
(1)Consists of MOBs we have owned continuously since July 1, 2016, includes our MOB (two buildings) that is owned in a joint venture arrangement and excludes properties classified as held for sale, if any.
(2)Prior periods exclude space re-measurements made subsequent to those periods.
(3)MOB occupancy includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease by tenants.
MOBs, all properties:
  Three Months Ended September 30,    
  2017 2016 Change % Change
Rental income $96,116
 $94,404
 $1,712
 1.8 %
Property operating expenses (29,158) (28,537) 621
 2.2 %
Net operating income (NOI) 66,958
 65,867
 1,091
 1.7 %
         
Depreciation and amortization expense (32,351) (30,922) 1,429
 4.6 %
Impairment of assets —
 7
 (7) (100.0)%
Operating income 34,607
 34,952
 (345) (1.0)%
         
Interest expense (6,172) (5,599) 573
 10.2 %
Net income 28,435
 29,353
 (918) (3.1)%
Net income attributable to noncontrolling interest (1,379) —
 1,379
 100.0 %
Net income attributable to common shareholders $27,056
 $29,353
 $(2,297) (7.8)%
Rental income.Rental income increased primarily due to rents from the MOBs we acquired since July 1, 2016, as well as certain changes at our comparable MOB properties discussed below. Rental income includes non-cash straight line rent adjustments totaling $2,733 and $3,290 and net amortization of approximately $1,297 and $1,181 of above and below market lease adjustments for the three months ended September 30, 2017 and 2016, respectively.
Property operating expenses. Property operating expenses consist of real estate taxes, utility expense, property management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these properties.  Property operating expenses increased primarily due to our acquisitions since July 1, 2016, as well as certain changes at our comparable MOB properties discussed below.
Net operating income.  NOI increased due to the increased rental income described above, partially offset by the increases in property operating expenses described above.  The reconciliation of NOI to net income for our MOB segment is shown in the table above.  Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”


Depreciation and amortization expense. Depreciation and amortization expense increased primarily due to acquisitions as well as increases in the amortization of leasing costs, depreciation expense on fixed assets and amortization of acquired in place real estate leases that we amortize over the respective lease terms.

Impairment of assets. We recorded a reversal of impairment charges previously recorded of $7 in the third quarter of 2016 to adjust the carrying value of four MOBs that we sold in the third quarter of 2016 to their sales prices less costs to sell.
Interest expense.  Interest expense relates to mortgage debts secured by certain of these properties.  The increase in interest expense is the result of our obtaining, in July 2016, an aggregate $620,000 secured debt financing with a weighted average fixed annual interest rate of 3.5%, partially offset by our prepayment of $19,386 in aggregate principal amount of mortgage debt since July 1, 2016 with an annual interest rate of 6.1%, as well as the regularly scheduled amortization of mortgage debts which secure these properties.

Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest represents the net income attributable to a sovereign investorspecific reporting segment.
(2)Comparable properties consists of properties that owns 45% of one of our MOBs (two buildings) through the joint venture agreement we entered in March 2017.
MOBs, comparable properties (MOBs we have owned and which have been leased to the same operator continuously since JulyJanuary 1, 2016, includes our MOB (two buildings) that is owned in a joint venture arrangement and2021; excludes properties classified as held for sale, if any):any.
(3)All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended December 31, 2021 and 2020 or the most recent prior period for which tenant operating results are available to us. Rent coverage is calculated using the operating cash flows from our triple net lease tenants' operations of our properties, before subordinated charges, if any, divided by triple net lease minimum rents payable to us. We have not independently verified tenant operating data. Excludes data for historical periods prior to our ownership of certain properties, as well as data for properties sold or classified as held for sale, if any, or for which there was a transfer of operations during the periods presented.
Three Months Ended March 31,
Comparable (1)
Non-Comparable
Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20222021ChangeChange2022202120222021ChangeChange
Rental income$10,092 $9,435 $657 7.0 %$196 $— $10,288 $9,435 $853 9.0 %
NOI$10,092 $9,435 $657 7.0 %$196 $— $10,288 $9,435 $853 9.0 %
  Three Months Ended September 30,    
  2017 2016 Change % Change
Rental income $94,526
 94,306
 $220
 0.2 %
Property operating expenses (28,574) (28,379) 195
 0.7 %
Net operating income (NOI) 65,952
 65,927
 25
 0.0 %
         
Depreciation and amortization expense (31,567) (30,922) 645
 2.1 %
Operating income 34,385
 35,005
 (620) (1.8)%
         
Interest expense (6,171) (5,599) 572
 10.2 %
Net income 28,214
 29,406
 (1,192) (4.1)%
Net income attributable to noncontrolling interest (1,379) —
 1,379
 100.0 %
Net income attributable to common shareholders $26,835
 $29,406
 $(2,571) (8.7)%
(1)Consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2021; excludes properties classified as held for sale, if any.

Rental income. Rental income increased primarily due to an increase in rental income at our comparable properties, the transfer of one senior living community we own from reimbursable expensesmanaged senior living communities to triple net leased senior living communities, and increased rents resulting from our purchase of improvements at certain of these properties.our comparable properties since January 1, 2021. Rental income includes non-cash straight line rent adjustments totaling $2,632 and $3,304 and net amortizationincreased at our comparable properties primarily due to higher cash rents received from a tenant that previously defaulted under leases for six of approximately $1,301 and $1,181 of above and below market lease adjustments forour wellness centers during the three months ended September 30, 2017March 31, 2022. We have elected to recognize rental income from this previously defaulted tenant as rent payments are received. In February 2022, the leases for these six wellness centers were amended and 2016, respectively.a portion of the rent due to us was deferred.
24

Property operating expenses.  Property operating expenses consist of real estate taxes, utility expense, property management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these properties. Property operating expenses increased primarily as the result of an increase in utility expense at certain of these properties and increases in other direct costs of operating these properties.
Net operating income. The change in NOI reflects the net changes in rental income and property operating expenses described above.  The reconciliation of NOI
Consolidated:
References to net income for our MOB segment for comparable properties is shownchanges in the table above.  Our definitionincome and expense categories below relate to the comparison of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”
Depreciation and amortization expense.  Depreciation and amortization expense increased primarily due to an increase in the amortization of leasing costs and depreciation expense on fixed assets acquired since July 1, 2016, partially offset by a reduction in amortization of acquired in place real estate leases that we amortize over the respective lease terms.
Interest expense.  Interest expense relates to mortgage debts secured by certain of these properties.  The increase in interest expense is the result of our obtaining, in July 2016, an aggregate $620,000 secured debt financing with a weighted average fixed

annual interest rate of 3.5%, partially offset by our prepayment of $19,386 in aggregate principal amount of mortgage debt since July 1, 2016 with an annual interest rate of 6.1%, as well as the regularly scheduled amortization of mortgage debts which secure these properties.

Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest represents the net income attributable to a sovereign investor that owns 45% of one of our MOBs (two buildings) through the joint venture agreement we entered in March 2017.
All other operations(1): 
  Three Months Ended September 30,    
  2017 2016 Change % Change
Rental income $4,570
 $4,579
 $(9) (0.2)%
         
Expenses:        
Depreciation and amortization (948) (948) —
 — %
General and administrative (19,883) (12,107) 7,776
 64.2 %
Acquisition and certain other transaction related costs —
 (824) (824) (100.0)%
Total expenses (20,831) (13,879) 6,952
 50.1 %
         
Operating loss (16,261) (9,300) 6,961
 74.8 %
         
Dividend income 659
 659
 —
 — %
Interest and other income 128
 89
 39
 43.8 %
Interest expense (32,106) (29,507) 2,599
 8.8 %
Loss on early extinguishment of debt (274) —
 274
 100.0 %
Loss before income tax expense and equity in earnings of an investee (47,854) (38,059) 9,795
 25.7 %
Income tax expense (109) (119) (10) (8.4)%
Equity in earnings of an investee 31
 13
 18
 138.5 %
Net loss $(47,932) $(38,165) $9,767
 25.6 %
(1)All other operations includes all of our other operations, including certain properties that offer wellness, fitness and spa services to members, which segment we do not consider to be sufficiently material to constitute a separate reporting segment, and any operating expenses that are not attributable to a specific reporting segment.
Rental income. Rental income includes non-cash straight line rent of approximately $138 and $137results for the three months ended September 30, 2017 and 2016, respectively. Rental income also includes net amortization of approximately $55 of acquired real estate leases and obligations for each ofMarch 31, 2022, compared to the three months ended September 30, 2017 and 2016.March 31, 2021.
Depreciation and amortization expense.Depreciation and amortization expense remained consistent asdecreased primarily due to the deconsolidation of 11 medical office and life science properties owned by unconsolidated joint ventures in each of which we had no acquisitions orown a 20% equity interest, our disposition of five properties and certain depreciable assets becoming fully depreciated since January 1, 2021. Decreases to depreciation and amortization expense were partially offset by the purchase of capital expenditures in this segmentimprovements at certain of our properties since JulyJanuary 1, 2016. We depreciate our long lived wellness center assets on a straight line basis.2021.

General andadministrative expense.expense. General and administrative expense consists of fees paid to RMR LLC under our business management agreements,agreement, legal and accounting fees, fees and expenses of our Trustees, equity compensation expense and other costs relating to our status as a publicly ownedtraded company. General and administrative expense increaseddecreased primarily due to an increasea decrease in our base business management fees expense as a result of $8,136, including $8,022 of estimated business management incentive fees that we recognizedlower consolidated indebtedness and lower trading prices for the three months ended September 30, 2017 that may become payable in 2018 due to our outperformance of the SNL U.S. REIT Healthcare Index during the applicable measurement period. This increase was partially offset by decreases in equity compensation expense and legal fees incurredcommon shares during the three months ended September 30, 2017.March 31, 2022 compared to the three months ended March 31, 2021.

Acquisition and certain other transaction related costs.  AcquisitionFor the three months ended March 31, 2022, acquisition and certain other transaction related costs include legal and diligenceprimarily represent costs incurred in connection with our acquisition, disposition and operations transition activities that we expensed under GAAP. We had no acquisitions, dispositions or operations transitions that required costs to be expensed under GAAP during the third quarter of 2017.

Dividend income. Dividend income consists of dividends received from our investment in RMR Inc.
Interest and other income.  The increase in interest and other income is primarily due to increased investable cash on hand.
Interest expense.  Interest expense increased primarily due to increased borrowings under our revolving credit facility, as well as an increase in LIBOR rates, resulting in an increase in interest expense on our revolving credit facility and term loans.

Loss on early extinguishment of debt. We recorded loss on early extinguishment of debt in August 2017 in connection with the amendmentsrelated to the agreements governing our revolving credit facility and our $200,000 term loan.

Income tax expense. Income tax expense primarily reflects state income taxes payable in certain jurisdictions.

Equity in earnings of an investee.  Equity in earnings of an investee represents our proportionate share of earnings from AIC.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016 (dollars in thousands, except average monthly rate):

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, 2017 to the nine months ended September 30, 2016.

Triple net leased senior living communities:    
  All Properties 
Comparable Properties (1)
  As of and for the Nine Months As of and for the Nine Months
  Ended September 30, Ended September 30,
  2017 2016 2017 2016
Total properties 236
 234
 227
 227
# of units 26,220
 26,094
 25,549
 25,549
Tenant operating data (2)
        
Occupancy 84.3% 85.3% 84.3% 85.3%
Rent coverage 1.26x 1.33x 1.26x 1.33x
(1)Consists of triple net leased senior living communities we have owned continuously since January 1, 2016 and excludes communities held for sale, if any.
(2)All tenant operating data presented are based upon the operating results provided by our tenants for the 12 months ended June 30, 2017 and 2016 or the most recent prior period for which tenant operating results are made available to us.  Rent coverage is calculated as operating cash flows from our triple net lease tenants’ operations of our properties, before subordinated charges, if any, divided by triple net lease minimum rents payable to us.  We have not independently verified tenant operating data.  Excludes data for historical periods prior to our ownershiptransition of certain properties, as well as for properties sold during the periods presented.

Triple net leased senior living communities all properties:
  Nine Months Ended September 30,    
  2017 2016 Change % Change
Rental income $202,340
 $198,269
 $4,071
 2.1 %
Property operating expenses —
 (833) (833) (100.0)%
Net operating income (NOI) 202,340
 197,436
 4,904
 2.5 %
         
Depreciation and amortization expense (61,434) (58,401) 3,033
 5.2 %
Impairment of assets —
 (6,583) (6,583) (100.0)%
Operating income 140,906
 132,452
 8,454
 6.4 %
         
Interest expense (8,205) (18,892) (10,687) (56.6)%
Loss on early extinguishment of debt (7,294) —
 7,294
 100.0 %
Gain on sale of properties —
 4,061
 (4,061) (100.0)%
Net income $125,407
 $117,621
 $7,786
 6.6 %
Except as noted below under “Rental income,” we have not included a discussion and analysis of the results of our comparable properties data for the triple net leased senior living communities segment as we believe that such a comparison is generally consistent with the comparison of results for all our triple net leased senior living communities from quarter to quarter and a separate, comparable properties comparison is not meaningful.
Rental income. Rental income increased primarily due to rents from triple net leased senior living communities we acquired since January 1, 2016, and also due to increased rents resulting from our purchase of improvements since January 1, 2016. These increases were partially offset by reduced rental income resulting from our sales of two senior living communities since January 1, 2016. Rental income includes non-cash straight line rent adjustments totaling $2,304 and $3,184 for the nine months ended September 30, 2017 and 2016, respectively. Rental income increased year over year on a comparable property basis by $2,180, primarily as a result of our purchase of improvements at certain of these communities that we have owned continuously since January 1, 2016 and the resulting increased rent, pursuant to the terms of the applicable leases.
Property operating expenses. In the nine months ended September 30, 2016, we recorded $833 of property operating expenses related to bad debt reserves associated with lease defaults at two triple net leased senior living communities we acquired in 2015 which were previously leased tonew third party private operators.  In 2016, we terminated these leases and entered management agreements with Five Star to manage the communities for our account under TRS structures.managers.
Net operating income.  We typically incur minimal property operating expenses at these communities, as the majority of those expenses are paid by our tenants. NOI increased due to the increase in rental income and decrease in property operating expenses described above.  The reconciliation of NOI to net income for our triple net leased senior living communities segment is shown in the table above. Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”
Depreciation and amortization expense.  Depreciation and amortization expense increased primarily as a result of our acquisitions and our purchase of improvements since January 1, 2016.

Impairment of assets. Impairment of assetsFor information about our asset impairment charges, recorded in 2016 relate to writing off acquired lease intangible assets associated with the two communities where the tenants defaulted on their leases as discussed above, as well as the reduction of the carrying value of a SNF that we sold during the third quarter of 2016 to its sale price less cost to sell.
Interest expense.  Interest expense relates to mortgage debts and capital leases secured by certain of these communities. The decrease in interest expense is duesee Note 3 to our prepaymentconsolidated financial statements included in Part IV, Item 15 of $320,379 in aggregate principal amount of mortgage debts since January 1, 2016 with a weighted average annual interest rate of 6.7%, as well as regularly scheduled amortization of mortgage debts which secure these communities.our Annual Report.

Loss on early extinguishment of debt. We recognized a loss on early extinguishment of debt in connection with our prepayment of a mortgage debt in April 2017.

Gain (loss) on sale of properties. Gain (loss) on sale of properties is the net result of our sale of one SNF in June 2016.

Managed senior living communities:
  All Properties 
Comparable Properties (1)
  As of and for the Nine Months As of and for the Nine Months
  Ended September 30, Ended September 30,
  2017 2016 2017 2016
Total properties 68
 68
 60
 60
# of units 8,807
 8,797
 8,104
 8,104
Occupancy 85.8% 87.2% 86.1% 87.2%
Average monthly rate (2)
 $4,287
 $4,251
 $4,316
 $4,258
(1)Consists of managed senior living communities owned and managed by the same operator continuously since January 1, 2016 and excludes communities classified as held for sale, if any.
(2)Average monthly rate is calculated by taking the average daily rate, which is defined as total residents fees and services divided by occupied units during the period, and multiplying it by 30 days.
Managed senior living communities, all properties:    
  Nine Months Ended September 30,    
  2017 2016 Change % Change
Residents fees and services $294,816
 $292,803
 $2,013
 0.7 %
Property operating expenses (224,585) (218,582) 6,003
 2.7 %
Net operating income (NOI) 70,231
 74,221
 (3,990) (5.4)%
         
Depreciation and amortization expense (49,295) (60,905) (11,610) (19.1)%
Impairment of assets —
 (2,394) (2,394) (100.0)%
Operating income 20,936
 10,922
 10,014
 91.7 %
         
Interest expense (3,523) (7,332) (3,809) (52.0)%
Loss on early extinguishment of debt —
 (90) (90) (100.0)%
Net income $17,413
 $3,500
 $13,913
 397.5 %
Residents fees and services. Residents fees and services are the revenues earned at our managed senior living communities.  We recognize these revenues as services are provided and related fees are accrued.  Residents fees and services increased primarily due to our acquisitions and the transfer of certain senior living communities we own from triple net leased senior living communities to managed senior living communities since January 1, 2016, as well as an increase in average monthly rates, partially offset by a decline in occupancy.
Property operating expenses.  Property operating expenses consist of management fees, real estate taxes, utility expense, insurance, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these communities. Property operating expenses increased primarily due to our acquisitions and the transfer of certain senior living communities we own from triple net leased senior living communities to managed senior living communities since January 1, 2016, increased salaries and benefit costs associated with increased staffing required as a result of the hurricanes that occurred in the southeastern United States and Texas in the third quarter of 2017, increased real estate taxes at certain of these communities and increased management fees as a result of the modifications made to our management and pooling arrangements with Five Star that took effect on July 1, 2016.
Net operating income.  NOI decreased due to the increases in property operating expenses, partially offset by the increase in residents fees and services described above.  The reconciliation of NOI to net income for our managed senior living communities

segment is shown in the table above.  Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”
Depreciation and amortization expense.  Depreciation and amortization expense includes the depreciation of owned property and equipment as well as the amortization expense related to in place resident agreements assumed upon the acquisition of a community. Depreciation and amortization expense decreased as a result of certain of our in place resident agreements becoming fully amortized since January 1, 2016, partially offset by an increase in depreciation expense due to acquisitionsproperties during the three months ended March 31, 2022 and 2021. The gain on sale of properties during the three months ended March 31, 2022 reflects our purchasesale of improvements since January 1, 2016.

Impairment of assets. Impairment of assets charges recorded in 2016 relate to the reduction of the carrying value of a senior living community that we sold in December 2016 to its estimated fair value less cost to sell.
Interest expense. Interest expense relates to mortgage debts secured by certain of these communities.  The decrease in interest expense is due10 medical office and life science properties to our prepayment10 medical office and life science properties joint venture in which we retained a 20% equity interest. For further information regarding gain (loss) on sale of $103,370 in aggregate principal amount of mortgage debts since January 1, 2016 with a weighted average annual interest rate of 6.0%, as well as regularly scheduled amortization of mortgage debts which secure these communities.

Loss on early extinguishment of debt. We recognized a loss on early extinguishment of debt in connection with our prepayment of mortgage debts during 2016.
Managed senior living communities, comparable properties, (managed senior living communities owned and managed by the same operator continuously since January 1, 2016 excluding communities classified as held for sale, if any):
  Nine Months Ended September 30,    
  2017 2016 Change % Change
Residents fees and services $274,186
 $274,808
 $(622) (0.2)%
Property operating expenses (207,152) (204,183) 2,969
 1.5 %
Net operating income (NOI) 67,034
 70,625
 (3,591) (5.1)%
         
Depreciation and amortization expense (40,476) (48,851) (8,375) (17.1)%
Operating income 26,558
 21,774
 4,784
 22.0 %
         
Interest expense (1,677) (5,624) (3,947) (70.2)%
Loss on early extinguishment of debt —
 (90) (90) (100.0)%
Net income $24,881
 $16,060
 $8,821
 54.9 %
Residents fees and services. Residents fees and services are the revenues earned at our managed senior living communities.  We recognize these revenues as services are provided and related fees are accrued.  Residents fees and services decreased year over year on a comparable property basis primarily due to a decline in occupancy, partially offset by an increase in average monthly rates.
Property operating expenses.  Property operating expenses consist of management fees, real estate taxes, utility expense, insurance, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these communities.  Property operating expenses increased primarily due to increased salaries and benefit costs associated with increased staffing required as a result of the hurricanes that occurred in the southeastern United States and Texas in the third quarter of 2017, as well as increases in real estate taxes, utility expense, insurance expense and management fees as a result of the modifications made see Note 2 to our managementcondensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and pooling arrangements with Five Star that took effectNote 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.
Losses on July 1, 2016.
Net operating income.  The decrease in NOI reflectsequity securities, net. Losses on equity securities, net, represent the net changes in residents fees and services and property operating expenses described above.  The reconciliation of NOIunrealized losses to net income for our managed senior living communities segment, comparable properties, is shown in the table above.  Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”
Depreciation and amortization expense.  Depreciation and amortization expense includes the depreciation of owned property and equipment as well as the amortization expense related to in place resident agreements assumed upon the acquisition of a

community. Depreciation and amortization expense decreased as a result of certain of our in place resident agreements becoming fully amortized since January 1, 2016, partially offset by an increase in depreciation expense due to our purchase of improvements since January 1, 2016.

Interest expense. Interest expense relates to mortgage debts secured by certain of these communities. The decrease in interest expense is due to our prepayment of $103,370 in aggregate principal amount of mortgage debts since January 1, 2016 with a weighted average annual interest rate of 6.0%, as well as regularly scheduled amortization of mortgage debts which secure these communities.

Loss on early extinguishment of debt. We recognized a loss on early extinguishment of debt in connection with our prepayment of mortgage debts during 2016.

MOBs:
  All Properties 
Comparable Properties (1)
  As of and for the Nine Months As of and for the Nine Months
  Ended September 30, Ended September 30,
  2017 2016 2017 2016
Total properties 121
 119
 116
 116
Total buildings 147
 145
 140
 140
Total square feet (2)
 11,611
 11,401
 11,046
 11,041
Occupancy (3)
 95.8% 95.9% 95.6% 96.3%
(1)Consists of MOBs we have owned continuously since January 1, 2016, includes our MOB (two buildings) that is owned in a joint venture arrangement and excludes properties classified as held for sale, if any.
(2)Prior periods exclude space re-measurements made subsequent to those periods.
(3)MOB occupancy includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease by tenants.
MOBs, all properties:
  Nine Months Ended September 30,    
  2017 2016 Change % Change
Rental income $285,413
 $278,964
 $6,449
 2.3 %
Property operating expenses (83,980) (79,361) 4,619
 5.8 %
Net operating income (NOI) 201,433
 199,603
 1,830
 0.9 %
         
Depreciation and amortization expense (95,890) (92,788) 3,102
 3.3 %
Impairment of assets —
 (7,953) (7,953) (100.0)%
Operating income 105,543
 98,862
 6,681
 6.8 %
         
Interest expense (18,742) (7,398) 11,344
 153.3 %
Loss on early extinguishment of debt (59) —
 59
 100.0 %
Net income 86,742
 91,464
 (4,722) (5.2)%
Net income attributable to noncontrolling interest (2,865) —
 2,865
 100.0 %
Net income attributable to common shareholders $83,877
 $91,464
 $(7,587) (8.3)%
Rental income.Rental income increased primarily due to rents from the MOBs we acquired since January 1, 2016, as well as certain changes at our comparable MOB properties discussed below. Rental income includes non-cash straight line rent adjustments totaling $7,769 and $10,002 and net amortization of approximately $3,797 and $3,629 of above and below market lease adjustments for the nine months ended September 30, 2017 and 2016, respectively.

Property operating expenses. Property operating expenses consist of real estate taxes, utility expense, property management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these properties.  Property operating expenses increased primarily due to our acquisitions since January 1, 2016, as well as certain changes at our comparable MOB properties discussed below.
Net operating income.  NOI increased because of the increases in rental income, partially offset by the increased property operating expenses described above.  The reconciliation of NOI to net income for our MOB segment is shown in the table above.  Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”

Depreciation and amortization expense. Depreciation and amortization expense increased primarily due to an increase in the amortization of leasing costs and depreciation expense on fixed assets and an increase in amortization of acquired in place real estate leases that we amortize over the respective lease terms.

Impairment of assets. Impairment of assets for the nine months ended September 30, 2016 relates to reducing the carrying
value of five MOBs (five buildings) and one land parcel to their estimated sales prices less costs to sell or estimated fair values
less costs to sell.
Interest expense.  Interest expense relates to mortgage debts secured by certain of these properties.  The increase in interest expense is the result of our obtaining, in July 2016, an aggregate $620,000 secured debt financing with a weighted average fixed annual interest rate of 3.5%, partially offset by our prepayment of $37,386 in aggregate principal amount of mortgage debt since January 1, 2016 with an annual interest rate of 5.4%, as well as the regularly scheduled amortization of mortgage debts which secure these properties.

Loss on early extinguishment of debt. We recognized a net loss on early extinguishment of debt in connection with our prepayment of two mortgage debts during the second quarter of 2017.

Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest represents the net income attributable to a sovereign investor that owns 45% of one of our MOBs (two buildings) through the joint venture agreement we entered in March 2017.
MOBs, comparable properties (MOBs we have owned continuously since January 1, 2016, includes our MOB (two buildings) that is owned in a joint venture arrangement and excludes properties classified as held for sale, if any):
  Nine Months Ended September 30,    
  2017 2016 Change % Change
Rental income $273,516
 271,623
 $1,893
 0.7 %
Property operating expenses (81,268) (77,792) 3,476
 4.5 %
Net operating income (NOI) 192,248
 193,831
 (1,583) (0.8)%
         
Depreciation and amortization expense (92,587) (90,891) 1,696
 1.9 %
Operating income 99,661
 102,940
 (3,279) (3.2)%
         
Interest expense (18,742) (7,397) 11,345
 153.4 %
Loss on early extinguishment of debt (59) —
 59
 100.0 %
Net income 80,860
 95,543
 (14,683) (15.4)%
Net income attributable to noncontrolling interest (2,865) —
 2,865
 100.0 %
Net income attributable to common shareholders $77,995
 $95,543
 $(17,548) (18.4)%

Rental income. Rental income increased primarily due to an increase in tax escalation income and other reimbursable expenses and increased rents from leasing activity at certain of these properties. Rental income includes non-cash straight line rent adjustments totaling $6,788 and $9,637 and net amortization of approximately $3,689 and $3,303 of above and below market lease adjustments for the nine months ended September 30, 2017 and 2016, respectively.

Property operating expenses.  Property operating expenses consist of real estate taxes, utility expense, property management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these properties. Property operating expenses increased primarily as the result of increases in real estate taxes at certain of these properties and other direct costs of operating these properties.
Net operating income.  NOI reflects the net changes in rental income and property operating expenses described above.  The reconciliation of NOI to net income for our MOB segment for comparable properties is shown in the table above.  Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”

Depreciation and amortization expense.  Depreciation and amortization expense increased due to an increase in the amortization of leasing costs and depreciation expense on fixed assets acquired since January 1, 2016, partially offset by a reduction in amortization of acquired in place real estate leases that we amortize over the respective lease terms.
Interest expense.  Interest expense relates to mortgage debts secured by certain of these properties.  The increase in interest expense is the result of our obtaining, in July 2016, an aggregate $620,000 secured debt financing with a weighted average fixed annual interest rate of 3.5%, partially offset by our prepayment of $37,386 in aggregate principal amount of mortgage debt since January 1, 2016 with an annual interest rate of 5.4%, as well as the regularly scheduled amortization of mortgage debts which secure these properties.

Loss on early extinguishment of debt. We recognized a net loss on early extinguishment of debt in connection with our prepayment of mortgage debts during the nine months ended September 30, 2017.

Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest represents the net income attributable to a sovereign investor that owns 45% of one of our MOBs (two buildings) through the joint venture agreement we entered in March 2017.

All other operations(1): 
  Nine Months Ended September 30,    
  2017 2016 Change % Change
Rental income $13,684
 $13,689
 $(5) (0.0)%
         
Expenses:        
Depreciation and amortization (2,844) (2,844) —
 —
General and administrative (57,889) (34,931) 22,958
 65.7 %
Acquisition and certain other transaction related costs (292) (1,443) (1,151) (79.8)%
Impairment of assets (5,082) —
 5,082
 100.0 %
Total expenses (66,107) (39,218) 26,889
 68.6 %
         
Operating loss (52,423) (25,529) 26,894
 105.3 %
         
Dividend income 1,978
 1,449
 529
 36.5 %
Interest and other income 323
 330
 (7) (2.1)%
Interest expense (93,924) (90,215) 3,709
 4.1 %
Loss on early extinguishment of debt (274) —
 274
 100.0 %
Loss before income tax expense and equity in earnings of an investee (144,320) (113,965) 30,355
 26.6 %
Income tax expense (300) (318) (18) (5.7)%
Equity in earnings of an investee 533
 107
 426
 398.1 %
Net loss $(144,087) $(114,176) $29,911
 26.2 %
(1)All other operations includes all of our other operations, including certain properties that offer wellness, fitness and spa services to members, which segment we do not consider to be sufficiently material to constitute a separate reporting segment, and any operating expenses that are not attributable to a specific reporting segment.
Rental income. Rental income includes non-cash straight line rent of approximately $412 for each of the nine months ended September 30, 2017 and 2016, respectively. Rental income also includes net amortization of approximately $166 of acquired real estate leases and obligations for each of the nine months ended September 30, 2017 and 2016.
Depreciation and amortization expense.  Depreciation and amortization expense remained consistent as we had no acquisitions or capital expenditures in this segment since January 1, 2016. We depreciate our long lived wellness center assets on a straight line basis.

General andadministrative expense.  General and administrative expense consists of fees paid to RMR LLC under our business management agreements, legal and accounting fees, fees and expenses of our Trustees, equity compensation expense and other costs relating to our status as a publicly owned company. General and administrative expense increased primarily due to an increase in our business management fees of $23,757, including $22,048 of estimated business management incentive fees that we recognized for the nine months ended September 30, 2017 that may become payable in 2018 due to our outperformance of the SNL U.S. REIT Healthcare Index during the applicable measurement period.

Acquisition and certain other transaction related costs.  Acquisition and certain other transaction related costs include legal and diligence costs incurred in connection with our acquisition, disposition and operations transition activities that we expensed under GAAP.

Impairment of assets: During the nine months ended September 30, 2017, we recorded a $5,082 loss on impairment to reduce the carrying value ofadjust our investment in Five Star sharesAlerisLife to its estimated fair value due to the market value of this investment being significantly below our carrying value for an extended period.

Dividend income. Dividend income consists of dividends received fromvalue. For further information regarding our investment in RMR Inc.AlerisLife, see Note 5 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest and other income. The decrease in interest and other income is primarily due to decreased investable cash on hand.$199 of funds we received from the U.S. government pursuant to the CARES Act during the three months ended March 31, 2022 compared to $2,433 received during the three months ended March 31, 2021.

Interest expense.Interest expense increaseddecreased primarily due to the deconsolidation of the debt secured by one life science property owned by our issuanceBoston life science property joint venture in which we own a 20% equity interest. Additionally, interest expense decreased due to our redemption in June 2021 of $250,000all $300,000 of 6.25%our 6.75% senior unsecured notes due 20462021 and our prepayment in February 2016, as well as2021 of our $200,000 term loan. These decreases were partially offset by an increase in LIBOR rates, resulting in an increase in interest expense onaverage borrowings under our revolving credit facility and term loans, partially offset by decreased borrowingsour issuance in February 2021 of $500,000 aggregate principal amount of our 4.375% senior notes due 2031 and an increase in the interest rate premium under our revolving credit facility.

Loss on modification or early extinguishment of debt. We recorded a loss on modification or early extinguishment of debt in August 2017connection with the amendment to our credit agreement during the three months ended March 31, 2022. We also recorded a loss in connection with the amendments to our credit agreement and the agreementsagreement governing our revolving credit facilitypreviously existing $200,000 term loan and our prepayment of our $200,000 term loan.loan during the three months ended March 31, 2021.

Income tax expense. expense. Income tax expense primarily reflectsis the result of operating income we earned in certain jurisdictions where we are subject to state income taxes payable in certain jurisdictions.taxes.
Equity in earnings of an investee.investees. Equity in earnings of an investee representsinvestees is the change in the fair value of our proportionate share of earnings from AIC.investments in our joint ventures.
25

Non-GAAP Financial Measures (dollars in thousands, except per share amounts)
We provide below calculationspresent certain "non-GAAP financial measures" within the meaning of ourapplicable rules of the Securities and Exchange Commission, or SEC, including funds from operations attributable to common shareholders, or FFO attributable to common shareholders, normalized funds from operations attributable to common shareholders, or Normalized FFO attributable to common shareholders, and NOI for the three and nine months ended September 30, 2017March 31, 2022 and 2016.  These measures should be considered in conjunction with net income, net income attributable to common shareholders and operating income as presented in our condensed consolidated statements of comprehensive income.2021. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) or net income (loss) attributable to common shareholders or operating income as indicators of our operating performance or as measures of our liquidity. Other REITsThese measures should be considered in conjunction with net income (loss) and real estate companies may calculate FFO, Normalized FFO or NOI differently than we do.
Funds From Operations and Normalized Funds From Operations
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, or NAREIT, which is net income (loss) attributable to common shareholders calculatedas presented in accordance with GAAP, excluding any gain or loss on saleour condensed consolidated statements of properties and impairment of real estate assets, plus real estate depreciation and amortization and the difference between netcomprehensive income attributable to common shareholders and FFO attributable to noncontrolling interest, as well as certain other adjustments currently not applicable to us. Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year, and we exclude acquisition and certain other transaction related costs expensed under GAAP such as legal and professional fees associated with our acquisition and disposition activities, gains and losses on early extinguishment of debt, if any, and Normalized FFO from noncontrolling interest, net of FFO, if any.(loss). We consider FFO and Normalized FFOthese non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss) and net income (loss) attributable to common shareholders and operating income.shareholders. We believe that FFO and Normalized FFOthese measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization, expense, FFO and Normalized FFOthey may facilitate a comparison of our operating performance between periods and with other REITs. FFOREITs 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.
Funds From Operations and Normalized Funds From Operations Attributable to Common Shareholders
We calculate FFO attributable to common shareholders and Normalized FFO attributable to common shareholders as shown below. FFO attributable to common shareholders is calculated on the basis defined by the National Association of Real Estate Investment Trusts, which is net income (loss) attributable to common shareholders, calculated in accordance with GAAP, excluding any gain or loss on sale of properties, equity in earnings or losses of unconsolidated joint ventures, loss on impairment of real estate assets, gains or losses on equity securities, net, if any, including adjustments to reflect our proportionate share of FFO of our equity method investment in AlerisLife and our proportionate share of FFO from our unconsolidated joint ventures, plus real estate depreciation and amortization of consolidated properties and minus FFO adjustments attributable to noncontrolling interest, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO attributable to common shareholders, we adjust for the items shown below including similar adjustments for our unconsolidated joint ventures, if any. FFO attributable to common shareholders and Normalized FFO attributable to common shareholders 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 revolving credit facility and term loan agreements and our public debt, covenants, 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 attributable to common shareholders and Normalized FFO attributable to common shareholders differently than we do.
Our calculations of FFO attributable to common shareholders and Normalized FFO attributable to common shareholders for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 and reconciliations of net income (loss) attributable to common shareholders, the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to FFO attributable to common shareholders and Normalized FFO attributable to common shareholders appear in the following table. This table also provides a comparison of distributions to shareholders, FFO attributable to common shareholders and Normalized FFO attributable to common shareholders and net income (loss) attributable to common shareholders per share for these periods.
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  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
Net income attributable to common shareholders $34,414
 $27,903
 $82,610
 $98,409
Depreciation and amortization expense 66,619
 72,344
 209,463
 214,938
Noncontrolling interest's share of net FFO adjustments (5,305) —
 (11,066) —
Gain on sale of properties —
 —
 —
 (4,061)
Impairment of assets —
 4,578
 5,082
 16,930
FFO 95,728
 104,825
 286,089
 326,216
         
Estimated business management incentive fees (1)
 8,022
 —
 22,048
 —
Acquisition and certain other transaction related costs —
 824
 292
 1,443
Loss on early extinguishment of debt 274
 84
 7,627
 90
Normalized FFO $104,024
 $105,733
 $316,056
 $327,749
         
Weighted average common shares outstanding (basic) 237,421
 237,347
 237,404
 237,329
Weighted average common shares outstanding (diluted) 237,460
 237,396
 237,445
 237,369
         
Per common share data (basic and diluted):        
Net income attributable to common shareholders $0.14
 $0.12
 $0.35
 $0.41
FFO $0.40
 $0.44
 $1.20
 $1.37
Normalized FFO $0.44
 $0.45
 $1.33
 $1.38
Distributions declared per common share $0.39
 $0.39
 $1.17
 $1.17
(1)Incentive fees under our business management agreement are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our condensed consolidated statements of comprehensive income. In calculating net income attributable to common shareholders in accordance with GAAP, we recognize estimated business management incentive fee 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 attributable to common shareholders, we do not include these amounts in the calculation of Normalized FFO until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined.
 Three Months Ended March 31,
 20222021
Net income (loss) attributable to common shareholders$240,423 $(67,505)
Depreciation and amortization57,259 66,153 
(Gain) loss on sale of properties(327,794)122 
Impairment of assets— (174)
Losses on equity securities, net8,553 8,339 
FFO adjustments attributable to noncontrolling interest— (5,273)
Equity in earnings of unconsolidated joint ventures(3,354)— 
Share of FFO from unconsolidated joint ventures3,675 — 
Adjustments to reflect our share of FFO attributable to an equity method investment(1,932)2,036 
FFO attributable to common shareholders(23,170)3,698 
Acquisition and certain other transaction related costs928 — 
Loss on modification or early extinguishment of debt483 2,040 
Adjustments to reflect our share of Normalized FFO attributable to an equity method investment(142)85 
Normalized FFO attributable to common shareholders$(21,901)$5,823 
Weighted average common shares outstanding (basic)238,149 237,834 
Weighted average common shares outstanding (diluted)238,198 237,834 
Per common share data (basic and diluted):
Net income (loss) attributable to common shareholders$1.01 $(0.28)
FFO attributable to common shareholders$(0.10)$0.02 
Normalized FFO attributable to common shareholders$(0.09)$0.02 
Distributions declared$0.01 $0.01 
Property Net Operating Income (NOI)
We calculate NOI as shown below. The calculation of NOI excludes certain components of net income (loss) in order to provide results that are more closely related to our property level results of operations. We define NOI as income from our real estate less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization. We consider NOI to be an appropriate supplemental measure to net income because it may help both investors and management to understand the operations of our properties. We use NOI internally to evaluate individual and company widecompany-wide property level performance,performance. Other real estate companies and REITs may calculate NOI differently than we believe that NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are generated and incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs.do.
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The calculation of NOI by reportable segment is included above in this Item 2. The following table includes the reconciliation of net income (loss) to NOI for the three and nine months ended September 30, 2017March 31, 2022 and 2016.2021.

Three Months Ended March 31,
20222021
Reconciliation of Net Income (Loss) to NOI:  
Net income (loss)$240,423 $(66,183)
Equity in earnings of investees(3,354)— 
Income tax expense1,472 238 
Income (loss) from continuing operations before income tax expense and equity in earnings of investees238,541 (65,945)
Loss on modification or early extinguishment of debt483 2,040 
Interest expense57,131 60,091 
Interest and other income(395)(2,835)
Losses on equity securities, net8,553 8,339 
(Gain) loss on sale of properties(327,794)122 
Impairment of assets— (174)
Acquisition and certain other transaction related costs928 — 
General and administrative7,285 7,542 
Depreciation and amortization57,259 66,153 
Total NOI$41,991 $75,333 
Office Portfolio NOI$31,550 $62,030 
SHOP NOI153 3,868 
Non-Segment NOI10,288 9,435 
Total NOI$41,991 $75,333 
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
Reconciliation of Net Income to NOI:  
  
  
  
Net income $35,793
 $27,903
 $85,475
 $98,409
Gain on sale of properties —
 —
 —
 (4,061)
Income before gain on sale of properties 35,793
 27,903
 85,475
 94,348
         
Equity in earnings of an investee (31) (13) (533) (107)
Income tax expense 109
 119
 300
 318
Income from continuing operations before income tax expense and equity in earnings of an investee 35,871
 28,009

85,242

94,559
Loss on early extinguishment of debt 274
 84
 7,627
 90
Interest expense 40,105
 43,438
 124,394
 123,837
Interest and other income (128) (89) (323) (330)
Dividend income (659) (659) (1,978) (1,449)
         
Operating income 75,463
 70,783
 214,962
 216,707
         
Impairment of assets —
 4,578
 5,082
 16,930
Acquisition and certain other transaction related costs —
 824
 292
 1,443
General and administrative expense 19,883
 12,107
 57,889
 34,931
Depreciation and amortization expense 66,619
 72,344
 209,463
 214,938
Total NOI $161,965
 $160,636
 $487,688
 $484,949
         
Triple net leased communities NOI $67,662
 $66,473
 $202,340
 $197,436
Managed communities NOI 22,775
 23,717
 70,231
 74,221
MOB NOI 66,958
 65,867
 201,433
 199,603
All other operations NOI 4,570
 4,579
 13,684
 13,689
Total NOI $161,965
 $160,636
 $487,688
 $484,949
         

LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of fundscash to meet operating and capital expenses, andpay debt service obligations and make distributions to pay distributions on our common sharesshareholders are the operating cash flows we generate as rental income from our leased properties, residents fees and services revenues from our managed communities, and borrowings under our revolving credit facility.facility and proceeds from the disposition of certain properties. We believe that these sources will be sufficient to meet our operating and capital expenses, andpay debt service obligations and paymake distributions onto our common sharesshareholders for the next 12 months and for the foreseeable future thereafter. Our future cash flows from operating activities will depend primarily upon:
•our ability to receive rents from our tenants, including in light of the COVID-19 pandemic and its impact on our tenants' businesses;
•our ability to maintain or increase the occupancy of, and the rental rates at, our properties;properties, particularly at our senior living communities;

•our abilityand our managers' abilities to control operating expenses and capital expenses at our properties;properties, including increased operating expenses that we may incur in response to inflation, supply chain challenges or in response to the COVID-19 pandemic; and

•our manager's ability to operate our managed senior living communities so asmanagers' abilities to maintain or increase our returns;returns from our managed senior living communities.

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In March 2021, we borrowed $800.0 million under our revolving credit facility as a precautionary measure to increase our cash position and

preserve financial flexibility in light of continued uncertainties related to the COVID-19 pandemic. In February 2022, we repaid $100.0 million of this borrowing to reduce the borrowing capacity under our revolving credit facility to $700.0 million pursuant to the February 2022 amendment to our credit agreement. In addition, in February 2022, we exercised our option to extend the maturity date of our revolving credit facility by one year to January 2024. Pursuant to our credit agreement, the borrowing capacity under our revolving credit facility will be reduced to $586.4 million as of January 2023 and as such, further repayment of our revolving credit facility may be required. Although we have taken steps to enhance our ability to purchasemaintain sufficient liquidity, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic, inflation or other economic, market or industry conditions may cause further increased pressure on our ability to satisfy financial and other covenants. We may fail to satisfy covenants and conditions under our credit agreement or fail to satisfy our public debt covenants. As of March 31, 2022, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our revolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic continued to adversely impact our operations. We are unable to incur additional debt until this ratio is at or above 1.5x on a pro forma basis. For additional responses and measures taken relating to the COVID-19 pandemic, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our Annual Report.
In January 2022, we entered into a joint venture with two unrelated third party institutional investors for 10 medical office and life science properties we owned for aggregate proceeds, before closing costs and other adjustments, of $653.3 million. The investors acquired 41% and 39% equity interests in the joint venture and we retained a 20% equity interest in the joint venture. The investment amounts are based upon a property valuation of approximately $702.5 million, less approximately $456.6 million of secured debt on the properties incurred by this joint venture. The net proceeds of $643.9 million, which produceinclude working capital prorations and formation costs, are included in restricted cash in our condensed consolidated balance sheet as of March 31, 2022 pursuant to the terms of our credit agreement. Effective as of the date of the sale, we deconsolidated these properties and we account for this joint venture using the equity method of accounting under the fair value option.
The measures we have taken to enhance our ability to maintain sufficient liquidity may not sufficiently offset the decrease in cash flows from operations and capital investments we make, in excesswhich case our liquidity would be negatively impacted.
The following is a summary of our costsources and uses of acquisition capital andcash flows for the related property operating expenses.periods presented, as reflected in our condensed consolidated statements of cash flows (dollars in thousands):

 Three Months Ended March 31,
 20222021
Cash and cash equivalents and restricted cash at beginning of period$1,016,945 $90,849 
Net cash provided by (used in):
Operating activities(7,264)34,822 
Investing activities588,353 (35,303)
Financing activities(106,038)1,079,637 
Cash and cash equivalents and restricted cash at end of period$1,491,996 $1,170,005 
Our Operating Liquidity and Resources

We generally receive minimum rents monthly or quarterly from our tenants we receive percentage rents from our senior living community tenants monthly quarterly or annually andquarterly, we receive residents fees and services revenues, net of expenses, from our managed senior living communities monthly. Our changesmonthly and we receive percentage rents from certain of our senior living community tenants monthly, quarterly or annually.
The change in cash flows for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 were as follows: (1) cash provided by operating activities decreased to $324.4 million in 2017 from $342.4 million in 2016; (2) cash used for investing activities decreased to $123.9 million in 2017 from $231.8 million in 2016; and (3) cash used for financing activities increased to $203.3 million in 2017 from $107.5 million in 2016.
The decrease in cash(used in) provided by operating activities for the ninethree months ended September 30, 2017March 31, 2022 compared to the prior yearperiod was primarily due to the continued impact of the COVID-19 pandemic and wage inflation in the senior living communities in our SHOP segment, along with reduced NOI as a result of an increase in restricted cash balances associated with ourthe deconsolidation of joint venture arrangementproperties during 2021 and 2022 and dispositions of properties during 2021. Additionally, we had increased working capital needs in 2022 as compared to 2021, specifically related to our senior living communities. We also paid more interest on our debt in 2022 as compared to 2021. As noted elsewhere in this Quarterly Report on Form 10-Q, the transition of the management of the 107 senior living communities from Five Star to other third party managers was completed as of September 30, 2017 which was established in 2017,December 31, 2021 and we have closed the remaining senior living community that we and Five Star agreed to transition and are assessing opportunities to redevelop that property.
Specifically as well as a decreaseit relates to our SHOP segment, we face and may continue to face issues with labor availability and wage inflation along with cost pressures from supply chain disruptions and commodity price inflation.
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Our Investing Liquidity and Resources
The change in cash generated from operating income in 2017. Cash used forprovided by (used in) investing activities decreased in 2017for the three months ended March 31, 2022 compared to the prior period was primarily due to higher acquisition activityproceeds from our sale of 10 medical office and life science properties to our 10 medical office and life science properties joint venture in the nine months ended September 30, 2016 compared to the nine months ended September 30, 2017,which we retained a 20% equity interest, partially offset by less proceeds from the sale of real estate properties during the nine months ended September 30, 2016, and increased funding foran increase in real estate improvements in the 2022 period compared to the 2021 period.
The following is a summary of capital expenditures, development, redevelopment and other activities for the periods presented (dollars in thousands):
 Three Months Ended March 31,
 20222021
Office Portfolio segment capital expenditures:
   Lease related costs (1)
$6,759 $8,358 
   Building improvements (2)
585 2,176 
SHOP segment fixed assets and capital improvements20,328 22,530 
Recurring capital expenditures$27,672 $33,064 
Development, redevelopment and other activities - Office Portfolio segment (3)
$16,617 $12,718 
Development, redevelopment and other activities - SHOP segment (3)
16,114 6,092 
Total development, redevelopment and other activities$32,731 $18,810 
(1)Office Portfolio segment lease related costs generally include 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)Office Portfolio segment building improvements generally include 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)Development, redevelopment and other activities generally include capital expenditures that reposition a property or result in new sources of revenue.
We plan to continue investing capital in our properties, including redevelopment projects, to better position these properties in their respective markets in order to increase our returns in future years. In 2022, we expect to incur capital expenditures in excess of 2021 levels, up to the $400.0 million limit allowed pursuant to our credit agreement.
As of March 31, 2022, we had estimated unspent leasing related obligations at our triple net leased senior living communities and our medical office and life science properties of approximately $62.5 million, of which we expect to spend approximately $44.7 million during the 2017 period. next 12 months. We expect to fund these obligations using operating cash flows we generate as rental income from our leased properties, residents fees and services revenues from our managed communities, cash on hand, proceeds from the contributions of certain of our properties to investors in our joint ventures and proceeds from the disposition of certain properties.
We are currently in the process of redeveloping five properties in our Office Portfolio. Our redevelopments in Lexington, MA, Decatur, GA and Tempe, AZ are currently expected to be completed in the second half of 2022. Our redevelopments at our properties in Irving, TX and Washington, D.C. are expected to be completed in 2023 and 2025, respectively. We have entered into a new ten year lease for the entire building at the Lexington, MA property at a rental rate that is 46% higher than the prior rental rate for the same space. Additionally, in January 2022, we entered into a new 11 year lease for the entire building at the Tempe, AZ property at a rental rate that is 20% higher than the prior rental rate for the same space. We are also currently reviewing strategic alternatives at a property in our Office Portfolio located in Silver Springs, MD, including opportunities to redevelop this property. We continue to assess opportunities to redevelop other properties in our portfolio. These redevelopment projects may require significant capital expenditures and time to complete.
As noted above, our ability to make capital investments is currently limited pursuant to our credit agreement. Additionally, due to supply chain disruptions and inflation, the capital investments we plan to make may be delayed or cost more than we expect. For further information regarding our acquisitions and dispositions, see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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Our Financing Liquidity and Resources
The increasechange in cash used for(used in) provided by financing activities for the ninethree months ended September 30, 2017March 31, 2022 compared to the prior yearperiod was primarily due primarily to the repayment of certain mortgage debts in 2017, partially offset by the proceeds from our 2016 issuance of senior unsecured notes and secured debt, proceeds from the joint venture arrangement entered in 2017 and higher net borrowings under our revolving credit facility in 2017 compared to net repayments of borrowings under our revolving credit facility in the prior year.
Our Investment2022 period compared to our full drawdown of our revolving credit facility and Financing Liquidity and Resources
net proceeds from our issuance in February 2021 of $500.0 million aggregate principal amount of our 4.375% senior notes in the 2021 period, partially offset by our repayment in February 2021 of our $200.0 million term loan. Additionally, we did not pay distributions during the 2022 period related to our noncontrolling interest in our Boston life science property joint venture that we deconsolidated in 2021.
As of September 30, 2017,March 31, 2022, we had $28.9$732.1 million of cash and cash equivalents and $529.0 million available to borrowwere fully drawn under our revolving credit facility. We typically use cash balances, borrowings under our revolving credit facility, net proceeds from offerings of debt or equity securities, net proceeds from the disposition of assets and the cash flows from our operations to fund our operations, debt repayments, distributions, property acquisitions, investments, capital expenditures and other general business purposes.
In order to fund acquisitionsinvestments and to meet cash needs that may result from timing differences between our receipt of rents and our desire or need to make distributions or pay operating or capital expenses, we maintain a $1.0 billion unsecured revolving credit facility. In August 2017, we amended the agreement governingThe maturity date of our revolving credit facility. As a result of the amendment, thefacility is January 15, 2024. Our revolving credit facility generally provides that we can borrow, repay and re-borrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. At March 31, 2022, our revolving credit facility required interest rate payableto be paid on borrowings underat the facility was reduced from LIBORannual rate of 3.0%, plus a premium of 130 basis points per annum to LIBOR plus a premium of 120 basis points per annum, and the facility fee was reduced fromof 30 basis points per annum to 25 basis points per annum on the total amount of lending commitments under the facility. The interest rate premium and facility fee are each subject to adjustment based upon changes to our credit ratings. AlsoOn March 31, 2021, we borrowed $800.0 million under our revolving credit facility as a resultprecautionary measure to increase our cash position and preserve financial flexibility in light of the amendment, the stated maturity date of the facility was extended from January 15, 2018 to January 15, 2022, and subjectcontinued uncertainties related to the paymentCOVID-19 pandemic. In February 2022, we repaid $100.0 million of an extension feethis borrowing to reduce the borrowing capacity under our revolving credit facility to $700.0 million pursuant to the February 2022 amendment to our credit agreement. Pursuant to our credit agreement, the borrowing capacity under our revolving credit facility will be reduced to $586.4 million as of January 2023 and meeting other conditions,as such, further repayment of our revolving credit facility may be required. Also in February 2022, we have anexercised our option to extend the maturity date of thisour revolving credit facility for an additional year. Theby one year to January 2024. As of March 31, 2022 and April 29, 2022, we were fully drawn under our revolving credit facility.
In February 2022, we and our lenders amended our credit agreement. Pursuant to the amendment:
•the waiver of the fixed charge coverage ratio covenant included in our credit agreement has been extended through December 31, 2022;
•the revolving credit facility also includes a feature pursuantcommitments have been reduced from $800.0 million to which$700.0 million;
•we have the ability to fund $400.0 million of capital expenditures per year and we are restricted in certain circumstances maximum borrowings may be increasedour ability to up to $2.0 billion. We can borrow, repay and re-borrow funds availableacquire real property as defined in our credit agreement;
•the interest rate premium under our revolving credit facility until maturity,increased by 15 basis points; and no principal repayment is due until maturity. As
•certain covenants and restrictions on distributions to common shareholders, share repurchases, capital expenditures, acquiring additional properties and incurring additional indebtedness (in each case subject to various exceptions), and the minimum liquidity requirement of September 30, 2017,$200.0 million will remain in place during the annual interest rate required on borrowings under our revolving credit facility was 2.4%. As of September 30, 2017 and November 8, 2017, we had $471.0 million and $485.0 million outstanding under our revolving credit facility, respectively.Amendment Period.
WhenGenerally, when significant amounts are outstanding under our revolving credit facility, or as the maturities of our indebtedness approach, we intend to explore refinancing alternatives. Such alternatives may include incurring additional debt, selling certain properties and issuing new equity securities. In addition, we may also seek to expand our existing joint venture arrangements or to participate in additional joint ventures or other arrangements that may provide us additional sources of financing. We currently have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities. We may also assume mortgage debtsdebt in connection with our acquisitions of properties or place new mortgagesdebt on properties we own.
We haveDuring the three months ended March 31, 2022, we paid a $350.0 million unsecured term loan that matures on January 15, 2020.  This term loan includes a feature under which maximum borrowings may be increased to up to $700.0 million in certain circumstances. This term loan requires interest to be paid at the rate of LIBOR plus a premium (currently 140 basis points per annum) that is subject to adjustment based upon changesquarterly cash distribution to our credit ratings.  Asshareholders totaling approximately $2.4 million using existing cash balances. On April 14, 2022, we declared a quarterly distribution payable to common shareholders of September 30, 2017, the annual interest rate payablerecord on amounts outstanding under this term loan was 2.6%.

We also have a $200.0 million unsecured term loan that matures on September 28, 2022. This term loan includes a feature under which maximum borrowings may be increased to up to $400.0 million in certain circumstances. In August 2017, we amended the agreement governing this term loan. As a result of the amendment, the interest rate payable on borrowings under the facility was reduced from LIBOR plus a premium of 180 basis points per annum to LIBOR plus a premium of 135 basis points per annum,

subject to adjustment based upon changes to our credit ratings. As of September 30, 2017, the annual interest rate payable on amounts outstanding under this term loan was 2.6%.

In March 2017, we entered a joint venture with a sovereign investor for one of our MOBs (two buildings) located in Boston, Massachusetts. The investor contributed approximately $260.9 million for a 45% equity interestApril 25, 2022 in the joint venture, and we retained the remaining 55% equity interest in the joint venture. Net proceeds that we received from this transaction wereamount of $0.01 per share, or approximately $255.8 million, after transaction costs. We used the proceeds from this transaction to repay a portion of the amounts outstanding under our revolving credit facility.

In April 2017, we prepaid a mortgage note secured by 17 of our properties with an outstanding principal balance of approximately $277.8 million plus a premium of $5.4 million plus accrued interest, a maturity date in September 2019 and an annual interest rate of 6.71%. In May 2017, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $10.6 million, a maturity date in August 2017 and an annual interest rate of 6.15%. In June 2017, we prepaid, at par plus accrued interest, a mortgage note secured by one of our properties with an outstanding principal balance of approximately $8.8 million, a maturity date in August 2037 and an annual interest rate of 5.95%. We funded these prepayments with cash on hand and borrowings under our revolving credit facility.
In January 2017, we acquired one MOB (one building) located in Kansas with approximately 117,000 square feet for approximately $15.1 million, excluding closing costs. In July 2017, we acquired one MOB (one building) located in Maryland with approximately 59,000 square feet for a purchase price of approximately $16.2 million, excluding closing costs. We funded these acquisitions with cash on hand and borrowings under our revolving credit facility.
In October 2017, we acquired two MOBs (two buildings) located in Minnesota and North Carolina with a total of approximately 255,000 square feet for an aggregate purchase price of approximately $38.7 million, excluding closing costs. We funded these acquisitions with cash on hand and borrowings under our revolving credit facility.

In August and October 2017, we entered agreements to acquire two MOBs (two buildings) located in California and Kansas with a total of approximately 302,000 square feet for an aggregate purchase price of approximately $71.1 million, excluding closing costs.$2.4 million. We expect to fund these acquisitions withpay this distribution on or about May 19, 2022 using cash on hand and borrowings under our revolving credit facility. These acquisitions are subject to conditions; accordingly, these acquisitions may not occur, may be delayed orhand. For further information regarding the terms may change.distribution we paid

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In November 2017, we entered a transaction agreement with Five Star pursuant to which we agreed to acquire six senior living communities from Five Star. The aggregate purchase price for these six senior living communities is approximately $104.0 million, including our assumption of approximately $33.7 million of mortgage debt securing certain of these senior living communities with a weighted average annual interest rate of 6.2% and excluding closing costs. We expect to fund these acquisitions with the assumption of mortgage debt described in the prior sentence, cash on hand and borrowings under our revolving credit facility. These acquisitions are subject to conditions; accordingly, we may not acquire these senior living communities, these acquisitions may be delayed or the terms may change. Seeduring 2022, see Note 107 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
During the three and nine months ended September 30, 2017, we invested $14.7 million and $41.2 million in revenue producing capital improvements at certain of our triple net leased senior living communities, and, as a result, annual rent payable to us increased or will increase by approximately $1.2 million and $3.3 million, respectively, pursuant to the terms of the applicable leases. We used cash on hand to fund these purchases.

During the three and nine months ended September 30, 2017 and 2016, amounts capitalized for leasing costs and building improvements at our MOBs and capital expenditures at our managed senior living communities were as follows (dollars in thousands): 
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
MOB tenant improvements (1)
 $1,951
 $2,652
 $5,791
 $4,784
MOB leasing costs (2)
 2,826
 1,220
 6,024
 3,042
MOB building improvements (3)
 4,444
 3,816
 9,704
 10,552
Managed senior living communities capital improvements 2,739
 4,542
 9,675
 10,790
Development, redevelopment and other activities (4)
 4,590
 7,362
 21,612
 24,668
Total capital expenditures $16,550
 $19,592
 $52,806
 $53,836

(1)MOB tenant improvements generally include capital expenditures to improve tenants’ space or amounts paid directly to tenants to improve their space.
(2)MOB leasing costs generally include leasing related costs, such as brokerage commissions and tenant inducements.
(3)MOB building improvements generally include capital expenditures to replace obsolete building components and capital expenditures that extend the useful life of existing assets.
(4)Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of acquisition of a property and incurred within a short period thereafter and (ii) capital expenditure projects that reposition a property or result in new sources of revenues.
During the three months ended September 30, 2017, commitments made for expenditures in connection with leasing space in our MOBs, such as tenant improvements and leasing costs, were as follows (dollars and square feet in thousands, except per square foot amounts):
  New Leases Renewals Total
Square feet leased during the quarter 50
 352
 402
Total leasing costs and concession commitments (1)
 $2,928
 $4,030
 $6,958
Total leasing costs and concession commitments per square foot (1)
 $58.04
 $11.45
 $17.29
Weighted average lease term (years) (2)
 9.7
 6.7
 7.2
Total leasing costs and concession commitments per square foot per year (1)
 $6.01
 $1.71
 $2.40
(1)Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.
(2)Weighted based on annualized rental income pursuant to existing leases as of September 30, 2017, including straight line rent adjustments and estimated recurring expense reimbursements and excluding lease value amortization.
We funded or expect to fund the foregoing capital commitments at our MOBs using cash on hand and borrowings under our revolving credit facility.

As of September 30, 2017, we have estimated unspent leasing related obligations at our triple net leased senior living communities and our MOBs of approximately $21.6 million.
On February 21, 2017, we paid a regular quarterly distribution to common shareholders of $0.39 per share, or approximately $92.6 million, that was declared on January 13, 2017 and was payable to shareholders of record on January 23, 2017. On May 18, 2017, we paid a regular quarterly distribution to common shareholders of $0.39 per share, or approximately $92.6 million, that was declared on April 11, 2017 and was payable to shareholders of record on April 21, 2017. On August 17, 2017, we paid a regular quarterly distribution to common shareholders of $0.39 per share, or approximately $92.6 million, that was declared on July 12, 2017 and was payable to shareholders of record on July 24, 2017. We funded these distributions using cash on hand and borrowings under our revolving credit facility.

On October 12, 2017, we declared a regular quarterly distribution payable to common shareholders of record on October 23, 2017 of $0.39 per share, or approximately $92.7 million. We expect to pay this distribution on or about November 16, 2017 using cash on hand and borrowings under our revolving credit facility.
We believe we will have access to various types of financings, including debt or equity offerings, to fund our future acquisitions and to pay our debts and other obligations as they become due.due, subject to limitations on debt offerings in agreements governing our debt. Our ability to complete, and the costs associated with, future debt or equity transactions depends primarily upon credit market conditions and our then creditworthiness. We have no control over market conditions. Our credit and debt ratings, which were most recently downgraded in February 2022, depend upon evaluations by credit rating agencies of our business practices and plans, including our ability to maintain our earnings, to stagger our debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. Similarly, our ability to raise equity capital in the future will depend primarily upon equity capital market conditions and our ability to conduct our business to maintain and grow our operating cash flows. We intend to conduct our business activities in a manner which will afford us reasonable access to capital for investment and financing activities, but we cannot be sure that we will be able to successfully carry out that intention. It is uncertain what the duration and severity of the COVID-19 pandemic and its economic impact will be. A protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from the COVID-19 pandemic, inflation or other economic, market or industry conditions may have various negative consequences including a decline in financing availability and increased costs for financing. Further, those conditions could also disrupt capital markets and limit our access to financing from public sources, particularly if the global financial markets experience significant disruptions.

In April 2022, we prepaid a mortgage note secured by one of our medical office properties with an outstanding principal balance of approximately $10.9 million, a maturity date in July 2022 and an annual interest rate of 6.28%. We prepaid this mortgage using cash on hand. Our next significant debt maturity does not occur until our revolving credit facility becomes due in January 2024.
OurIn February 2022, Moody's Investors Service downgraded our senior unsecured debt rating from B1 to B3, our 9.75% senior notes due 2025 rating from Ba3 to B2 and our 4.375% senior notes due 2031 rating from Ba3 to B2.
For further information regarding our outstanding debt, see Note 4 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Except for the limitations in the amendments to our credit agreement described above, our strategy related to property acquisitions and dispositions is materially unchanged from that disclosed in our Annual Report. We continue to explore and evaluate for possible acquisition additional properties primarily for income and secondarily for appreciation potential; however, we cannot be sure that we will reach any agreement to acquire such properties, or that if we do

reach any such agreement, that we will complete any acquisitions. Generally, we identify properties for sale based on changes in market conditions in the area where the property is located, our expectations regarding the property's future financial performance, our expectation regarding lease renewals, our plans with regard to particular properties or alternative opportunities we may wish to pursue. Our plans for particular properties and other strategic considerations may cause us to change our acquisition and disposition strategies, and we may do so at any time and without shareholder approval.
Off Balance Sheet Arrangements
As of September 30, 2017, we had no off balance sheet arrangements that have had Further, those plans may be further impacted by the COVID-19 pandemic, inflation or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenuesother economic, market or expenses, results of operations, liquidity, capital expenditures or capital resources.
industry conditions.
Debt Covenants
Our principal debt obligations at September 30, 2017March 31, 2022 were: (1) outstanding borrowings under our $1.0 billion$700.0 million revolving credit facility; (2) six public issuances$2.9 billion outstanding principal amount of senior unsecured notes, including: (a) $400.0 million principal amount at an annual interest rate of 3.25% due 2019, (b) $200.0 million principal amount at an annual interest rate of 6.75% due 2020, (c) $300.0 million principal amount at an annual interest rate of 6.75% due 2021, (d) $250.0 million principal amount at an annual interest rate of 4.75% due 2024, (e) $350.0 million principal amount at an annual interest rate of 5.625% due 2042notes; and (f) $250.0 million principal amount at an annual interest rate of 6.25% due 2046; (3) our $350.0 million principal amount term loan due 2020; (4) our $200.0 million principal amount term loan due 2022; and (5) $806.4$62.0 million aggregate principal amount of mortgage notes (excluding premiums, discounts and net debt issuance costs) secured by 24six properties. For further information regarding our indebtedness, see Note 4 to our condensed consolidated financial statements included in Part I, Item 1 of our properties (25 buildings) with maturity dates between 2018 and 2043. We also have two properties encumbered by capital leases with lease obligations totaling $10.9 million at September 30, 2017; the capital leases expire in 2026. We had $471.0 million outstanding under our revolving credit facility as of September 30, 2017. this Quarterly Report on Form 10-Q.
Our senior unsecured notes are governed by our senior unsecured notes indentures and their supplements. Our revolving credit facility and term loan agreementsagreement and our senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our revolving credit facility and term loan agreements,agreement, a change of control of us, as defined, which includes RMR LLC ceasing to act as our business and property manager. Our senior unsecured notes indentures and their supplements and our revolving credit facility and term loan agreementsagreement also contain a number of covenants whichthat 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, and our revolving credit facility and term loan agreementsagreement contains covenants whichthat restrict our ability to make distributions to our shareholders in certain circumstances. As of September 30, 2017,March 31, 2022, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our revolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic, inflation and other economic, market or industry conditions continued to adversely impact our operations. We are unable to incur additional debt until this ratio is at or above 1.5x on a pro forma basis, and as such, prior to falling below the 1.5x incurrence requirement, we borrowed $800.0 million under our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility. The proceeds from this borrowing may be used for general business purposes. In February 2022, we repaid $100.0 million of this borrowing to reduce the borrowing
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capacity under our revolving credit facility to $700.0 million pursuant to the February 2022 amendment to our credit agreement. As of March 31, 2022, we believe we were in compliance with all of the other covenants under our senior unsecured notes indentures and their supplements, our revolving credit facility and term loan agreementsagreement and our other debt obligations.
Although we have taken 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 the COVID-19 pandemic, inflation and other economic, market or industry conditions may cause increased pressure on our ability to satisfy financial and other covenants. Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions. If our operating results and financial condition are significantly negatively impacted by the economic conditions or otherwise, we may fail to satisfy covenants and conditions under our credit agreement or fail to satisfy our public debt covenants. Further, if we believe we will not be able to satisfy our financial or other covenants, we will seek waivers, amendments, or in the case of our public debt covenants, borrow any undrawn amounts which may become available under our revolving credit facility prior to any covenant violation, consistent with our approach in March 2021, which may lead to increased costs and interest rates, additional restrictive covenants or other lender protections. We cannot assure that we would be able to obtain these waivers or amendments or repay the related debt facilities when due, or that there will be any amounts available to borrow under our revolving credit facility, which may result in an event of default under the agreements governing our debt or the potential acceleration of our outstanding debt.
Neither our senior unsecured notes indentures and their supplements, nor our revolving credit facility and term loan agreements,agreement, contain provisions for acceleration which could be triggered by our debt ratings. However, under our revolving credit facility and term loan agreements,agreement, our senior unsecured debt ratings are used to determine the fees and interest rates we pay. Accordingly, iffollowing our debt ratings are downgraded,downgrades, our interest expense and related costs under our credit agreement has increased. See "—Our Financing Liquidity and Resources" above for information regarding recent downgrades of our issuer credit rating and senior unsecured debt rating that resulted in a change in the interest rate premiums under our revolving credit facility and term loan agreements would increase.
facility.
Our senior unsecured notes indentures and their supplements contain cross default provisions to any other debts of more than $20.0 million ($50.0 million or more in the case of our senior unsecured notes indentureindentures and supplementsupplements entered in February 2016)2016, February 2018, June 2020 and February 2021). Similarly, our revolving credit facility and term loan agreements haveagreement has cross default provisions to other indebtedness that is recourse of $25.0 million or more and indebtedness that is non-recourse of $75.0 million or more.
The loan agreements governing the aggregate $620.0 million secured debt financing we obtained in July 2016related to our Boston life science property joint venture contain customary covenants and provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default. We no longer include this $620.0 million of secured debt financing in our condensed consolidated balance sheet following the deconsolidation of the net assets of this joint venture; however, we continue to provide certain guaranties on this debt. The debt secured by the properties included in our 10 medical office and life science properties joint venture in which we own a 20% equity interest is guaranteed by this joint venture.
Supplemental Guarantor Information
On May 28, 2020, we issued $1.0 billion of our 9.75% senior notes due 2025. On February 3, 2021, we issued $500.0 million of our 4.375% senior notes due 2031. As of March 31, 2022, all $1.0 billion of our 9.75% senior notes due 2025 and all $500.0 million of our 4.375% senior notes due 2031 were fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for certain excluded subsidiaries, including pledged subsidiaries under our credit agreement. The notes and the guarantees are effectively subordinated to all of our and the subsidiary guarantors' secured indebtedness, respectively, to the extent of the value of the collateral securing such secured indebtedness, and are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes. Our remaining $1.35 billion of senior unsecured notes do not have the benefit of any guarantees as of March 31, 2022.
A subsidiary guarantor's guarantee of our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, as applicable, and all other obligations of such subsidiary guarantor under the indenture governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and the indenture under certain circumstances, including on or after the date (a) the notes have an investment grade rating from two rating agencies and one of such investment grade ratings is a mid-BBB investment grade rating and (b) no default or event of default has occurred and is continuing under the indenture. Our non-guarantor subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on our 9.75% senior notes due 2025 or our 4.375% senior notes due 2031 or the respective guarantees, or to make any funds available therefor, whether by dividend, distribution, loan or other payments. The rights of holders of our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, as applicable, to benefit from any of the assets of our non-guarantor subsidiaries are subject to the prior satisfaction of claims of those subsidiaries' creditors and any preferred equity holders. As a result, our 9.75% senior notes due
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2025 and our 4.375% senior notes due 2031 and the respective guarantees are structurally subordinated to all indebtedness, guarantees and other liabilities of our subsidiaries that do not guarantee our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, including guarantees of other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.
The following tables present summarized financial information for guarantor entities and issuer, on a combined basis after eliminating (i) intercompany transactions and balances among the guarantor entities and (ii) equity in earnings from, and any investments in, any subsidiary that is a non-guarantor (dollars in thousands):
March 31, 2022December 31, 2021
Real estate properties, net$3,831,645 $3,822,547 
Other assets, net1,960,063 1,424,994 
Total assets$5,791,708 $5,247,541 
Indebtedness, net$3,514,788 $3,613,447 
Other liabilities277,441 259,670 
Total liabilities$3,792,229 $3,873,117 
Three Months Ended March 31, 2022
Revenues$271,060 
Expenses307,497 
Loss from continuing operations(97,986)
Net loss(96,104)
Related Person Transactions
We have relationships and historical and continuing transactions with RMR, LLC, RMR Inc., AlerisLife (including Five Star, AICStar) and others related to them. For example: we have no employees and the personnel and various services we require to operate our business are provided to us by RMR LLC pursuant to our management agreements with RMR LLC; RMR Inc. is the managing member of RMR LLC; ABP Trust, which is owned by our Managing Trustees, is the controlling shareholder of RMR Inc.; and we own shares of class A common stock of RMR Inc. We also have relationships and historical and continuing transactions with other companies to which RMR LLC provides management services and which may have trustees, directors and officers who are also trustees, directors or officers of us, RMR LLC or RMR Inc., including: Five Star, which is our former subsidiary and largest tenant and the

manager of our managed senior living communities and of which we own 8.5% of its outstanding common stock and our Managing Trustees beneficially own, directly and indirectly, 36.7% of its outstanding common stock; and AIC, of which we, ABP Trust, Five Star and four other companies to which RMR LLC provides management services each own 14.3% and which arranges and reinsures in part a combined property insurance program for us and its six other shareholders. 

For further information about these and other such relationships and related person transactions, see Notes 9, 10 11 and 1211 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 20172022 Annual Meeting of Shareholders and our other filings with the Securities and Exchange Commission, or 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. Our filings with the SEC and copies of certain of our agreements with these related persons, including our business and property management agreements with RMR LLC, our various agreements with Five Star and our shareholders agreement with AIC and its six other shareholders, are available as exhibits to our filings with the SEC and accessible at the SEC’s website, www.sec.gov. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its affiliatessubsidiaries provide management services.

Impact of Government Reimbursement
For the ninethree months ended September 30, 2017, approximately 97%March 31, 2022, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants’tenants' and residents’residents' private resources, and the remaining 3%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 manageroperators 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 MOBmedical office and life science property tenants participate in federal Medicare and state Medicaid programs and other government healthcare payment programs.

On September 13, 2017, membersDuring the three months ended March 31, 2022, we recognized $0.2 million in interest and other income in our condensed consolidated statement of the U.S. Congress introduced the Graham-Cassidy-Heller-Johnson bill, or GCHJ, with the announced intentioncomprehensive income (loss) related to repeal and replace major provisions of the Patient Protection and Affordable Care Act, or the ACA. Although it is unclear whether GCHJ will ultimately become law, attempts to repeal or to repeal and replace the ACA will likely continue. In addition, on October 12, 2017, President Trump signed an executive order directing federal agencies to reduce limits on association health plans and temporary insurance plans, allowing more widespread offerings of plans that do not adhere to all of the ACA’s mandates, and to permit workers to use funds from tax advantaged accounts to pay for their own coverage. On the same day, the Trump Administration also announced that it would stop paying what are known as cost sharing reduction subsidies to issuers of qualified health plansreceived under the ACA. It is unclear what the result of any of these legislative, executive and regulatory reform efforts may be or the effect they may have on us or the tenants and managers of our properties.

On September 20, 2017, the Centers for Medicare & Medicaid Services, or CMS, through its Innovation Center, issued a request for information seeking reactions from stakeholders regarding new approaches to promote patient centered care and test market driven reforms intended to empower Medicare and Medicaid beneficiaries as consumers, provide price transparency, increase choices and competition to improve quality, reduce cost and improve outcomes. In particular, CMS indicated that the Innovation Center is interested in testing models in eight focus areas, including increased participation in advanced alternative payment models; consumer directed care and market based innovation models; state based and local innovation, including Medicaid focused models; and program integrity models. CMS is accepting responses to its information request through November 20, 2017.

On August 24, 2017, the U.S. Department of Health and Human Services, Office of Inspector General, or OIG, issued an early alert regarding preliminary results of its ongoing review of potential abuse or neglect of Medicare beneficiaries in SNFs. As a result of the review, which is part of the ongoing efforts of the OIG to detect and combat elder abuse, the OIG concluded that CMS has inadequate procedures to ensure that incidents of potential abuse or neglect of beneficiaries residing in SNFs are identified and reported. The OIG provided suggestions for immediate actions that CMS can take to ensure better protection of beneficiaries. It is unclear what policy changes or oversight efforts CMS will undertake as a result of this early alert.

Because of shifting policy priorities, the current and projected federal budget deficit, other federal spending priorities and challenging fiscal conditions in some states, there have been numerous recent legislative and regulatory actions or proposed actions with respect to federal Medicare rates, state Medicaid rates and federal payments to states for Medicaid programs. We cannot currently predict the type and magnitude of the potential Medicare and Medicaid policy changes, rate changes or other changes that may be implemented, but we believe that some of these changes will cause these government funded healthcare programs to fail to provide rates that match our and our tenants’ increasing expenses and that such changes may be material and adverse to our future financial results.


CARES Act.
For more information regarding the government healthcare funding and regulation of our business, please see the section captioned “Business-Government“Business—Government Regulation and Reimbursement” in our Annual Report and the section captioned “Impact“Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Government Reimbursement” in our Annual Report and in Part I, Item 2Report.
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Table of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017.Contents

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates has not materially changed since December 31, 2016.2021. Other than as described below, we do not currently foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.
Although we have no present plans to do so, we may in the future enter into hedge arrangements or derivative contracts from time to time to mitigate our exposure to changes in interest rates.
Fixed Rate Debt
At September 30, 2017,March 31, 2022, our outstanding fixed rate debt included the following (dollars in thousands):
  AnnualAnnual  
 PrincipalInterestInterest Interest
Debt
Balance (1)
Rate (1)
ExpenseMaturityPayments Due
Senior unsecured notes$250,000 4.750 %$11,875 2024Semi-Annually
Senior unsecured notes1,000,000 9.750 %97,500 2025Semi-Annually
Senior unsecured notes500,000 4.750 %23,750 2028Semi-Annually
Senior unsecured notes500,000 4.375 %21,875 2031Semi-Annually
Senior unsecured notes350,000 5.625 %19,688 2042Quarterly
Senior unsecured notes250,000 6.250 %15,625 2046Quarterly
Mortgage note (2)
10,934 6.280 %687 2022Monthly
Mortgage note10,416 4.850 %505 2022Monthly
Mortgage note15,363 5.750 %883 2022Monthly
Mortgage note15,085 6.640 %1,002 2023Monthly
Mortgage note10,178 4.444 %452 2043Monthly
 $2,911,976 $193,842   
    Annual Annual    
  Principal Interest Interest   Interest
Debt 
Balance (1)
 
Rate (1)
 Expense Maturity Payments Due   
Senior unsecured notes $400,000
 3.25% $13,000
 2019 Semi-Annually
Senior unsecured notes 350,000
 5.63% 19,705
 2042 Quarterly
Senior unsecured notes 300,000
 6.75% 20,250
 2021 Semi-Annually
Senior unsecured notes 250,000
 4.75% 11,875
 2024 Semi-Annually
Senior unsecured notes 250,000
 6.25% 15,625
 2046 Quarterly
Senior unsecured notes 200,000
 6.75% 13,500
 2020 Semi-Annually
Mortgage notes (2)
 620,000
 3.53% 21,886
 2026 Monthly
Mortgage notes 68,307
 4.47% 3,053
 2018 Monthly
Mortgage notes 43,788
 3.79% 1,660
 2019 Monthly
Mortgage note 13,884
 6.28% 872
 2022 Monthly
Mortgage notes 12,609
 6.31% 796
 2018 Monthly
Mortgage notes 11,911
 6.24% 743
 2018 Monthly
Mortgage note 11,444
 4.85% 555
 2022 Monthly
Mortgage note 8,476
 6.73% 570
 2018 Monthly
Mortgage note 6,465
 4.69% 303
 2019 Monthly
Mortgage note 4,361
 4.38% 191
 2043 Monthly
Mortgage notes 2,738
 7.49% 205
 2022 Monthly
Mortgage note 2,435
 6.25% 152
 2033 Monthly
  $2,556,418
   $124,941
    
(1)The principal balances and interest rates are the amounts stated in the applicable contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we assumed certain of these debts. This table does not include obligations under finance leases.
(1)The principal balances and interest rates are the amounts stated in the applicable contracts.  In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we assumed these debts. This table does not include obligations under capital leases.
(2)The property encumbered by these mortgages is subject to a joint venture arrangement. No principal payments are due on these mortgages until maturity.
(2)We prepaid this mortgage in April 2022.
No principal repayments are due under our unsecured notes until maturity. Our mortgage debtsnotes generally require principal and interest payments through maturity pursuant to amortization schedules. Because these debts require interest to be paid at a fixed rate, changes in market interest rates during the term of these debts will not affect our interest obligations.

If these debts were refinanced at interest rates which are 100 basis pointsone percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $25.6$29.1 million.
Changes in market interest rates also would affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at September 30, 2017,March 31, 2022, and discounted cash flows analyses through the respective maturity

dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate 100 basisone percentage point changeincrease in interest rates would change the fair value of those obligations by approximately $48.8$1.4 million.
Our senior unsecured notes and certain of our mortgages contain provisions that allow us to make repayments earlier than the stated maturity date. In some cases, we are not allowed to make early repayment prior to a cutoff date and we are generally allowed to make prepayments only at a premium equal to a make whole amount, as defined, which is generally designed to preserve a stated yield to the noteholder. In the past, we have repurchased and retired some of our outstanding debtsdebt and we may do so again in the future. These prepayment rights and our ability to repurchase and retire outstanding debt may afford us opportunities to mitigate the risk of refinancing our debts at maturity at higher rates by refinancing prior to maturity.
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Floating Rate Debt
At September 30, 2017,March 31, 2022, our floating rate debt obligations consisted of our $1.0 billion revolving credit facility under which we had $471.0$700.0 million outstanding our $350.0 million term loan and our $200.0 million term loan.  In August 2017, we amended the agreement governingunder our revolving credit facility. As a result of the amendment, among other things, the stated maturity date of theOur revolving credit facility was extended frommatures in January 15, 2018 to January 15, 2022, and subject to the payment of an extension fee and meeting other conditions, we have an option to extend the maturity date of the facility for an additional year. No2024. Generally, no principal repayments are required under our revolving credit facility prior to maturity, and we can borrow, repay and re-borrow funds available, subject to conditions, at any time without penalty. Our $350.0 million term loan matures on January 15, 2020, and our $200.0 million term loan matures on September 28, 2022. Our $350.0 million term loan and our $200.0 million term loan are prepayable without penalty at any time.
Borrowings under our revolving credit facility and term loans are in U.S. dollars and interest is required to be paid at the rate of LIBOR plus premiumsa premium that areis subject to adjustment based upon changes to our credit ratings. Accordingly, we are exposed to interest rate risk for changes in U.S. dollar based short term rates, specifically LIBOR.LIBOR, and to changes in our credit ratings. In addition, upon renewal or refinancing of our revolving credit facility, or our term loans, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit characteristics. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results.
The following table presents the impact a 100 basisone percentage point increase in interest rates would have on our annual floating rate interest expense as of September 30, 2017March 31, 2022 (dollars in thousands except per share amounts):
 Impact of Changes in Interest Rates
  OutstandingTotal InterestAnnual Earnings
 
Interest Rate (1)
Floating Rate DebtExpense Per Year
Per Share Impact (2)
At March 31, 20223.00 %$700,000 $21,000 $0.09 
One percentage point increase4.00 %$700,000 $28,000 $0.12 
  Impact of Changes in Interest Rates
    Outstanding Total Interest Annual Earnings
  
Interest Rate (1)
 Floating Rate Debt Expense Per Year 
per Share Impact (2)
At September 30, 2017 2.51% $1,021,000
 $25,627
 $(0.11)
100 basis point increase 3.51% $1,021,000
 $35,837
 $(0.15)
(1)Weighted based on the respective interest rates and outstanding borrowings(1)Interest rate under our credit facility and term loans as of September 30, 2017.
(2)Based on weighted average number of shares outstanding (diluted) for the nine months ended September 30, 2017.

The following table presents the impact a 100 basis point increase in interest rates would have on our annual floating rate interest expense as of September 30, 2017 if we were fully drawn on our revolving credit facility and our term loan remainedas of March 31, 2022.
(2)Based on weighted average number of shares outstanding (dollars in thousands except per share amounts): 
  Impact of Changes in Interest Rates
    Outstanding Total Interest Annual Earnings
  
Interest Rate (1)
 Floating Rate Debt Expense Per Year 
per Share Impact (2)
At September 30, 2017 2.47% $1,550,000
 $38,285
 $(0.16)
100 basis point increase 3.47% $1,550,000
 $53,785
 $(0.23)
(1)Weighted based on the respective interest rates and outstanding borrowings under our credit facility (assuming fully drawn) and term loans as of September 30, 2017.
(2)Based on weighted average number of shares outstanding (diluted) for the nine months ended September 30, 2017.
(diluted) for the three months ended March 31, 2022.
The foregoing tables showtable shows the impact of an immediate increase in floating interest rates. If interest rates were to changeincrease gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or

decrease in the future with increases or decreases in the outstanding amount of our borrowings outstanding under our revolving credit facility or other floating rate debt.
LIBOR Phase Out
Although we have no present plans
LIBOR has phased out for new contracts and it is currently expected to do so,be phased out for pre-existing contracts by June 30, 2023. We are required to pay interest on borrowings under our revolving credit facility at floating rates based on LIBOR and interest we may pay on any future debt that we may incur may also require that we pay interest based upon LIBOR. In September 2021, we amended our credit agreement to set forth the mechanics for establishing a replacement benchmark rate under our revolving credit facility at such time as LIBOR is no longer available to calculate interest payable on amounts outstanding thereunder. Despite this amendment, we cannot be sure that any changes to the determination of interest under our agreement will approximate the current calculation in the future enter into hedge arrangements to mitigateaccordance with LIBOR. We cannot be sure what standard, if any, will replace LIBOR, and any alternative interest rate index that may replace LIBOR may result in our exposure to changes in interest rates.paying increased interest.



Item 4.  Controls and Procedures.
 
As of the end of the period covered by this report,Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and Chief OperatingExecutive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Managing Trustees, our President and Chief OperatingExecutive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2017March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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WARNING CONCERNING FORWARD LOOKING STATEMENTS
Warning Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever we use words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Forward-looking statements in this Quarterly Report on Form 10-Q relate to various aspects of our business, including:
•The duration and severity of the COVID-19 pandemic and its impact on us and our managers' and other operators' and tenants' businesses,
•The ability of our senior living community managers to minimize negative economic impacts, including the current inflationary conditions and supply chain challenges, on our senior living communities and to manage them profitably and increase our returns,
•Our belief that we are well positioned to weather the present disruptions facing the real estate industry and, in particular, the real estate healthcare industry, including the senior living industry,
•Our belief that the healthcare sector and many of our tenants and managers and other operators provide essential services across the United States and the implication that our and our tenants' and managers' and other operators' businesses will remain open to provide such essential services,
•Our expectations regarding the quality and future performance of the new third party managers of the senior living communities we transitioned from Five Star during 2021,
•Whether the aging U.S. population and increasing life spans of seniors will increase the demand for senior living communities and other medical and healthcare related properties and healthcare services,
•Our ability to retain our existing tenants, attract new tenants and maintain or increase current rental rates on terms as favorable to us as our prior leases,
•The credit qualities of our tenants,
•Our ability to compete for tenancies and acquisitions effectively,
•Our expectation that our redevelopment projects will be completed on budget and by the estimated completion dates,
•Our acquisitions and sales of properties,
•Our closures and repositioning of senior living communities,
•The impact of increasing labor costs and shortages and commodity and other price inflation due to supply chain challenges or other market conditions,
•Our ability to raise debt or equity capital,
•Our ability to complete dispositions,
•The future availability of borrowings under our revolving credit facility,
•Our policies and plans regarding investments, financings and dispositions,
•Our ability to pay distributions to our shareholders and to sustain the amount of such distributions,
•Whether we may contribute additional properties to our joint ventures and receive proceeds from the other investors in our joint ventures in connection with any such contributions or enter into new joint venture arrangements,
•Our ability to pay interest on and principal of our debt,
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•Our ability to appropriately balance our use of debt and equity capital,
•Our credit ratings,
•Our expectation that we benefit from our relationships with RMR,
•Our qualification for taxation as a REIT, and
•Other matters.
Our actual results may differ materially from those contained in or implied by our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, FFO attributable to common shareholders, Normalized FFO attributable to common shareholders, NOI, cash flows, liquidity and prospects include, but are not limited to:
•The impacts of the COVID-19 pandemic on us and our managers and other operators and tenants,
•The impacts of economic conditions and the capital markets on us and our managers and other operators and tenants,
•Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
•Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,
•Competition within the healthcare and real estate industries, particularly in those markets in which our properties are located,
•Actual and potential conflicts of interest with our related parties, including our Managing Trustees, AlerisLife (including Five Star), RMR and others affiliated with them, and
•Acts of terrorism, outbreaks of pandemics, including the COVID-19 pandemic, or other manmade or natural disasters beyond our control.
For example:
•Under the current economic conditions for the industries in which our properties and businesses operate, our managers and other operators and tenants may not be able to profitably operate their businesses at our properties, our tenants may become unable or unwilling to pay their rent obligations to us, or our senior living community managers may be unable to generate our minimum returns for sustained periods as a result of the COVID-19 pandemic or otherwise. Additionally, if we default under our credit facility or other debt obligations, we may be required to repay our outstanding borrowings and other debt. Further, although we have taken steps to enhance our ability to maintain sufficient liquidity, unanticipated events may require us to expend amounts not currently planned,
•Our senior living community managers and other operators may experience operating and financial challenges resulting from a number of factors, some of which are beyond their control, and which challenges impact our operating results, including, but not limited to:
•Fluctuations in occupancy,
•Competition within the senior living and other health and wellness related service businesses,
•Older adults delaying or forgoing moving into senior living communities or purchasing health and wellness services,
•Increased labor costs, decreased labor availability and staffing turnover at our senior living communities or increases in costs paid for goods and services, due in part to supply chain constraints and commodity price inflation,
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•The availability and increases in cost of general and professional liability insurance coverage,
•Medicare or Medicaid policies and regulations, as well as federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations and standards that could affect our senior living community managers' services or impose requirements, costs and administrative burdens that may reduce our managers' ability to profitably operate their businesses,
•Imposition of civil, criminal and administrative penalties resulting from any noncompliance with healthcare laws and regulations at our senior living communities, including suspension of or non-payment for new admission or the loss or suspension of accreditation, licenses or certificates of need, among other things, and
•Exposure to litigation and regulatory and government proceedings due to the nature of the senior living and other health and wellness related service businesses.
•We own a significant number of AlerisLife common shares and we expect to own these shares for the foreseeable future. However, we may sell some or all of our AlerisLife common shares, or our ownership interest in AlerisLife may otherwise be diluted in the future,
•Our current cash distribution rate to common shareholders is $0.01 per share per quarter, or $0.04 per share per year, due to the operating challenges and other economic impacts resulting from the COVID-19 pandemic. Our distribution rate may be set and reset from time to time by our Board of Trustees. Our Board of Trustees will consider many factors when setting or resetting our distribution rate, including our historical and projected net income, Normalized FFO, 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, our expected needs for and availability of cash to pay our obligations and other factors deemed relevant by our Board of Trustees in its discretion. Further, our projected cash available for distribution may change and may vary from our expectations. Accordingly, future distributions to our shareholders may be increased or decreased and we cannot be sure as to the rate at which future distributions will be paid,
•Our ability to make future distributions to our shareholders and to make payments of principal and interest on our debt depends upon a number of factors, including our future earnings, the capital costs we incur to lease and operate our properties and our working capital requirements. We may be unable to pay our debt obligations when they become due or to maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,
•We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities. However, we may not succeed in this regard and we may not have reasonable access to capital,
•Subject to limitations on acquisitions in agreements governing our debt, we plan to selectively sell certain properties from time to time to fund future acquisitions, manage leverage and strategically update, rebalance and reposition our investment portfolio, which we refer to as our capital recycling program. We cannot be sure we will sell any of these properties or what the terms or timing of any such sales may be. In addition, any updating, rebalancing or repositioning of our portfolio may not result in the benefits we expect, and properties we may sell may be at prices that are less than expected and less than their carrying values,
•Contingencies in our acquisition and sale agreements that we may enter may not be satisfied and any acquisitions and sales pursuant to such agreements and any related management arrangements we may expect to enter may not occur, may be delayed or the terms of such transactions or arrangements may change,
•The capital investments we are making at our senior living communities and our plan to invest significant additional capital in our senior living communities to better position them in their respective markets in order to increase our future returns may not be successful and may not achieve our expected results. Our senior living communities may not be competitive, despite these capital investments, or these capital investments may be delayed or may cost more than expected due to supply chain disruptions, market inflation, labor shortages or other conditions,
•Our redevelopment projects may not be successful and may cost more or take longer to complete than we currently expect. In addition, we may not realize the returns we expect from these projects and we may incur losses from these projects, and potential leasing arrangements related to our redevelopment projects may not materialize,
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•We may spend more for capital expenditures or redevelopment projects than we currently expect,
•Our existing joint ventures and any additional joint ventures we may enter into in the future may not be successful,
•Our tenants may experience losses and default on their rent obligations to us,
•Some of our tenants may not renew expiring leases, and we may be unable to obtain new tenants to maintain or increase the historical occupancy rates of, or rents from, our properties. In addition, we may incur significant costs to reposition or re-lease a vacant property for a new operator and vacancies may reduce the value of the property,
•Our ability to grow our business and maintain or increase our distributions to shareholders depends in large part upon our ability to buy properties and arrange for their profitable operation or lease them for rents, less their property operating expenses, that exceed our capital costs. We are currently generally limited in making acquisitions pursuant to our credit agreement. In addition, even after these restrictions expire, we may be unable to identify properties that we want to acquire, and we may fail to reach agreement with the sellers and complete the purchase of any properties we do want to acquire. In addition, we may not realize the returns we expect on any properties we acquire,
•Rents that we receive from our properties may decline upon renewals or expirations of our leases because of changing market conditions or otherwise,
•Although we have obtained a waiver from compliance with the fixed charge coverage ratio covenant included in our credit agreement through December 2022, if our operating results and financial condition are further adversely impacted by current economic conditions or otherwise, we may fail to comply with the terms of the waiver and other requirements under our credit agreement, and we may also fail to satisfy certain financial requirements under the agreements governing our public debt. For example, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our credit agreement and our public debt covenants as of March 31, 2022, and we cannot be certain how long this ratio will remain below 1.5x. We are unable to incur additional debt until this ratio is at or above 1.5x on a pro forma basis, but we are not required to repay outstanding debt as a result of failure to comply with this financial requirement. We are currently fully drawn under our revolving credit facility and could also be required to repay our outstanding debt in the event of non-compliance with certain other requirements of our credit agreement or the agreements governing our public debt. We may therefore experience future liquidity constraints, as we are currently unable to incur additional debt under our credit agreement or otherwise for failure to comply with the requirements of our credit agreement and the agreements governing our public debt, and we will be limited to our cash on hand or be forced to raise additional sources of capital or take other measures to maintain adequate liquidity,
•Actual costs under our revolving credit facility or other floating rate debt will be higher than the stated rates because of fees and expenses associated with such debt,
•The premiums used to determine the interest rate payable on our revolving credit facility and the facility fee payable on our revolving credit facility are based on our credit ratings, which are subject to change,
•For the three months ended March 31, 2022, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources. This may imply that we will maintain or increase the percentage of our NOI generated from private resources at our senior living communities. However, our residents and patients may become unable to fund our charges with private resources and we may be required or may elect for business reasons to accept or pursue revenues from government sources, which could result in an increased part of our NOI and revenue being generated from government payments and our becoming more dependent on government payments. If the government fails to pay us or our managers or other operators amounts due to us or them because of government defaults, shutdowns, budgetary constraints or otherwise, we and they may be significantly negatively impacted,
•Circumstances that adversely affect the ability of seniors or their families to pay for our managers' or other operators' services, such as economic downturns, weak housing market conditions, higher levels of unemployment among our residents' family members, lower levels of consumer confidence, inflation, stock market volatility and/or changes in demographics generally could affect the profitability of our senior living communities,
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•It is difficult to accurately estimate tenant space preparation costs. Our unspent leasing related obligations may cost more or less and may take longer to complete than we currently expect, and we may incur increasing amounts for these and similar purposes in the future,
•We expect that we will benefit from RMR's Environmental, Social and Governance, or ESG, program and initiatives. However, we may not realize the benefits we expect from such program and initiatives and we or RMR may not succeed in meeting existing or future standards regarding ESG,
•We believe that our relationships with our related parties, including AlerisLife (including Five Star) and RMR and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize, and
•The business and property management agreements between us and RMR have continuing 20 year terms. However, those agreements permit early termination in certain circumstances. Accordingly, we cannot be sure that these agreements will remain in effect for continuing 20 year terms.
Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as the COVID-19 pandemic and its aftermath, new legislation or regulations affecting our business or the businesses of our managers or other operators or tenants, changes in our managers' or other operators' or tenants' revenues or costs, worsening or lack of improvement of the financial condition or changes in our managers' or other operators' or tenants' financial conditions, deficiencies in operations by a manager or other operator of one or more of our senior living communities, acts of terrorism, war or other hostilities, pandemics, natural disasters, climate change and climate related events or changes in capital markets or the economy generally.
The information contained elsewhere in this Quarterly Report on Form 10-Q or in our other filings with the SEC, including under the caption “Risk Factors”, or incorporated herein or therein, identifies other important factors that could cause differences from our forward-looking statements. Our other filings with the SEC are available on the SEC's website at www.sec.gov.
You should not place undue reliance upon our forward-looking statements.
Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
Statement Concerning Limited Liability
The Amended and Restated Declaration of Trust establishing Diversified Healthcare Trust, dated September 20, 1999, as amended and supplemented, as filed with the State Department of Assessments and Taxation of Maryland, provides that no trustee, officer, shareholder, employee or agent of Diversified Healthcare Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Diversified Healthcare Trust. All persons dealing with Diversified Healthcare Trust in any way shall look only to the assets of Diversified Healthcare Trust for the payment of any sum or the performance of any obligation.
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PART II.  Other Information
 
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING: 
OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS,
OUR ABILITY TO RETAIN OUR EXISTING TENANTS, ATTRACT NEW TENANTS AND MAINTAIN OR INCREASE CURRENT RENTAL RATES,
THE CREDIT QUALITIES OF OUR TENANTS,
OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY,
OUR ACQUISITIONS AND SALES OF PROPERTIES,
THE ABILITY OF THE MANAGER OF OUR MANAGED SENIOR LIVING COMMUNITIES TO MAINTAIN AND INCREASE OCCUPANCY, REVENUES AND OPERATING INCOME AT THOSE COMMUNITIES,
OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS,
OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL,
THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,
OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,
OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL,
OUR CREDIT RATINGS,
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF RMR INC.,
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF AIC AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC,
OUR QUALIFICATION FOR TAXATION AS A REIT,
OUR BELIEF THAT THE AGING U.S. POPULATION AND INCREASING LIFE SPANS OF SENIORS WILL INCREASE THE DEMAND FOR SENIOR LIVING SERVICES,
OUR BELIEF THAT FIVE STAR, OUR FORMER SUBSIDIARY AND LARGEST TENANT AND THE MANAGER OF OUR MANAGED SENIOR LIVING COMMUNITIES, HAS ADEQUATE FINANCIAL RESOURCES AND LIQUIDITY AND THE ABILITY TO MEET ITS OBLIGATIONS TO US AND TO MANAGE OUR SENIOR LIVING COMMUNITIES SUCCESSFULLY, AND
OTHER MATTERS.

OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FFO, NORMALIZED FFO, NOI, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:

THE IMPACT OF CONDITIONS AND CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS AND MANAGERS,
THE IMPACT OF THE ACA, INCLUDING CURRENT PROPOSALS TO REPEAL OR TO REPEAL AND REPLACE THE ACA, AND OTHER EXISTING OR PROPOSED LEGISLATION OR REGULATIONS ON US, ON OUR TENANTS AND MANAGERS AND ON THEIR ABILITY TO PAY OUR RENTS AND RETURNS,
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, FIVE STAR, RMR LLC, RMR INC., AIC AND OTHERS AFFILIATED WITH THEM,
COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS,
LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY FOR TAXATION AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES,
COMPETITION WITHIN THE HEALTHCARE AND REAL ESTATE INDUSTRIES, AND
ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL.
FOR EXAMPLE: 
FIVE STAR IS OUR LARGEST TENANT AND THE MANAGER OF OUR MANAGED SENIOR LIVING COMMUNITIES AND IT MAY EXPERIENCE FINANCIAL DIFFICULTIES AS A RESULT OF A NUMBER OF FACTORS, INCLUDING, BUT NOT LIMITED TO: 
CHANGES IN MEDICARE OR MEDICAID POLICIES, INCLUDING THOSE THAT MAY RESULT FROM THE ACA, INCLUDING CURRENT PROPOSALS TO REPEAL OR TO REPEAL AND REPLACE THE ACA, AND OTHER EXISTING OR PROPOSED LEGISLATION OR REGULATIONS, WHICH COULD RESULT IN REDUCED MEDICARE OR MEDICAID RATES OR A FAILURE OF SUCH RATES TO COVER FIVE STAR’S COSTS OR LIMIT THE SCOPE OR FUNDING OF EITHER OR BOTH PROGRAMS,
THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON FIVE STAR AND ITS RESIDENTS AND OTHER CUSTOMERS,
COMPETITION WITHIN THE SENIOR LIVING SERVICES BUSINESS,
INCREASES IN INSURANCE AND TORT LIABILITY COSTS,
INCREASES IN COMPLIANCE COSTS, AND
INCREASES IN FIVE STAR'S LABOR COSTS OR IN COSTS FIVE STAR PAYS FOR GOODS AND SERVICES.
IF FIVE STAR’S OPERATIONS CONTINUE TO BE UNPROFITABLE, IT MAY DEFAULT ON ITS RENT OBLIGATIONS TO US,
IF FIVE STAR FAILS TO PROVIDE QUALITY SERVICES AT SENIOR LIVING COMMUNITIES THAT WE OWN, OUR INCOME FROM THESE COMMUNITIES MAY BE ADVERSELY AFFECTED,
IN RESPONSE TO COMPETITIVE PRESSURES RESULTING FROM RECENT AND EXPECTED NEW SUPPLY OF SENIOR LIVING COMMUNITIES, WE HAVE BEEN INVESTING IN IMPROVEMENTS TO OUR EXISTING SENIOR LIVING COMMUNITIES. OUR COMMUNITIES MAY FAIL TO BE COMPETITIVE AND THEY MAY FAIL TO ATTRACT RESIDENTS, DESPITE OUR CAPITAL INVESTMENTS,
OUR OTHER TENANTS MAY EXPERIENCE LOSSES AND DEFAULT ON THEIR RENT OBLIGATIONS TO US,
SOME OF OUR TENANTS MAY NOT RENEW EXPIRING LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN OR INCREASE THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES,

OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS, THE CAPITAL COSTS WE INCUR TO LEASE AND OPERATE OUR PROPERTIES AND OUR WORKING CAPITAL REQUIREMENTS. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED,
OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND ARRANGE FOR THEIR PROFITABLE OPERATION OR LEASE THEM FOR RENTS, LESS THEIR PROPERTY OPERATING EXPENSES, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING, MANAGEMENT AGREEMENTS OR LEASE TERMS FOR NEW PROPERTIES,
RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE,
CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES AND ANY RELATED LEASES OR MANAGEMENT ARRANGEMENTS WE MAY EXPECT TO ENTER INTO MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS OR ARRANGEMENTS MAY CHANGE,
WE HAVE ENTERED AN AGREEMENT TO ACQUIRE SIX SENIOR LIVING COMMUNITIES FROM FIVE STAR FOR APPROXIMATELY $104.0 MILLION, INCLUDING OUR ASSUMPTION OF APPROXIMATELY $33.7 MILLION OF MORTGAGE DEBT AND EXCLUDING CLOSING COSTS, AND WE EXPECT TO ENTER MANAGEMENT AND POOLING ARRANGEMENTS WITH FIVE STAR FOR FIVE STAR TO MANAGE THESE SENIOR LIVING COMMUNITIES FOR US. THESE ACQUISITIONS ARE SUBJECT TO CONDITIONS. THESE CONDITIONS MAY NOT BE MET AND THESE ACQUISITIONS AND RELATED MANAGEMENT AND POOLING ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED BEYOND THE FIRST QUARTER OF 2018 OR THEIR TERMS MAY CHANGE,
WE EXPECT TO ENTER INTO ADDITIONAL LEASE OR MANAGEMENT ARRANGEMENTS WITH FIVE STAR FOR ADDITIONAL SENIOR LIVING COMMUNITIES THAT WE OWN OR MAY ACQUIRE IN THE FUTURE. HOWEVER, WE CANNOT BE SURE THAT WE WILL ENTER INTO ANY ADDITIONAL LEASES, MANAGEMENT ARRANGEMENTS OR OTHER TRANSACTIONS WITH FIVE STAR,
CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY,
ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE CREDIT FACILITIES WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH FACILITIES,

THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS MAY BE INCREASED TO UP TO $3.1 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES. HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR,
WE HAVE THE OPTION TO EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY UPON PAYMENT OF A FEE AND MEETING OTHER CONDITIONS;  HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET,
THE PREMIUMS USED TO DETERMINE THE INTEREST RATE PAYABLE ON OUR REVOLVING CREDIT FACILITY AND TERM LOANS AND THE FACILITY FEE PAYABLE ON OUR REVOLVING CREDIT FACILITY ARE BASED ON OUR CREDIT RATINGS.  FUTURE CHANGES IN OUR CREDIT RATINGS MAY CAUSE THE INTEREST AND FEES WE PAY TO INCREASE,
WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017, APPROXIMATELY 97% OF OUR NOI WAS GENERATED FROM PROPERTIES WHERE A MAJORITY OF THE REVENUES ARE DERIVED FROM OUR TENANTS’ AND RESIDENTS’ PRIVATE RESOURCES.  THIS MAY IMPLY THAT WE WILL MAINTAIN OR INCREASE THE PERCENTAGE OF OUR NOI GENERATED FROM PRIVATE RESOURCES AT OUR SENIOR LIVING COMMUNITIES.  HOWEVER, OUR RESIDENTS AND PATIENTS MAY BECOME UNABLE TO FUND OUR CHARGES WITH PRIVATE RESOURCES AND WE MAY BE REQUIRED OR MAY ELECT FOR BUSINESS REASONS TO ACCEPT OR PURSUE REVENUES FROM GOVERNMENT SOURCES, WHICH COULD RESULT IN AN INCREASED PART OF OUR NOI AND REVENUE BEING GENERATED FROM GOVERNMENT PAYMENTS AND OUR BECOMING MORE DEPENDENT ON GOVERNMENT PAYMENTS,
CIRCUMSTANCES THAT ADVERSELY AFFECT THE ABILITY OF SENIORS OR THEIR FAMILIES TO PAY FOR OUR TENANTS' AND MANAGER'S SERVICES, SUCH AS ECONOMIC DOWNTURNS, WEAK HOUSING MARKET CONDITIONS, HIGHER LEVELS OF UNEMPLOYMENT AMONG OUR RESIDENTS' FAMILY MEMBERS, LOWER LEVELS OF CONSUMER CONFIDENCE, STOCK MARKET VOLATILITY AND/OR CHANGES IN DEMOGRAPHICS GENERALLY COULD AFFECT THE PROFITABILITY OF OUR SENIOR LIVING COMMUNITIES,
AS OF SEPTEMBER 30, 2017, WE HAD ESTIMATED UNSPENT LEASING RELATED OBLIGATIONS OF $21.6 MILLION. IT IS DIFFICULT TO ACCURATELY ESTIMATE TENANT SPACE PREPARATION COSTS. OUR UNSPENT LEASING RELATED OBLIGATIONS MAY COST MORE OR LESS AND MAY TAKE LONGER TO COMPLETE THAN WE CURRENTLY EXPECT, AND WE MAY INCUR INCREASING AMOUNTS FOR THESE AND SIMILAR PURPOSES IN THE FUTURE,
WE MAY NOT BE ABLE TO SELL PROPERTIES THAT WE DETERMINE TO OFFER FOR SALE ON TERMS ACCEPTABLE TO US OR OTHERWISE,
WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING FIVE STAR, RMR LLC, RMR INC., ABP TRUST, AIC AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS.  HOWEVER, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE,
RMR INC. MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US,
OUR SENIOR LIVING COMMUNITIES ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION, LICENSURE AND OVERSIGHT. WE SOMETIMES EXPERIENCE DEFICIENCIES IN THE OPERATION OF OUR SENIOR LIVING COMMUNITIES AND SOME OF OUR COMMUNITIES MAY BE PROHIBITED FROM ADMITTING NEW RESIDENTS OR OUR LICENSE TO CONTINUE OPERATIONS AT A COMMUNITY MAY BE REVOKED. ALSO, OPERATING DEFICIENCIES OR A LICENSE REVOCATION AT ONE OR MORE OF OUR SENIOR LIVING COMMUNITIES MAY HAVE AN ADVERSE IMPACT ON OUR ABILITY TO OBTAIN LICENSES FOR, OR ATTRACT RESIDENTS TO, OUR OTHER COMMUNITIES, AND
THE BUSINESS AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES.  ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS.
CURRENTLY UNEXPECTED RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS NEW LEGISLATION OR REGULATIONS AFFECTING OUR BUSINESS OR THE BUSINESSES OF OUR TENANTS OR MANAGERS, CHANGES IN OUR TENANTS’ OR MANAGERS’ REVENUES OR COSTS, CHANGES IN OUR TENANTS’ OR MANAGERS’ FINANCIAL CONDITIONS, DEFICIENCIES IN OPERATIONS BY A TENANT OR MANAGER OF ONE OR MORE OF OUR SENIOR LIVING COMMUNITIES, CHANGED MEDICARE OR MEDICAID RATES, ACTS OF TERRORISM, NATURAL DISASTERS OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY.
THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q AND IN OUR ANNUAL REPORT OR IN OUR OTHER FILINGS WITH THE SEC INCLUDING UNDER THE CAPTION “RISK FACTORS”, OR INCORPORATED HEREIN OR THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.









STATEMENT CONCERNING LIMITED LIABILITY
THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING SENIOR HOUSING PROPERTIES TRUST, DATED SEPTEMBER 20, 1999, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SENIOR HOUSING PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SENIOR HOUSING PROPERTIES TRUST. ALL PERSONS DEALING WITH SENIOR HOUSING PROPERTIES TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF SENIOR HOUSING PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.


PART II.  Other Information
Item 1A. Risk Factors.
There have been no material changes to risk factors from those we previously disclosed in our Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


Issuer purchases of equity securities. The following table provides information about our purchases of our equity
securities during the quarter ended September 30, 2017:March 31, 2022:

Calendar Month
Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
March 20221,698 $3.20 — $— 
Total1,698 $3.20 — $— 
Calendar Month 
Number of Shares Purchased (1)
 Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
September 2017 16,654
 $19.85
 —
 $—
Total 16,654
 $19.85
 —
 $—


(1) TheseThis common share withholdingswithholding and purchases werepurchase was made to satisfy tax withholding and payment obligations of certaina former employee of RMR LLC employees in connection with the vesting of prior awards of our common shares. We withheld and purchased these shares at their fair market value based upon the trading price of our common shares at the close of trading on the Nasdaq on the purchase date.

Item 5. Other Information.

On November 8, 2017, we entered a transaction agreement with Five Star pursuant to which we agreed to acquire six senior living communities from Five Star. We will enter management and pooling agreements with Five Star as we acquire these communities for Five Star to manage these senior living communities for us. The aggregate purchase price for these six senior living communities is approximately $104.0 million, including our assumption of approximately $33.7 million of mortgage debt securing certain of these senior living communities and excluding closing costs. The transaction agreement includes certain conditions to our acquisitions of these senior living communities, including receipt of any applicable lender and regulatory approvals. We expect to complete these acquisitions as third party approvals are received between now and the end of the first quarter of 2018; however, the conditions to our acquisitions of these senior living communities may not be met and some or all of these acquisitions and related management and pooling arrangements may not occur, may be delayed or the terms may change.
The management agreements we and Five Star will enter in connection with our acquisitions of these senior living communities will be combined pursuant to two new pooling agreements to be entered between us and Five Star. The first new pooling agreement will combine the management agreements for five of these senior living communities. Pursuant to the terms of the management and pooling agreements to be entered for these five senior living communities, we will pay Five Star a management fee equal to 5% of the gross revenues realized at these communities plus reimbursement for Five Star’s direct costs and expenses related to its operation of these communities, as well as an annual incentive fee equal to 20% of the annual NOI of these communities remaining after we realize an annual minimum return equal to 7% of our invested capital for these senior living communities. The second new pooling agreement will include one management agreement for a senior living community that is subject to an ongoing construction, expansion and development project. The terms of the management and pooling agreements to be entered for this senior living community will be substantially the same as the terms of the management and pooling agreements for the other five senior living communities, except that our annual minimum return on invested capital related to the ongoing construction, expansion and development project at this community will be an amount equal to the interest rate then applicable to borrowings under our revolving credit facility plus 2% per annum. This amount of minimum return will apply until the earlier of 12 months after a certificate of occupancy is issued with respect to the project and the third anniversary of our acquisition of this community; thereafter, the amount of annual minimum return on invested capital related to this project will be 7% of our invested capital. Also pursuant to the terms of the management and pooling agreements to be entered for these six senior living communities, we will pay Five Star a fee for its management of capital expenditure projects at these senior living communities equal to 3% of amounts funded by us. The terms of these management and pooling agreements will expire in 2041 and will be subject to automatic renewals, unless earlier terminated or timely notices of nonrenewal are delivered.
Also on November 8, 2017, we entered an amendment to our preexisting pooling agreements with Five Star, among other things, to provide that, with respect to our right to terminate all of the management agreements covered by a preexisting pooling

agreement if we do not receive our annual minimum return under such agreement in each of three consecutive years, the commencement year for the measurement period for determining whether the specified annual minimum return under the applicable pooling agreement has been achieved will be 2017.
The foregoing descriptions of the transaction agreement and the amendment to our preexisting pooling agreements with Five Star are not complete and are qualified in their entirety by reference to the full text of those documents and all exhibits and schedules thereto, copies of which are filed with this Quarterly Report on Form 10-Q as Exhibits 10.2 and 10.3.
We have relationships and historical and continuing transactions with Five Star. For information regarding these relationships and transactions, see Notes 10, 11 and 12 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 2017 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. Our filings with the SEC and copies of certain of our agreements with these related persons, including our various agreements with Five Star, are available as exhibits to our filings with the SEC and accessible at the SEC’s website, www.sec.gov.
Item 6. Exhibits.
Exhibit

Number		Description
3.1
3.2
3.3
3.4
3.5
4.1
4.2
4.3
4.4
Supplemental Indenture No. 6, dated as of December 8, 2011, between the Company and U.S. Bank National Association, related to 6.75% Senior Notes due 2021, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, File No. 001-15319.)
4.5
Supplemental Indenture No. 7, dated as of July 20, 2012, between the Company and U.S. Bank National Association, related to 5.625% Senior Notes due 2042, including form thereof (Incorporated by reference to the Company’s Registration Statement on Form 8-A dated July 20, 2012, File No. 001-15319.)
4.6
Supplemental Indenture No. 8, dated as of April 28, 2014, between the Company and U.S. Bank National Association, related to 3.25% Senior Notes due 2019, including form thereof. (Incorporated by reference to the Company’s Quarterly ReportCompany's Registration Statement on Form 10-Q for the quarter ended March 31, 2014.8-A filed on July 20, 2012.)
4.74.4
4.84.5
4.94.6
4.104.7
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Table of Contents
4.8
4.9
4.10
4.11
4.12

10.1
10.1
10.222.1
10.331.1
12.1
Computation of Ratio of Earnings to Fixed Charges. (Filed herewith.)
31.1
Rule 13a-14(a) Certification. (Filed herewith.)
31.2
31.332.1
31.4
Rule 13a-14(a) Certification. (Filed herewith.)
32.1 
Section 1350 Certification. (Furnished herewith.)
101.1101.INSThe following materials fromXBRL Instance Document - the Company’s Quarterly Report on Form 10-Q forinstance document does not appear in the quarter ended September 30, 2017 formatted inInteractive Data File because its XBRL (eXtensible Business Reporting Language): (i)tags are embedded within the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements, tagged as blocks of text and in detail.Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CALXBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEFXBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LABXBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PREXBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
SENIOR HOUSING PROPERTIESDIVERSIFIED HEALTHCARE TRUST
By:/s/ David J. HegartyJennifer F. Francis
David J. HegartyJennifer F. Francis
President and Chief OperatingExecutive Officer
Dated: November 9, 2017May 3, 2022
By:/s/ Richard W. Siedel, Jr.
Richard W. Siedel, Jr.
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
Dated: November 9, 2017May 3, 2022



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