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 June 30, 20202021
OR 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Commission File Number 1-15319 
DIVERSIFIED 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,, MA02458-1634
(Address of Principal Executive Offices) (Zip Code) 
617 - 796 - 8350
(Registrant'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 every Interactive Data File required to be submitted 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 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☐
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. ☐
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's common shares outstanding as of August 3, 2020:2, 2021: 237,950,658238,374,572


Table of Contents
DIVERSIFIED HEALTHCARE TRUST
FORM 10-Q
 
June 30, 20202021
 
INDEX
Page
1
1
2
3
4
6
2220
4743
4945
5046
5451
5552
5552
5852
5852
6054
 
References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Diversified 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.
 
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amountsdollars in thousands, except share data)
(unaudited)
 June 30, December 31, June 30,December 31,
 2020 2019 20212020
Assets  
  
Assets  
Real estate properties:  
  
Real estate properties:  
Land $799,462
 $793,123
Land$793,261 $789,125 
Buildings and improvements 6,720,113
 6,668,463
Buildings and improvements6,731,677 6,621,605 
Total real estate properties, gross 7,519,575
 7,461,586
Total real estate properties, gross7,524,938 7,410,730 
Accumulated depreciation (1,666,244) (1,570,801)Accumulated depreciation(1,792,472)(1,694,901)
Total real estate properties, net 5,853,331
 5,890,785
Total real estate properties, net5,732,466 5,715,829 
    
Assets of properties held for sale 106,049
 209,570
Assets of properties held for sale0 112,437 
Cash and cash equivalents 78,485
 37,357
Cash and cash equivalents849,079 74,417 
Restricted cash 15,283
 14,867
Restricted cash59,010 16,432 
Acquired real estate leases and other intangible assets, net 310,657
 337,875
Acquired real estate leases and other intangible assets, net263,657 286,513 
Other assets, net 236,718
 163,372
Other assets, net275,640 270,796 
Total assets $6,600,523
 $6,653,826
Total assets$7,179,852 $6,476,424 
    
Liabilities and Equity  
  
Liabilities and Equity  
Unsecured revolving credit facility $—
 $537,500
Unsecured term loans, net 198,777
 448,741
Revolving credit facilityRevolving credit facility$800,000 $0 
Term loan, netTerm loan, net0 199,049 
Senior unsecured notes, net 2,605,153
 1,820,681
Senior unsecured notes, net2,803,497 2,608,189 
Secured debt and finance leases, net 693,179
 694,739
Secured debt and finance leases, net689,895 691,573 
Liabilities of properties held for sale 5,841
 6,758
Liabilities of properties held for sale0 3,525 
Accrued interest 27,162
 24,060
Accrued interest32,690 23,772 
Assumed real estate lease obligations, net 72,286
 76,705
Assumed real estate lease obligations, net63,487 67,830 
Other liabilities 243,285
 167,592
Other liabilities285,134 263,264 
Total liabilities 3,845,683
 3,776,776
Total liabilities4,674,703 3,857,202 
    
Commitments and contingencies 


 


Commitments and contingencies00
    
Equity:  
  
Equity:  
Equity attributable to common shareholders:    Equity attributable to common shareholders:
Common shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 237,951,968 and 237,897,163 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively 2,380
 2,379
Common shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 238,374,572 and 238,268,478 shares issued and outstanding, respectivelyCommon shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 238,374,572 and 238,268,478 shares issued and outstanding, respectively2,384 2,383 
Additional paid in capital 4,613,146
 4,612,511
Additional paid in capital4,614,748 4,613,904 
Cumulative net income 2,036,225
 2,052,562
Cumulative net income1,811,382 1,913,109 
Cumulative distributions (4,028,797) (3,930,933)Cumulative distributions(4,038,325)(4,033,559)
Total equity attributable to common shareholders 2,622,954
 2,736,519
Total equity attributable to common shareholders2,390,189 2,495,837 
Noncontrolling interest:    Noncontrolling interest:
Total equity attributable to noncontrolling interest 131,886
 140,531
Total equity attributable to noncontrolling interest114,960 123,385 
Total equity 2,754,840
 2,877,050
Total equity2,505,149 2,619,222 
Total liabilities and equity $6,600,523
 $6,653,826
Total liabilities and equity$7,179,852 $6,476,424 
 SeeThe accompanying notes.notes are an integral part of these unaudited condensed consolidated financial statements.

1
Table of Contents
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
(unaudited)
 Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30,
 2020 2019 2020 2019 2021202020212020
Revenues:  
  
  
  
Revenues:    
Rental income $106,207
 $153,097
 $216,705
 $311,338
Rental income$102,394 $106,207 $205,152 $216,705 
Residents fees and services 304,104
 108,906
 636,073
 216,951
Residents fees and services243,947 304,104 503,913 636,073 
Total revenues 410,311
 262,003
 852,778
 528,289
Total revenues346,341 410,311 709,065 852,778 
        
Expenses:  
  
  
  
Expenses:    
Property operating expenses 301,915
 120,193
 618,500
 237,415
Property operating expenses264,632 301,915 552,023 618,500 
Depreciation and amortization 68,825
 73,924
 137,255
 146,154
Depreciation and amortization67,888 68,825 134,041 137,255 
General and administrative 7,312
 8,867
 16,144
 18,683
General and administrative9,126 7,312 16,668 16,144 
Acquisition and certain other transaction related costs 87
 903
 750
 8,717
Acquisition and certain other transaction related costs12,071 87 12,071 750 
Impairment of assets 31,175
 2,213
 42,409
 8,419
Impairment of assets0 31,175 (174)42,409 
Total expenses 409,314
 206,100
 815,058
 419,388
Total expenses353,717 409,314 714,629 815,058 
        
(Loss) gain on sale of properties (168) 17,832
 2,614
 17,710
Dividend income —
 923
 —
 1,846
Gain (loss) on sale of propertiesGain (loss) on sale of properties30,760 (168)30,638 2,614 
Gains and losses on equity securities, net 11,974
 (64,448) 2,031
 (41,516)Gains and losses on equity securities, net(3,849)11,974 (12,188)2,031 
Interest and other income 7,736
 238
 7,874
 352
Interest and other income16,038 7,736 18,873 7,874 
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $1,617, $1,519, $3,126 and $3,171, respectively) (43,974) (46,412) (85,624) (92,023)
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $3,017, $1,617, $5,829 and $3,126, respectively)Interest expense (including net amortization of debt premiums, discounts and issuance costs of $3,017, $1,617, $5,829 and $3,126, respectively)(67,657)(43,974)(127,748)(85,624)
Gain on lease termination —
 —
 22,896
 —
Gain on lease termination0 0 0 22,896 
Loss on early extinguishment of debt (181) (17) (427) (17)Loss on early extinguishment of debt(370)(181)(2,410)(427)
Loss from continuing operations before income tax (expense) benefit and equity in earnings of an investee (23,616) (35,981) (12,916) (4,747)
Income tax (expense) benefit (1,126) 35
 (683) (99)
Equity in earnings of an investee —
 130
 —
 534
Loss from continuing operations before income tax expenseLoss from continuing operations before income tax expense(32,454)(23,616)(98,399)(12,916)
Income tax expenseIncome tax expense(191)(1,126)(429)(683)
Net loss (24,742) (35,816) (13,599) (4,312)Net loss(32,645)(24,742)(98,828)(13,599)
Net income attributable to noncontrolling interest (1,330) (1,413) (2,738) (2,835)Net income attributable to noncontrolling interest(1,577)(1,330)(2,899)(2,738)
Net loss attributable to common shareholders $(26,072) $(37,229) $(16,337) $(7,147)Net loss attributable to common shareholders$(34,222)$(26,072)$(101,727)$(16,337)
        
Other comprehensive income:  
  
  
  
Equity in unrealized gain of an investee —
 71
 —
 137
Other comprehensive income —
 71
 —
 137
Comprehensive loss (24,742) (35,745) (13,599) (4,175)
Comprehensive income attributable to noncontrolling interest (1,330) (1,413) (2,738) (2,835)
Comprehensive loss attributable to common shareholders $(26,072) $(37,158) $(16,337) $(7,010)
        
Weighted average common shares outstanding (basic) 237,700
 237,580
 237,684
 237,574
Weighted average common shares outstanding (basic)237,871 237,700 237,853 237,684 
Weighted average common shares outstanding (diluted) 237,700
 237,580
 237,684
 237,574
Weighted average common shares outstanding (diluted)237,871 237,700 237,853 237,684 
        
Per common share amounts (basic and diluted):  
  
  
  
Per common share amounts (basic and diluted):    
Net loss attributable to common shareholders $(0.11) $(0.16) $(0.07) $(0.03)Net loss attributable to common shareholders$(0.14)$(0.11)$(0.43)$(0.07)
 
SeeThe accompanying notes.notes are an integral part of these unaudited condensed consolidated financial statements.

2
Table of Contents
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(amountsdollars in thousands, except share data)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, 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 
Net (loss) income— — — (34,222)— (34,222)1,577 (32,645)
Distributions— — — — (2,383)(2,383)— (2,383)
Share grants120,000 1 675 — — 676 — 676 
Share repurchases(13,906)— (59)— — (59)— (59)
Distributions to noncontrolling interest— — — — — — (5,630)(5,630)
Balance at June 30, 2021:238,374,572 $2,384 $4,614,748 $1,811,382 $(4,038,325)$2,390,189 $114,960 $2,505,149 
Balance at December 31, 2019:237,897,163 $2,379 $4,612,511 $2,052,562 $(3,930,933)$2,736,519 $140,531 $2,877,050 
Net income— — — 9,735 — 9,735 1,408 11,143 
Distributions— — — — (35,684)(35,684)— (35,684)
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock— — — — (59,801)(59,801)— (59,801)
Share grants— — 249 — — 249 — 249 
Share repurchases(3,438)— (21)— — (21)— (21)
Distributions to noncontrolling interest— — — — — — (5,767)(5,767)
Balance at March 31, 2020:237,893,725 2,379 4,612,739 2,062,297 (4,026,418)2,650,997 136,172 2,787,169 
Net (loss) income— — — (26,072)— (26,072)1,330 (24,742)
Distributions— — — — (2,379)(2,379)— (2,379)
Share grants60,000 1 415 — — 416 — 416 
Share repurchases(1,757)— (8)— — (8)— (8)
Distributions to noncontrolling interest— — — — — — (5,616)(5,616)
Balance at June 30, 2020:237,951,968 $2,380 $4,613,146 $2,036,225 $(4,028,797)$2,622,954 $131,886 $2,754,840 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
  
Number of
Shares
 
Common
Shares
 
Additional
Paid-in
Capital
 
Cumulative
Net Income
 Cumulative Other
Comprehensive
Income (Loss)		 Cumulative Distributions Total Equity Attributable to Common Shareholders 
Total Equity Attributable to Noncontrolling
Interest
 Total Equity
Balance at December 31, 2019: 237,897,163
 $2,379
 $4,612,511
 $2,052,562
 $—
 $(3,930,933) $2,736,519
 $140,531
 $2,877,050
Net income —
 —
 —
 9,735
 —
 —
 9,735
 1,408
 11,143
Distributions —
 —
 —
 —
 —
 (35,684) (35,684) —
 (35,684)
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock —
 —
 —
 —
 —
 (59,801) (59,801) —
 (59,801)
Share grants —
 —
 249
 —
 —
 —
 249
 —
 249
Share repurchases (3,438) —
 (21) —
 —
 —
 (21) —
 (21)
Distributions to noncontrolling interest —
 —
 —
 —
 —
 —
 —
 (5,767) (5,767)
Balance at March 31, 2020: 237,893,725
 2,379
 4,612,739
 2,062,297
 —
 (4,026,418) 2,650,997
 136,172
 2,787,169
Net (loss) income —
 —
 —
 (26,072) —
 —
 (26,072) 1,330
 (24,742)
Distributions —
 —
 —
 —
 —
 (2,379) (2,379) —
 (2,379)
Share grants 60,000
 1
 415
 —
 —
 —
 416
 —
 416
Share repurchases (1,757) —
 (8) —
 —
 —
 (8) —
 (8)
Distributions to noncontrolling interest —
 —
 —
 —
 —
 —
 —
 (5,616) (5,616)
Balance at June 30, 2020: 237,951,968
 $2,380
 $4,613,146
 $2,036,225
 $—
 $(4,028,797) $2,622,954
 $131,886
 $2,754,840
                   
Balance at December 31, 2018: 237,729,900
 $2,377
 $4,611,419
 $2,140,796
 $(266) $(3,731,214) $3,023,112
 $156,758
 $3,179,870
Net income —
 —
 —
 30,082
 —
 —
 30,082
 1,422
 31,504
Other comprehensive income —
 —
 —
 —
 66
 —
 66
 —
 66
Distributions —
 —
 —
 —
 —
 (92,714) (92,714) —
 (92,714)
Share grants —
 —
 215
 —
 —
 —
 215
 —
 215
Distributions to noncontrolling interest —
 —
 —
 —
 —
 —
 —
 (5,503) (5,503)
Balance at March 31, 2019: 237,729,900
 2,377
 4,611,634
 2,170,878
 (200) (3,823,928) 2,960,761
 152,677
 3,113,438
Net (loss) income —
 —
 —
 (37,229) —
 —
 (37,229) 1,413
 (35,816)
Other comprehensive income —
 —
 —
 —
 71
 —
 71
 —
 71
Distributions —
 —
 —
 —
 —
 (35,659) (35,659) —
 (35,659)
Share grants 15,000
 —
 395
 —
 —
 —
 395
 —
 395
Share repurchases (4,139) —
 (36) —
 —
 —
 (36) —
 (36)
Distributions to noncontrolling interest —
 —
 —
 —
 —
 —
 —
 (5,684) (5,684)
Balance at June 30, 2019: 237,740,761
 $2,377
 $4,611,993
 $2,133,649
 $(129) $(3,859,587) $2,888,303
 $148,406
 $3,036,709
See accompanying notes.
Table of Contents

DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amountsdollars in thousands)
(unaudited)
 Six Months Ended June 30,
 20212020
Cash flows from operating activities:  
Net loss$(98,828)$(13,599)
Adjustments to reconcile net loss to cash provided by operating activities:  
Depreciation and amortization134,041 137,255 
Net amortization of debt premiums, discounts and issuance costs5,829 3,126 
Straight line rental income(2,125)(2,538)
Amortization of acquired real estate leases(3,715)(3,703)
Loss on early extinguishment of debt2,410 51 
Gain on lease termination0 (22,896)
Impairment of assets(174)42,409 
Gain on sale of properties(30,638)(2,614)
Gains and losses on equity securities, net12,188 (2,031)
Other non-cash adjustments, net(982)(1,885)
Change in assets and liabilities:  
Deferred leasing costs, net(8,258)(4,140)
Other assets(7,937)(24,441)
Accrued interest8,918 3,085 
Other liabilities16,317 2,594 
Net cash provided by operating activities27,046 110,673 
Cash flows from investing activities:  
Real estate acquisitions and deposits0 (2,526)
Real estate improvements(83,468)(71,762)
Proceeds from sale of properties, net103,057 66,604 
Distributions in excess of earnings from Affiliates Insurance Company0 287 
Net cash provided by (used in) investing activities19,589 (7,397)
Cash flows from financing activities:  
Proceeds from issuance of senior unsecured notes, net492,500 985,000 
Proceeds from borrowings on revolving credit facility800,000 405,500 
Repayments of borrowings on revolving credit facility0 (943,000)
Repayment of senior unsecured notes(300,000)(200,000)
Repayment of term loan(200,000)(250,000)
Repayment of other debt(1,558)(4,455)
Loss on early extinguishment of debt settled in cash0 (376)
Payment of debt issuance costs(4,188)(4,926)
Repurchase of common shares(59)(29)
Distributions to noncontrolling interest(11,324)(11,383)
Distributions to shareholders(4,766)(38,063)
Net cash provided by (used in) financing activities770,605 (61,732)
Increase in cash and cash equivalents and restricted cash817,240 41,544 
Cash and cash equivalents and restricted cash at beginning of period90,849 52,224 
Cash and cash equivalents and restricted cash at end of period$908,089 $93,768 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
  Six Months Ended June 30,
  2020 2019
Cash flows from operating activities:  
  
Net loss $(13,599) $(4,312)
Adjustments to reconcile net loss to cash provided by operating activities:  
  
Depreciation and amortization 137,255
 146,154
Amortization of debt issuance costs and debt discounts and premiums 3,126
 3,171
Straight line rental income (2,538) (2,364)
Amortization of acquired real estate leases and other intangible assets (3,703) (3,080)
Loss on early extinguishment of debt 51
 17
Gain on lease termination (22,896) —
Impairment of assets 42,409
 8,419
Gain on sale of properties (2,614) (17,710)
Gains and losses on equity securities, net (2,031) 41,516
Other non-cash adjustments (1,885) (1,885)
Equity in earnings of an investee —
 (534)
Change in assets and liabilities:  
  
Other assets (26,836) 9,370
Accrued interest 3,085
 (765)
Other liabilities 849
 (52,123)
Net cash provided by operating activities 110,673
 125,874
     
Cash flows from investing activities:  
  
Real estate acquisitions and deposits (2,526) —
Real estate improvements (71,762) (135,750)
Proceeds from sale of properties, net 66,604
 34,116
Distributions in excess of earnings from Affiliates Insurance Company 287
 —
Net cash used in investing activities (7,397) (101,634)
     
Cash flows from financing activities:  
  
Proceeds from issuance of senior unsecured notes, net 985,000
 —
Proceeds from borrowings on revolving credit facility 405,500
 730,000
Repayments of borrowings on revolving credit facility (943,000) (179,000)
Repayment of senior unsecured notes (200,000) (400,000)
Repayment of unsecured term loan (250,000) —
Repayment of other debt (4,455) (44,552)
Loss on early extinguishment of debt settled in cash (376) —
Payment of debt issuance costs (4,926) —
Repurchase of common shares (29) (33)
Distributions to noncontrolling interest (11,383) (11,187)
Distributions to shareholders (38,063) (128,373)
Net cash used in financing activities (61,732) (33,145)
     
Increase (decrease) in cash and cash equivalents and restricted cash 41,544
 (8,905)
Cash and cash equivalents and restricted cash at beginning of period 52,224
 70,071
Cash and cash equivalents and restricted cash at end of period $93,768
 $61,166
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See accompanying notes.

DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(amountsdollars in thousands)
(unaudited)
 Six Months Ended June 30,Six Months Ended June 30,
 2020 201920212020
Supplemental cash flow information:    Supplemental cash flow information:  
Interest paid $80,131
 $90,061
Interest paid$113,933 $80,131 
Income taxes paid $—
 $431
Income taxes paid$1,880 $0 
    
Non-cash investing activities:    Non-cash investing activities:
Five Star Senior Living Inc. common stock $97,896
 $—
Five Star Senior Living Inc. common stock$0 $97,896 
Transaction Agreement additional consideration (75,000) —
Restructuring transaction additional considerationRestructuring transaction additional consideration$0 $(75,000)
Real estate improvements accrued, not paidReal estate improvements accrued, not paid$20,860 $18,353 
Capitalized interest $718
 $444
Capitalized interest$932 $718 
    
Non-cash financing activities:    Non-cash financing activities:
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock $(59,801) $—
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock$0 $(59,801)
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 June 30,As of June 30,
 2020 201920212020
Cash and cash equivalents $78,485
 $48,033
Cash and cash equivalents$849,079 $78,485 
Restricted cash (1)
 15,283
 13,133
Restricted cash (1)
59,010 15,283 
Total cash and cash equivalents and restricted cash shown in our condensed consolidated statements of cash flows $93,768
 $61,166
Total cash and cash equivalents and restricted cash shown in our condensed consolidated statements of cash flows$908,089 $93,768 
(1) As of June 30, 2021, restricted cash consists of amounts from dispositions 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 and cash held for the operations of one of ourthe life science propertiesproperty that is owned in a joint venture arrangement in which we own a 55% equity interest.

SeeThe accompanying notes.notes are an integral part of these unaudited 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 1.1.  Basis of Presentation
The accompanying condensed consolidated financial statements of Diversified 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, 2019,2020, or our Annual Report.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and impairments of real estate and intangible assets. We have made reclassifications to the financial statements of prior periods to conform to the current period presentation. These reclassifications had no effect on net income (loss) or equity.
We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other governmental audits, investigations and proceedings arising in the ordinary course of our business, 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 incur significant expense. We account for claims and litigation losses in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 450, Contingencies, or ASC 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 estimated minimum loss amount, which could be zero, is recorded; and then, as information becomes known, the minimum loss amount is updated, as appropriate. A minimum or best estimate amount may be increased or decreased when events result in a changed expectation.
We are party to a joint venture arrangement with an institutional investor for 1 of ourinvestor. This joint venture arrangement owns a life science propertiesproperty located in Boston, Massachusetts. The investor owns a 45% equity interest in the joint venture, and we own the remaining 55% equity interest in the joint venture. We have determined that this joint venture is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB Accounting Standards Codification. We concluded that we must consolidate this VIE because we are 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 that could be significant to the VIE, and therefore are the primary beneficiary of the VIE. The assets of this VIE were $991,730$946,564 and $1,015,661$970,142 as of June 30, 20202021 and December 31, 2019,2020, respectively, and consist primarily of the net real estate owned by the joint venture. The liabilities of this VIE were $699,761$692,489 and $704,344$697,129 as of June 30, 20202021 and December 31, 2019,2020, respectively, and consist primarily of themortgage debts secured debts onby the property. The investor's interest in this consolidated entity is reflected as a noncontrolling interest in our condensed consolidated financial statements. See Note 76 for further information about this joint venture.

Note 2.  Recent Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update 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. We adopted this standard which was effective as of January 1, 2020 using the modified retrospective approach. The implementation of this standard did not have a material impact in our condensed consolidated financial statements.

Note 3.2.  Real Estate Properties
As of June 30, 2020,2021, we owned 412392 properties located in 3836 states and Washington, D.C., including 21 properties classified as held for sale and 1 life science property owned in a joint venture arrangement in which we own a 55% equity interest.
We regularly evaluate our assets for indicators of impairment. Impairment indicators may include declining tenant or resident occupancy, weak or declining profitability from the property, decreasing tenant cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life, and legislative, market or industry changes that could permanently reduce the value of an asset. If indicators of impairment are present, we evaluate the carrying value of the affected assets by comparing it to the expected future cash flows to be generated from those assets. The future cash flows are subjective and are

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

comparing it to the expected future cash flows to be generated from those assets. The future cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the asset to its estimated fair value.
Acquisition Activities:
In January 2020, we acquired a vacant land parcel adjacent to a property we own in our portfolio of medical office and life science properties, or our Office Portfolio, segment located in Tempe, Arizona for $2,600, excluding acquisition costs.
Disposition Activities:
During the six months ended June 30, 2021, we recorded a reversal of impairment charges of $174 related to the estimated costs to sell 10 senior living communities that were classified as held for sale as of December 31, 2020 and changed the status of those communities from held for sale to held and used as of March 31, 2021.
Acquisitions and Dispositions:
During the six months ended June 30, 2021, we sold 125 properties for an aggregate sales price of $68,154,$104,500, excluding closing costs, as presented in the table below. The sales of these properties do not represent significant dispositions, individually or in the aggregate, norand we do wenot believe theythese sales represent a strategic shift in our business. As a result, the results of the operationoperations for these properties are included in continuing operations through the date of sale of such properties in our condensed consolidated statements of comprehensive income (loss).

Date of SaleLocationType of PropertyNumber of PropertiesSquare Feet
Sales Price (1)
Gain (Loss) on Sale
February 2021PennsylvaniaMedical Office192,000 $9,000 $(122)
April 2021FloridaLife Science and Medical Office4263,656 95,500 30,760 
5$104,500 $30,638 
(1)Sales price excludes closing costs.
Date of Sale Location Type of Property Number of Properties Square Feet or Number of Units  
Sales Price (1)
 Gain (loss) on Sale Impairment of Assets
January 2020 Louisiana Medical Office 6 40,575
sq. ft. $5,925
 $(81) $—
February 2020 Pennsylvania Medical Office 1 50,000
sq. ft. 2,900
 —
 (47)
March 2020 Texas Medical Office 1 70,229
sq. ft. 8,779
 2,863
 —
April 2020 California Managed Senior Living 3 599
units 47,000
 (168) 5,465
June 2020 South Carolina Medical Office 1 49,242
sq. ft. 3,550
 —
 2,753
      12    $68,154
 $2,614
 $8,171
In June 2021, we terminated a previously announced agreement to acquire a property which is adjacent to one of our existing properties located in Silver Springs, Maryland.

(1)Sales price excludes closing costs.

As of June 30, 2020, we had 21 properties classified as held for sale in our condensed consolidated balance sheet as follows:
Type of Property Number of Properties Undepreciated Carrying Value 
Impairment of Assets(1)
Managed Senior Living 15 $52,563
 $30,752
Medical Office 3 11,832
 415
Triple Net Leased, Senior Living 3 48,236
 —
  21 $112,631
 $31,167
(1)We recorded an aggregate of $31,167 impairment of real estate during the six months ended June 30, 2020 to adjust the carrying values of certain of these properties to their estimated fair values less costs to sell.
Subsequent to June 30, 2020, 2 of the 3 medical office properties and 2 of the 15 managed senior living communities classified as held for sale in the table above were sold for an aggregate sales price of $5,197, excluding closing costs.
We also recorded impairment charges of $3,071 related to 7 medical office properties and 2 senior living communities that were classified as held for sale during the three months ended March 31, 2020. These properties were subsequently reclassified to held and used as of June 30, 2020.
As of August 3, 2020, we had 24 properties under agreements to sell for an aggregate sales price of approximately $231,725, excluding closing costs. We may not complete the sales of any or all of the properties we currently plan to sell. Also, we may sell some or all of these properties at amounts that are less than currently expected and/or less than the carrying values of such properties and we may incur losses on any such sales as a result.

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


Note 4.3.  Leases
We are a lessor of medical office and life science properties, senior living communities and other healthcare related properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the premises demised under the leases; therefore, we have determined to evaluate our leases as lease arrangements.
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.
We increased rental income to record revenue on a straight line basis by $1,385$1,321 and $430$1,385 for the three months ended June 30, 20202021 and 2019,2020, respectively, and $2,538$2,125 and $2,364$2,538 for the six months ended June 30, 20202021 and 2019,2020, respectively. Rents receivable, excluding receivables related to our properties classified as held for sale, if any, include $107,178$106,501 and $99,297$104,803 of straight line rent receivables at June 30, 20202021 and December 31, 2019,2020, respectively, and are included in other assets, net in our condensed consolidated balance sheets.
We do not include in our measurement of our lease receivables certain variable payments, including changes in the index or market based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. We recognized suchSuch payments totalingtotaled $18,476 and $18,263 and $19,525 for the three months ended June 30, 20202021 and 2019,2020, respectively, of which tenant reimbursements totaled $1,074$18,440 and $1,203,$18,209, respectively, and $38,291$36,704 and $38,370$38,291 for the six months ended June 30, 20202021 and 2019,2020, respectively, of which tenant reimbursements totaled $2,094$36,620 and $2,400,$38,192, respectively.
As a result of the COVID-19 pandemic, someCertain of our tenants have requested relief from their obligations to pay rent due to us. As of August 3, 2020, weus in response to the current economic conditions resulting from the COVID-19 pandemic. In most cases, these tenants granted requests for certain of our tenants to defer rent payments totaling $5,474. These tenants aredeferrals were obligated to pay in most cases, the deferred rents in 12 equal monthly installments commencingbeginning in September 2020. We have elected to use the FASB relief package regarding the applicationAs of lease accounting guidance to lease concessions providedJune 30, 2021 and December 31, 2020, deferred payments totaling $442 and $1,486, respectively, are included in other assets, net in our condensed consolidated
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as a result of the COVID-19 pandemic. The FASB relief package provides entities with the option to account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance if the resulting cash flows from the modified lease are substantially the same as the original lease. Because the majority of the deferred rents referenced above will generally be repaid over a 12-month period, the cash flows from the respective leases are substantially the same as before the rent deferrals.otherwise stated)
balance sheets. These deferred amounts did not negatively impact our operating results for the three andor six months ended June 30, 2020 and, as of June 30, 2020, we recognized an increase in our accounts receivable related to these deferred amounts of $3,504.2021 or 2020.
Right of Use Asset and Lease Liability. For leases where we are the lessee, we recognized a right of use asset and a lease liability equal to the present value of the minimum lease payments with rental payments being applied to the lease liability and the right of use asset being amortized over the term of the lease. The valuevalues of the right of use asset and related liability representing our future obligation under the lease arrangement for which we are the lessee were $4,278$4,195 and $4,437,$4,381, respectively, as of June 30, 2020,2021, and $4,319$4,237 and $4,461,$4,410, respectively, as of December 31, 2019.2020. The right of use asset and related lease liability are included within other assets, net and other liabilities, respectively, within our condensed consolidated balance sheets. In addition, we lease equipment at certain of our managed senior living communities. These leases are short term in nature, are cancelable with no fee or do not result in an annual expense in excess of our capitalization policy and, as a result, are not recorded on our condensed consolidated balance sheets.


Note 4.  Indebtedness
Our principal debt obligations at June 30, 2021 were: (1) outstanding borrowings under our $800,000 revolving credit facility; (2) $2,850,000 outstanding principal amount of senior unsecured notes; and (3) $683,502 aggregate principal amount of mortgage notes secured by 7 properties, of which $620,000 is related to the life science property owned by a joint venture arrangement in which we own a 55% equity interest. These 7 mortgaged properties had a gross book value of $948,269 at June 30, 2021. We also had 2 properties subject to finance leases with lease obligations totaling $7,234 at June 30, 2021; these 2 properties had gross book value and accumulated depreciation of $35,998 and $17,826, respectively, at June 30, 2021, and $35,676 and $17,579, respectively, at December 31, 2020, and the finance leases expire in 2026.
We have a $800,000 revolving credit facility that is available for general business purposes. The maturity date of our revolving credit facility is January 2022, and, subject to the payment of an extension fee and meeting other conditions, we have 2, one year options to extend the maturity date of the facility to January 2024. Our revolving credit facility 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. As of June 30, 2021, our revolving credit facility required interest to be paid on borrowings at the annual rate of 2.9%, plus a facility fee of 30 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% and 1.8% for the three months ended June 30, 2021 and 2020, respectively, and 2.9% and 2.2% for the six months ended June 30, 2021 and 2020, respectively. The interest rate premium and facility fee are each subject to adjustment based upon changes to our credit ratings. On March 31, 2021, we borrowed $800,000 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. As of June 30, 2021 and August 2, 2021, we were fully drawn under our revolving credit facility.
In February 2021, we issued $500,000 aggregate principal amount of our 4.375% senior notes due 2031 in an underwritten public offering raising net proceeds of $491,357, after deducting estimated offering expenses and underwriters' discounts. These notes are guaranteed by all of our subsidiaries, except for certain excluded subsidiaries, including pledged subsidiaries under our credit agreement, and require semi-annual interest payments through maturity. We used the net proceeds from this offering to prepay in full in February 2021 our $200,000 term loan which was scheduled to mature in September 2022. The weighted average interest rate under our $200,000 term loan was 2.9% for the period from January 1, 2021 to February 7, 2021 and 2.3% and 2.7% for the three and six months ended June 30, 2020, respectively. As a result of the prepayment of our $200,000 term loan, we recorded a loss on early extinguishment of debt of $1,477 for the six months ended June 30, 2021. In June 2021, we used the remaining net proceeds from this offering and cash on hand to redeem all of our outstanding 6.75% senior notes due 2021 for a redemption price equal to the principal amount of $300,000 plus accrued and unpaid interest of $10,125, when these notes became redeemable with no prepayment premium. In connection with this redemption, we recorded a loss on early extinguishment of debt of $370 for the six months ended June 30, 2021.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

Note 5.  Indebtedness
Our principal debt obligations at June 30, 2020 were: (1) $2,650,000 outstanding principal amount of senior unsecured notes; (2) $200,000 outstanding principal amount under our term loan; and (3) $685,428 aggregate principal amount of mortgage notes (excluding premiums, discounts and net debt issuance costs) secured by 7 properties, of which $620,000 is related to a joint venture arrangement in which we own a 55% equity interest. These 7 mortgaged properties had a gross book value of real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations and less impairment write downs of $1,258,457 at June 30, 2020. We also had 2 properties subject to finance leases with lease obligations totaling $8,352 at June 30, 2020; these 2 properties had gross book value of real estate assets of $35,708 at June 30, 2020, and the finance leases expire in 2026.
We have a $1,000,000 unsecured revolving credit facility that is available for general business purposes. The maturity date of our revolving credit facility isIn 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. Our revolving credit facility provides that we can borrow, repay and re-borrow funds available under our revolving credit facility until maturity, and 0 principal repayment is due until maturity. As of June 30, 2020, our revolving credit facility required interest to be paid on borrowings at the annual rate of 2.6%, plus a facility fee of 30 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 1.8% and 3.6% for the three months ended June 30, 2020 and 2019, respectively, and 2.2% and 3.6% for the six months ended June 30, 2020 and 2019, respectively. The interest rate premium and facility fee are each subject to adjustment based upon changes to our credit ratings. As of June 30, 2020 and August 3, 2020, we had 0 outstanding borrowings and $1,000,000 available for borrowing under our revolving credit facility.
We have a $200,000 unsecured term loan that matures in September 2022 and is prepayable without penalty at any time. At June 30, 2020, the annual interest rate payable on amounts outstanding under this term loan was 2.4%. The weighted average annual interest rate for amounts outstanding under this term loan was 2.3% and 3.9% for the three months ended June 30, 2020 and 2019, respectively, and 2.7% and 3.9% for the six months ended June 30, 2020 and 2019, respectively. The interest rate premium is subject to adjustment based upon changes to our credit ratings.
In February 2020, we prepaid a mortgage note secured by 1 of our life science properties with an outstanding principal balance of approximately $1,554, a maturity date in March 2026 and an annual interest rate of 6.25%. As a result of this prepayment, we recorded a loss on early extinguishment of debt of $246 for the six months ended June 30, 2020. We prepaid this mortgage using cash on hand and borrowings under our revolving credit facility.
In April 2020, we redeemed all of our outstanding 6.75% senior notes due 2020 for a redemption price equal to the principal amount of $200,000 plus accrued and unpaid interest of $6,750. We funded this redemption with cash on hand and borrowings under our revolving credit facility.
In May 2020, we prepaid a mortgage note secured by 1 of our medical office properties with an outstanding principal balance of approximately $1,213, a maturity date in January 2022 and an annual interest rate of 7.49%. As a result of the prepayment of this mortgage note, we recorded a loss on early extinguishment of debt of $155 for both the three and six months ended June 30, 2020. We prepaid this mortgage using cash on hand and borrowings under our revolving credit facility.
In June 2020, we issued $1,000,000 aggregate principal amount of our 9.75% senior notes due 2025 in an underwritten public offering raising net proceeds of $983,500, after deducting estimated offering expenses and underwriters' discounts. These notes are guaranteed by all of our subsidiaries, except for certain excluded subsidiaries, and require semi-annual interest payments through maturity. Prior to June 15, 2022, we may, at our option, redeem all or a portion of these notes at a redemption price equal to the outstanding principal amount of these notes, plus accrued and unpaid interest, plus the make-whole amount set forth in the indenture which governs these notes, as supplemented, or our 2025 Notes Indenture. Prior to June 15, 2022, we may also, at our option, redeem up to 40% of the aggregate principal amount of these notes with the net proceeds of certain equity offerings at the redemption price set forth in the 2025 Notes Indenture, so long as at least 50% of the original aggregate principal amount of these notes remains outstanding after each such redemption. In addition, we have the option to redeem all or a portion of these notes at any time on or after June 15, 2022 at the redemption prices set forth in the 2025 Notes Indenture. We used the net proceeds from this offering to prepay in full our $250,000 unsecured term loan which was scheduled to mature

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

in June 2020 and to reduce amounts outstanding under our revolving credit facility. The weighted average interest rate under our $250,000 senior unsecured term loan was 1.9% and 2.4% for the periods from April 1, 2020 to June 2, 2020 and January 1, 2020 to June 2, 2020, respectively. As a result of the repayment of our $250,000 senior unsecured term loan, we recorded a loss on early extinguishment of debt of $26 for the three and six months ended June 30, 2020.
In June 2020,2021, we amended the agreements governing our $1,000,000 unsecured revolving credit facility and our $200,000 unsecured term loan, or collectively, our credit and term loan agreements. The amendments modify agreements, in order to provide us with certain flexibility in light of continued uncertainties related to the COVID-19 pandemic. Pursuant to the amendments:
•certain of the financial covenants under our credit and term loan agreements, including covenants that require us to maintain certain financial ratios, have been waived through June 2022, or the Amendment Period;
•the revolving credit facility commitments have been reduced from $1,000,000 to $800,000, and as a result of the reduction in commitments, we recorded a loss on early extinguishment of debt of $563 for the six months ended June 30, 2021;
•we pledged certain equity interests of subsidiaries owning properties to secure our obligations under our credit and term loan agreements and agreed to provide first mortgage liens on 62 medical office and life science properties with an aggregate gross book value of real estate assets of $1,038,174 as of June 30, 2021 to secure our obligations, which pledges and/or mortgage liens may be removed or new ones may be added during the Amendment Period duringbased on outstanding debt amounts, among other things;
•we had the ability to fund $250,000 of capital expenditures per year, which subjectincreased to certain conditions, we will continue$350,000 per year following the repayment of our term loan in February 2021, and are restricted in our ability to have access to undrawn amounts underacquire real property as defined in our revolving credit facility. We have the right to terminate the Amendment Period prior to June 30, 2021, subject to certain conditions.agreement;
During •the Amendment Period:
our interest rate premium over LIBOR under our revolving credit facility and term loan increased by 5030 basis points;
•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; and
•we willare generally be required to apply the net cash proceeds from the disposition of assets, capital markets transactions, and debt financings or COVID-19 government stimulus programs, if allowed, to the repayment of any amounts outstanding loans under the revolving credit facility, if any;
we will be subject to certain additional covenants, including additional restrictions on our ability to incur indebtedness (with exceptions for borrowings under our revolving credit facility and certain other categories of secured and unsecured indebtedness), and to acquire real property or make other investments (with exceptions for, among other things, certain categories of capital expenditures and costs);facility.
we will be required to maintain unrestricted liquidity (unrestricted cash and undrawn availability under our revolving credit facility) of not less than $200,000; and
our ability to pay distributions on our common shares will be limited to paying a cash dividend of $0.01 per common share per quarter and amounts required to maintain our qualification for taxation as a real estate investment trust, or REIT, and to avoid the payment of certain income and excise taxes.
Our credit and term loan agreementsagreement 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 credit 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 credit and term loan agreementsagreement and our senior unsecured notes indentures and their supplements also contain covenants, including covenants that restrict our ability to incur debts, and generally require us to maintain certain financial ratios, and our credit and term loan agreements restrictagreement restricts our ability to make distributions under certain circumstances. As of June 30, 2021, 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 not allowed to incur additional debt while this ratio is below 1.5x. We believe we were in compliance with the remaining terms and conditions of the respective covenants under our credit and term loan agreementsagreement and our senior unsecured notes indentures and their supplements at June 30, 2020.2021. 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 economic impact resulting from the COVID-19 pandemic 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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(dollar amounts in thousands, except per share data or as otherwise stated)


Note 6.5.  Fair Value of Assets and Liabilities
The following table presents certain of our assets that are measured at fair value at June 30, 2020,2021, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
Fair Value at Reporting Date Using
 Quoted Prices in 
Active Markets for Identical Assets		Significant Other Observable InputsSignificant Unobservable Inputs
DescriptionTotal(Level 1)(Level 2)(Level 3)
Recurring Fair Value Measurements Assets:    
Investment in Five Star (1)
$61,584 $61,584 $0 $0 
(1)Our 10,691,658 shares of common stock of Five Star Senior Living Inc., or Five Star, 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). Our adjusted cost basis for these shares was $44,448 as of June 30, 2021. During the three months ended June 30, 2021 and 2020, we recorded an unrealized loss of $3,849 and an unrealized gain of $11,974, respectively, and during the six months ended June 30, 2021 and 2020, we recorded an unrealized loss of $12,188 and an unrealized gain of $2,031, respectively, which are included in gains and losses on equity securities, net in our condensed consolidated statements of comprehensive income (loss), to adjust the carrying value of our investment in Five Star common shares to their fair value. See Note 11 for further information about our investment in Five Star.
    Fair Value at Reporting Date Using
    
Quoted Prices in 
Active Markets for Identical Assets
 Significant Other Observable Inputs Significant Unobservable Inputs
Description Total (Level 1) (Level 2) (Level 3)
Recurring Fair Value Measurements Assets:        
Investment in Five Star (1)
 $41,697
 $41,697
 $—
 $—
Non-Recurring Fair Value Measurements Assets:        
Real estate properties held for sale (2)
 $52,957
 $—
 $52,957
 $—

(1)
Our 10,691,658 shares of common stock of Five Star Senior Living Inc., or Five Star, 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). On April 1, 2019, we entered into a transaction agreement with Five Star, or the Transaction Agreement, to restructure our business arrangements with Five Star, or the Restructuring Transaction. Pursuant to the Transaction Agreement, on January 1, 2020, Five Star issued 10,268,158 Five Star common shares to us. The fair value and initial cost basis of the Five Star common shares issued to us on January 1, 2020 was $38,095. Our adjusted cost basis inclusive of the 423,500 Five Star common shares we owned as of December 31, 2019 and the 10,268,158 Five Star common shares issued to us on January 1, 2020 was $44,448 as of June 30, 2020. During the three and six months ended June 30, 2020, we recorded unrealized gainsof $11,974 and $2,031, respectively, which is included in gains and losses on equity securities, net in our condensed consolidated statements of comprehensive income (loss), to adjust the carrying value of our investment in Five Star common shares to their fair value. See Note 12 for further information about our investment in Five Star.
(2)
We have assets in our condensed consolidated balance sheets that are measured at fair value on a nonrecurring basis. During the six months ended June 30, 2020, we recorded impairment charges of $267 to reduce the carrying value of 1 medical office property that is classified as held for sale to its estimated sales price, less estimated costs to sell of $84, based on the sales price under a purchase and sale agreement that we have entered into with a third party buyer for this medical office property of $625. We also recorded impairment charges of $30,752 to reduce the carrying value of 15 senior living communities that are classified as held for sale to their estimated sales price, less estimated costs to sell of $1,184, based on the aggregate sales prices under the purchase and sale agreements that we have entered into with third party buyers for these senior living communities of $53,600. See Note 3 for further information about impairment charges and these and other properties we have classified as held for sale.
In addition to the assets described in the table above, our financial instruments at June 30, 20202021 and December 31, 20192020 included cash and cash equivalents, restricted cash, other assets, our revolving credit facility, term loans,loan, senior unsecured notes, secured debt and finance 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 June 30, 2021As of December 31, 2020
Description
Carrying Amount (1)
Estimated Fair Value
Carrying Amount (1)
Estimated Fair Value
Senior unsecured notes, 6.750% coupon rate, due 2021$0 $0 $299,273 $303,891 
Senior unsecured notes, 4.750% coupon rate, due 2024249,208 256,911 249,068 256,258 
Senior unsecured notes, 9.750% coupon rate, due 2025986,131 1,112,840 984,359 1,135,800 
Senior unsecured notes, 4.750% coupon rate, due 2028491,562 497,425 490,925 502,648 
Senior unsecured notes, 4.375% coupon rate, due 2031491,698 479,265 0 0 
Senior unsecured notes, 5.625% coupon rate, due 2042341,993 338,660 341,802 330,120 
Senior unsecured notes, 6.250% coupon rate, due 2046242,905 248,000 242,762 245,000 
Secured debts (2) (3)
689,895 709,149 691,573 716,185 
 $3,493,392 $3,642,250 $3,299,762 $3,489,902 
(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.
  As of June 30, 2020 As of December 31, 2019
Description 
Carrying Amount (1)
 Estimated Fair Value 
Carrying Amount (1)
 Estimated Fair Value
Senior unsecured notes $2,605,153
 $2,454,286
 $1,820,681
 $1,890,386
Secured debts(2)
 693,179
 692,589
 697,729
 697,142
  $3,298,332
 $3,146,875
 $2,518,410
 $2,587,528
(1)Includes unamortized debt issuance costs, premiums and discounts.

(3)Includes secured debts for the life science property owned by a joint venture arrangement in which we own a 55% equity interest. The amounts listed in the table for these debts have not been adjusted to reflect the equity interests in the joint venture that we do not own.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

(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 2 issuances of senior unsecured notes due 2042 and 2046 based on the closing price on Nasdaq (Level 1 input) as of June 30, 2020.2021. We estimated the fair values of our 4 issuances of senior unsecured notes due 2021, 2024, 2025, 2028 and 20282031 using an average of the bid and ask price on Nasdaq on or about June 30, 20202021 (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
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
flows analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.
Realized and unrealized gains and losses for our equity securities for the three and six months ended June 30, 2020 and 2019 were as follows:
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Realized gains and losses on equity securities sold (1)
 $—
 $(62,272) $—
 $(41,436)
Unrealized gains and losses on equity securities held 11,974
 (2,176) 2,031
 (80)
Gains and losses on equity securities, net $11,974
 $(64,448) $2,031
 $(41,516)
(1)This amount relates to our sale of our former investment in The RMR Group Inc., or RMR Inc., on July 1, 2019. For further information about our former investment in RMR Inc. see our Annual Report.

Note 7.6. Noncontrolling Interest
We haveare party to a joint venture arrangement with an institutional investor for 1 of our life science properties located in Boston, Massachusetts. The investor owns a 45% equity interest in the joint venture, and we own the remaining 55% equity interest in the joint venture. We continue to control this property and therefore continue to account for this property on a consolidated basis in our condensed consolidated financial statements under the VIE model. The portion of the joint venture's net income and comprehensive income not attributable to us, or $1,330$1,577 and $1,413$1,330 for the three months ended June 30, 20202021 and 2019,2020, respectively, and $2,738$2,899 and $2,835$2,738 for the six months ended June 30, 20202021 and 2019,2020, respectively, is reported as a noncontrolling interest in our condensed consolidated statements of comprehensive income (loss). The joint venture made aggregate cash distributions to the other joint venture investor of $5,616$5,630 and $5,684$5,616 for the three months ended June 30, 20202021 and 2019,2020, respectively, and $11,383$11,324 and $11,187$11,383 for the six months ended June 30, 20202021 and 2019,2020, respectively, which are reflected as a decrease in total equity attributable to noncontrolling interest in our condensed consolidated balance sheets. As of June 30, 2020,2021, this joint venture held real estate assets with an aggregate net book value of $714,906,$695,287, subject to mortgage notes of $620,000.
In assessing whether we have a controlling interest in this joint venture arrangement and are required to consolidate the accounts of the joint venture entity, we considered the members' rights to residual gains and obligations to absorb losses, which activities most significantly impact the economic performance of the entity and which member has the power to direct those activities.

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


Note 8.7.  Shareholders' Equity
Common Share Awards:
On May 19, 2020,June 3, 2021, in accordance with our Trustee compensation arrangements, we awarded to each of our 6 Trustees 10,00020,000 of our common shares, valued at $2.94$3.70 per share, the closing price of our common shares on Nasdaq on that day.day.
Common Share Purchases:Repurchases:
During the six months ended June 30, 2020,2021, we purchased an aggregate of 13,906 of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase date, from certain former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase dates, as follows:
Date Purchased Number of Shares Price per Share
1/9/2020 1,938
 $8.10
3/13/2020 1,500
 $3.79
6/30/2020 1,757
 $4.43

shares.
Distributions:
During the six months ended June 30, 2020,2021, we declared and paid quarterly distributions to common shareholders as follows:
Record Date Payment Date Distribution Per Share Total Distributions
January 27, 2020 February 20, 2020 $0.15
 $35,684
April 13, 2020 May 21, 2020 $0.01
 $2,379

As described in Note 10, pursuant to the Transaction Agreement, on January 1, 2020, Five Star issued an aggregate of 16,118,849 of its common shares, with a value of $59,801, to our shareholders of record as of December 13, 2019. We recorded this issuance as a non-cash distribution in our condensed consolidated financial statements.
Declaration DateRecord DatePayment DateDistribution Per ShareTotal Distributions
January 14, 2021January 25, 2021February 18, 2021$0.01 $2,383 
April 15, 2021April 26, 2021May 20, 20210.01 2,383 
$0.02 $4,766 
On July 16, 2020,15, 2021, we declared a quarterly distribution payable to our common shareholders of record on July 27, 2020 in the amount26, 2021 of $0.01 per share, or approximately $2,380.$2,384 in aggregate. We expect to pay this distribution on or about August 20, 2020.19, 2021.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

Note 9.8.  Segment Reporting
We operate in, and report financial information for, the following 2 segments: Office Portfolio and senior housing operating portfolio, or SHOP. We aggregate each of these 2 reporting segments based on their similar operating and economic characteristics. Our Office Portfolio segment consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties leased to biotech laboratories and other similar tenants. Our SHOP segment consists of managed senior living communities that provide short term and long term residential living and in some instances care and other services for residents where we pay fees to a manager to operate the operator to manage the communities for our account. In addition, prior to January 1, 2020, our SHOP segment included triple net leased senior living communities that provided short term and long term residential living and in some instances care and other services for residents and from which we received rents from Five Star. Pursuant to the Restructuring Transaction, effective January 1, 2020, our previously existing master leases and management and pooling agreements with Five Star were terminated and replaced with new management and related agreements, or collectively, the New Management Agreements, for all of our senior living communities operated by Five Star. Prior periods have been recast to reflect these reportable segments for all periods presented.communities.
We also report “non-segment” operations, which consists of triple net leased senior living communities whichthat are leased to operators other than Five Star from which we receive rents, and wellness centers, 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.

 For the Three Months Ended June 30, 2021
 Office PortfolioSHOPNon-SegmentConsolidated
Revenues:    
Rental income$92,804 $0 $9,590 $102,394 
Residents fees and services0 243,947 0 243,947 
Total revenues92,804 243,947 9,590 346,341 
Expenses:    
Property operating expenses31,321 233,311 0 264,632 
Depreciation and amortization32,497 32,538 2,853 67,888 
General and administrative0 0 9,126 9,126 
Acquisition and certain other transaction related costs0 0 12,071 12,071 
Total expenses63,818 265,849 24,050 353,717 
Gain on sale of properties30,760 0 0 30,760 
Losses on equity securities, net0 0 (3,849)(3,849)
Interest and other income0 15,748 290 16,038 
Interest expense(5,992)(525)(61,140)(67,657)
Loss on early extinguishment of debt0 0 (370)(370)
Income (loss) from continuing operations before income tax expense53,754 (6,679)(79,529)(32,454)
Income tax expense0 0 (191)(191)
Net income (loss)53,754 (6,679)(79,720)(32,645)
Net income attributable to noncontrolling interest(1,577)0 0 (1,577)
Net income (loss) attributable to common shareholders$52,177 $(6,679)$(79,720)$(34,222)
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)

material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
  For the Three Months Ended June 30, 2020
  Office Portfolio SHOP Non-Segment Consolidated
Revenues:  
  
  
  
Rental income $95,510
 $—
 $10,697
 $106,207
Residents fees and services —
 304,104
 —
 304,104
Total revenues 95,510
 304,104
 10,697
 410,311
         
Expenses:  
  
  
  
Property operating expenses 30,893
 271,022
 —
 301,915
Depreciation and amortization 32,234
 33,773
 2,818
 68,825
General and administrative —
 —
 7,312
 7,312
Acquisition and certain other transaction related costs —
 —
 87
 87
Impairment of assets 538
 30,637
 —
 31,175
Total expenses 63,665
 335,432
 10,217
 409,314
         
Loss on sale of properties —
 (168) —
 (168)
Gains on equity securities, net —
 —
 11,974
 11,974
Interest and other income —
 7,346
 390
 7,736
Interest expense (6,020) (560) (37,394) (43,974)
Loss on early extinguishment of debt (155) —
 (26) (181)
Income (loss) from continuing operations before income tax expense 25,670
 (24,710) (24,576) (23,616)
Income tax expense —
 —
 (1,126) (1,126)
Net income (loss) 25,670
 (24,710) (25,702) (24,742)
Net income attributable to noncontrolling interest (1,330) —
 —
 (1,330)
Net income (loss) attributable to common shareholders $24,340
 $(24,710) $(25,702) $(26,072)

 For the Six Months Ended June 30, 2021
 Office PortfolioSHOPNon-SegmentConsolidated
Revenues:    
Rental income$186,127 $0 $19,025 $205,152 
Residents fees and services0 503,913 0 503,913 
Total revenues186,127 503,913 19,025 709,065 
Expenses:    
Property operating expenses62,614 489,409 0 552,023 
Depreciation and amortization64,435 63,899 5,707 134,041 
General and administrative0 0 16,668 16,668 
Acquisition and certain other transaction related costs0 0 12,071 12,071 
Impairment of assets0 (174)0 (174)
Total expenses127,049 553,134 34,446 714,629 
Gain on sale of properties30,638 0 0 30,638 
Losses on equity securities, net0 0 (12,188)(12,188)
Interest and other income0 18,181 692 18,873 
Interest expense(11,931)(1,053)(114,764)(127,748)
Loss on early extinguishment of debt0 0 (2,410)(2,410)
Income (loss) from continuing operations before income tax expense77,785 (32,093)(144,091)(98,399)
Income tax expense0 0 (429)(429)
Net income (loss)77,785 (32,093)(144,520)(98,828)
Net income attributable to noncontrolling interest(2,899)0 0 (2,899)
Net income (loss) attributable to common shareholders$74,886 $(32,093)$(144,520)$(101,727)
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 thea 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. As of June 30, 2020, we had received $10,133 in funds from the Provider Relief Fund to be used to support the operations of our managed senior living communities; weWe have currently determined thatrecognized $18,181 and $7,346 of such funds meet the required terms and conditions and have therefore recognized such amount as other income with respect to our SHOP segment for the three and six months ended June 30, 2020.2021 and 2020, respectively. We currently expect to returnhave applied for additional funds that may be available under the remaining $2,787 of such funds to HHS in August 2020 unlessCARES Act Provider Relief Fund; however, we determine that such funds meet the required terms and conditions and have therefore included that amount in other liabilities in our condensed consolidated financial statements as of June 30, 2020.may not receive any additional funding.

 As of June 30, 2021
 Office PortfolioSHOPNon-SegmentConsolidated
Total assets$2,997,668 $2,949,629 $1,232,555 $7,179,852 

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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 June 30, 2020
 Office PortfolioSHOPNon-SegmentConsolidated
Revenues:    
Rental income$95,510 $0 $10,697 $106,207 
Residents fees and services0 304,104 0 304,104 
Total revenues95,510 304,104 10,697 410,311 
Expenses:    
Property operating expenses30,893 271,022 0 301,915 
Depreciation and amortization32,234 33,773 2,818 68,825 
General and administrative0 0 7,312 7,312 
Acquisition and certain other transaction related costs0 0 87 87 
Impairment of assets538 30,637 0 31,175 
Total expenses63,665 335,432 10,217 409,314 
Loss on sale of properties0 (168)0 (168)
Gains on equity securities, net0 0 11,974 11,974 
Interest and other income0 7,346 390 7,736 
Interest expense(6,020)(560)(37,394)(43,974)
Loss on early extinguishment of debt(155)0 (26)(181)
Income (loss) from continuing operations before income tax expense25,670 (24,710)(24,576)(23,616)
Income tax expense0 0 (1,126)(1,126)
Net income (loss)25,670 (24,710)(25,702)(24,742)
Net income attributable to noncontrolling interest(1,330)0 0 (1,330)
Net income (loss) attributable to common shareholders$24,340 $(24,710)$(25,702)$(26,072)
  For the Six Months Ended June 30, 2020
  Office Portfolio SHOP Non-Segment Consolidated
Revenues:  
  
  
  
Rental income $194,280
 $—
 $22,425
 $216,705
Residents fees and services —
 636,073
 —
 636,073
Total revenues 194,280
 636,073
 22,425
 852,778
         
Expenses:  
  
  
  
Property operating expenses 63,599
 554,901
 —
 618,500
Depreciation and amortization 64,397
 66,815
 6,043
 137,255
General and administrative —
 —
 16,144
 16,144
Acquisition and certain other transaction related costs —
 —
 750
 750
Impairment of assets 6,756
 35,653
 —
 42,409
Total expenses 134,752
 657,369
 22,937
 815,058
         
Gain (loss) on sale of properties 2,782
 (168) —
 2,614
Gains on equity securities, net —
 —
 2,031
 2,031
Interest and other income —
 7,346
 528
 7,874
Interest expense (12,072) (1,124) (72,428) (85,624)
Gain on lease termination

 —
 —
 22,896
 22,896
Loss on early extinguishment of debt (401) —
 (26) (427)
Income (loss) from continuing operations before income tax expense 49,837
 (15,242) (47,511) (12,916)
Income tax expense —
 —
 (683) (683)
Net income (loss) 49,837
 (15,242) (48,194) (13,599)
Net income attributable to noncontrolling interest (2,738) —
 —
 (2,738)
Net income (loss) attributable to common shareholders $47,099
 $(15,242) $(48,194) $(16,337)
14


During the six months ended June 30, 2020, interest and other income for our SHOP segment includes $7,346 of funds we received pursuant to the CARES Act.

  As of June 30, 2020
  Office Portfolio SHOP Non-Segment Consolidated
Total assets $3,119,928
 $3,005,164
 $475,431
 $6,600,523



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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 Six Months Ended June 30, 2020
 Office PortfolioSHOPNon-SegmentConsolidated
Revenues:    
Rental income$194,280 $0 $22,425 $216,705 
Residents fees and services0 636,073 0 636,073 
Total revenues194,280 636,073 22,425 852,778 
Expenses:    
Property operating expenses63,599 554,901 0 618,500 
Depreciation and amortization64,397 66,815 6,043 137,255 
General and administrative0 0 16,144 16,144 
Acquisition and certain other transaction related costs0 0 750 750 
Impairment of assets6,756 35,653 0 42,409 
Total expenses134,752 657,369 22,937 815,058 
Gain (loss) on sale of properties2,782 (168)0 2,614 
Gains on equity securities, net0 0 2,031 2,031 
Interest and other income0 7,346 528 7,874 
Interest expense(12,072)(1,124)(72,428)(85,624)
Gain on lease termination0 0 22,896 22,896 
Loss on early extinguishment of debt(401)0 (26)(427)
Income (loss) from continuing operations before income tax expense49,837 (15,242)(47,511)(12,916)
Income tax expense0 0 (683)(683)
Net income (loss)49,837 (15,242)(48,194)(13,599)
Net income attributable to noncontrolling interest(2,738)0 0 (2,738)
Net income (loss) attributable to common shareholders$47,099 $(15,242)$(48,194)$(16,337)
  For the Three Months Ended June 30, 2019
  Office Portfolio SHOP Non-Segment Consolidated
Revenues:  
  
  
  
Rental income $104,385
 $33,400
 $15,312
 $153,097
Residents fees and services —
 108,906
 —
 108,906
Total revenues 104,385
 142,306
 15,312
 262,003
         
Expenses:  
  
  
  
Property operating expenses 32,525
 87,668
 —
 120,193
Depreciation and amortization 35,037
 34,226
 4,661
 73,924
General and administrative —
 —
 8,867
 8,867
Acquisition and certain other transaction related costs —
 —
 903
 903
Impairment of assets 96
 2,117
 —
 2,213
Total expenses 67,658
 124,011
 14,431
 206,100
         
Gain on sale of properties 2,625
 15,207
 —
 17,832
Dividend income —
 —
 923
 923
Losses on equity securities, net —
 —
 (64,448) (64,448)
Interest and other income —
 —
 238
 238
Interest expense (5,988) (902) (39,522) (46,412)
Loss on early extinguishment of debt —
 (17) —
 (17)
Income (loss) from continuing operations before income tax benefit and equity in earnings of an investee 33,364
 32,583
 (101,928) (35,981)
Income tax benefit —
 —
 35
 35
Equity in earnings of an investee —
 —
 130
 130
Net income (loss) 33,364
 32,583
 (101,763) (35,816)
Net income attributable to noncontrolling interest (1,413) —
 —
 (1,413)
Net income (loss) attributable to common shareholders $31,951
 $32,583
 $(101,763) $(37,229)
 As of December 31, 2020
Office PortfolioSHOPNon-SegmentConsolidated
Total assets$3,092,289 $2,912,570 $471,565 $6,476,424 


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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 Six Months Ended June 30, 2019
  Office Portfolio SHOP Non-Segment Consolidated
Revenues:  
  
  
  
Rental income $207,606
 $72,713
 $31,019
 $311,338
Residents fees and services —
 216,951
 —
 216,951
Total revenues 207,606
 289,664
 31,019
 528,289
         
Expenses:  
  
  
  
Property operating expenses 64,702
 172,713
 —
 237,415
Depreciation and amortization 71,138
 65,179
 9,837
 146,154
General and administrative —
 —
 18,683
 18,683
Acquisition and certain other transaction related costs —
 —
 8,717
 8,717
Impairment of assets 96
 8,323
 —
 8,419
Total expenses 135,936
 246,215
 37,237
 419,388
         
Gain on sale of properties 2,503
 15,207
 —
 17,710
Dividend income —
 —
 1,846
 1,846
Losses on equity securities, net —
 —
 (41,516) (41,516)
Interest and other income —
 —
 352
 352
Interest expense (12,018) (1,896) (78,109) (92,023)
Loss on early extinguishment of debt —
 (17) —
 (17)
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee 62,155
 56,743
 (123,645) (4,747)
Income tax expense —
 —
 (99) (99)
Equity in earnings of an investee —
 —
 534
 534
Net income (loss) 62,155
 56,743
 (123,210) (4,312)
Net income attributable to noncontrolling interest (2,835) —
 —
 (2,835)
Net income (loss) attributable to common shareholders $59,320
 $56,743
 $(123,210) $(7,147)

 As of December 31, 2019
 Office Portfolio SHOP Non-Segment Consolidated
Total assets$3,165,577
 $3,044,989
 $443,260
 $6,653,826



Note 10.9. Leases and Management Agreements with Five Star
As of December 31, 2019, we leased 166 senior living communities to Five Star. As of that date, we also leased to our taxable REIT subsidiaries, or TRSs, 78 communities that we owned and that were managed by Five Star for our account.
2020 Restructuring of our Business Arrangements with Five Star
The Transaction Agreement with Five StarStar. . Pursuant to the Transaction Agreement, effectiveEffective as of January 1, 2020, or the Conversion Time:2020:
•our previously existing master leases with Five Star for all of our senior living communities that Five Star leased, as well as our previously existing management agreements and pooling agreements with Five Star for our senior living communities that Five Star managed, were terminated and replaced or the Conversion, with the New Management Agreements;new management agreements and a related omnibus agreement. These new management and omnibus agreements were subsequently replaced in June 2021, as described below;

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

Five Star issued to us 10,268,158 Five Star common shares and an aggregate of 16,118,849 Five Star common shares to our shareholders of record as of December 13, 2019; and
•as consideration for these share issuances, we provided Five Star with $75,000 of additional consideration by assuming certain of Five Star's working capital liabilities and through cash payments, resulting in a gain on lease termination of $22,896
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
$22,896 for the six months ended June 30, 2020 in our condensed consolidated statements of comprehensive income (loss).; and
Also •pursuant to the Transaction Agreement: (1) commencing February 1, 2019, the aggregate amount of monthly minimum rent payable to us by Five Star under our previously existing master leases with Five Star was set at $11,000 as of February 1, 2019, subject to adjustment, and subsequently reduced in accordance with the Transaction Agreement as a result of our subsequent sales of certain of the leased senior living communities, and no additional rent was payable to us by Five Star from such date until the Conversion Time; and (2) as of April 1, 2019, we purchased from Five Star $49,155 of unencumbered Qualifying PP&E (as defined in the Transaction Agreement) related to our senior living communities leased and operated by Five Star.
Pursuant to the New Management Agreements, Five Star receives a management fee equal to 5% of the gross revenues realized at the applicable senior living communities plus reimbursement for its direct costs and expenses related to such communities, as well as an annual incentive fee equal to 15% of the amount by which the annual earnings before interest, taxes, depreciation and amortization, or EBITDA, of all communities on a combined basis exceeds the target EBITDA for all communities on a combined basis for such calendar year, provided that in no event shall the incentive fee be greater than 1.5% of the gross revenues realized at all communities on a combined basis for such calendar year.
The New Management Agreements expire in 2034, subject to Five Star's right to extend for 2 consecutive five year terms if Five Star achieves certain performance targets for the combined managed communities portfolio, unless earlier terminated. The New Management Agreements also provide us with the right to terminate the New Management Agreement for any community that does not earn 90% of the target EBITDA for such community for two consecutive calendar years or in any two of three consecutive calendar years, with the measurement period commencing January 1, 2021 (and the first termination not possible until the beginning of calendar year 2023), provided we may not in any calendar year terminate communities representing more than 20% of the combined revenues for all communities for the calendar year prior to such termination. Pursuant to a guaranty agreement dated as of January 1, 2020 made by Five Star in favor of our applicable subsidiaries, Five Star has guaranteed the payment and performance of each of its applicable subsidiary's obligations under theour applicable New Management Agreements.
On April 1, 2019, we concluded that the Restructuring Transaction constituted a reconsideration event requiring us to assess whether we held a controlling financial interest inmanagement agreements with Five Star. As a result of this assessment, we determined that Five Star was a VIE effective as of the date of the Transaction Agreement. We determined not to consolidate Five Star in our condensed consolidated financial statements, as we do not have the power to direct the activities of Five Star that most significantly impact Five Star's economic performance and therefore are not the primary beneficiary of Five Star.
Effective January 1, 2020, we determined that Five Star iswas not a VIE and we will account for our 33.9%33.7% investment in Five Star using the equity method of accounting because we are deemed to exert significant influence, but not control, over Five Star's most significant activities. We have elected to use the fair value option to account for our investment in Five Star.
Our Senior Living Communities Formerly Leased by2021 Amendments to our Management Arrangements with Five StarStar.. Prior On June 9, 2021, we amended our management arrangements with Five Star. The principal changes to the Conversion Time, we leased senior living communities tomanagement arrangements include:
•that Five Star pursuant to five master leasesis cooperating with Five Star, each of which was terminated as of January 1, 2020 pursuant to the Transaction Agreement.
Under our previously existing leases with Five Star, Five Star paid us annual rent plus percentage rent equal to 4.0% of the increase in gross revenues at certaintransitioning 108 of our senior living communities over base year gross revenues as specified inwith 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 applicable leases. We recognized rental income payableright to sell up to an additional $682,000 of senior living communities currently managed by Five Star and terminate Five Star's management of $33,400those 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 with approximately 18,000 living units, and $72,713 (including percentage rentthat the skilled nursing units in all of $538our continuing care retirement communities that Five Star is continuing to manage, which then included approximately 1,500 living units, are being closed and repositioned;
•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 EBITDA 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 LLC 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 operators. These agreements replaced our prior management and omnibus agreements with Five Star. In addition, Five Star delivered to us a related amended and restated guaranty agreement pursuant to which Five Star is continuing to guarantee the payment and performance of each of its applicable period)subsidiary's obligations under the applicable management agreements.
We expect that the transition of the management of the 108 senior living communities from Five Star to other third party managers will be completed before year end 2021. As of August 3, 2021, we had executed agreements with 4 new third party managers to transition 76 senior living communities. Of these 76 senior living communities, 41 have been transitioned to new third party managers. We lease our senior living communities that have been transitioned to new managers to our taxable REIT subsidiaries, or TRSs. We also expect to incur costs related to retention and other transition costs for these communities, which costs may be significant. For the three and six months ended June 30, 2019, respectively. Rental2021, we recorded $11,914 of these costs to acquisition and certain other transaction related costs in our condensed consolidated statements of comprehensive income from Five Star represented 12.7% and 13.8% of our total revenues for the three and six months ended June 30, 2019, respectively, and the properties Five Star leased from us represented 26.4%, excluding properties held for sale, of our real estate investments, at cost, as of June 30, 2019. Pursuant to the Transaction Agreement, commencing February 1, 2019, no percentage rent was payable to us by Five Star. We previously determined percentage rent due under these leases annually and recognized it when all contingencies were met, which was typically at year end.

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

Our previously existing leases with Five Star were “triple net” leases, which generally required Five Star to pay rent and all property operating expenses, to indemnify us from liability which may arise by reason of our ownership of the properties, to maintain the properties at Five Star's expense, to remove and dispose of hazardous substances on the properties in compliance with applicable law and to maintain insurance on the properties for Five Star's and our benefit.
For the six months ended June 30, 2019, we funded $86,288 of improvements to communities leased to Five Star, including $49,155 of fixed assets and improvements that we purchased pursuant to the Transaction Agreement as discussed above. Also pursuant to the Transaction Agreement, Five Star's rent did not increase as a result of these purchases.
Our Senior Living Communities Managed by Five Star. Five Star managed 235 and 241 of our senior living communities as of June 30, 2021 and 772020, respectively, which included 7 closed senior living communities for our account as of June 30, 2020 and 2019, respectively.the 2021 period. We lease our senior living communities that are managed by Five Star to our TRSs, and Five Star manages these communities pursuant to long term management agreements. As described above, pursuant to the Transaction Agreement, effective January 1, 2020, we replaced our long term management and pooling agreements with Five Star with the New Management Agreements, the terms of which are described above.TRSs.
We incurred management fees payable to Five Star of $15,262$12,927 and $3,871$15,706 for the three months ended June 30, 20202021 and 2019,2020, respectively, and $31,850$26,777 and $7,660$32,756 for the six months ended June 30, 2021 and 2020, respectively. For the three months ended June 30, 2021 and 2019, respectively. These amounts are included in2020, $12,212 and $15,262, respectively, of the total management fees were expensed to property operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements.statements of comprehensive income (loss) and $715 and $444, respectively, were capitalized in our condensed consolidated balance sheets and are being depreciated over the estimated useful lives of the related capital assets. For the six months ended June 30, 2021 and 2020, $25,228 and $31,850, respectively, of the total management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $1,549 and $906, respectively, were capitalized in our condensed consolidated balance sheets and are being depreciated over the estimated useful lives of the related capital assets.
The following table presents residents fees and services revenue disaggregated by type of contract and payer:
  Three Months Ended June 30, Six Months Ended June 30,
Revenue from contracts with customers: 2020 2019 2020 2019
Basic housing and support services $218,783
 $89,082
 $450,299
 $176,494
Medicare and Medicaid programs 42,910
 7,686
 92,578
 16,431
Private pay and other third party payer SNF services 42,411
 12,138
 93,196
 24,026
Total residents fees and services $304,104
 $108,906
 $636,073
 $216,951

Three Months Ended June 30,Six Months Ended June 30,
Revenue from contracts with customers:2021202020212020
Basic housing and support services$188,169 $218,783 $376,198 $450,299 
Medicare and Medicaid programs24,907 42,910 60,855 92,578 
Private pay and other third party payer SNF services30,871 42,411 66,860 93,196 
Total residents fees and services$243,947 $304,104 $503,913 $636,073 
In addition to providing management services to us, Five Star also provides certain other services to residents at some of the senior living communities 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 and outpatient rehabilitation services, we generally pay Five Star for those rehabilitation services and charges for these services are included in amounts charged to residents, third party payers or government programs. We incurred fees of $5,814$2,630 and $1,513$5,814 for the three months ended June 30, 20202021 and 2019,2020, respectively, and $13,871$8,071 and $3,188$13,871 for the six months ended June 30, 20202021 and 2019,2020, respectively, with respect to rehabilitation services Five Star provided at our senior living communities it manages for us that are payable by us. These amounts are included in property operating expenses in our condensed consolidated statements of comprehensive income (loss).
As a result of routine monitoring protocols that are a part of Five Star's compliance program activities related to Medicare billing, Five Star discovered potentially inadequate documentation at 1 of our senior living communities that Five Star manages. This monitoring was not initiated in response to any specific complaint or allegation but rather was of the type that Five Star periodically undertakes to test its compliance with applicable Medicare billing rules. We and Five Star voluntarily disclosed this matter to the United States Department of Health and Human Services, Office of the Inspector General, or the OIG, pursuant to the OIG’s Provider Self-Disclosure Protocol. In January 2021, we and Five Star settled this matter with the OIG and we agreed to pay approximately $5,763 in exchange for a customary release, but we and Five Star did not admit any liability. We recognized that amount in our consolidated statement of comprehensive income (loss) during the year ended December 31, 2020 and paid that amount to the OIG in January 2021. Five Star refunded to us approximately $115 of management fees it previously received relating to the Medicare payments we refunded to the OIG.
Since January 1, 2020, we sold certain senior living communities that were then managed by Five Star. We and Five Star terminated our management agreements for these senior living communities in connection with these sales. We have also identified additional senior living communities for sale that are currently managed by Five Star. If these sales are consummated, we and Five Star will terminateSee Note 3 to the management agreements for these senior living communities. See Note 3consolidated financial statements contained in our Annual Report for further information regarding these sales.
We lease to Five Star space at certain of our senior living communities that Five Star manages which it uses to providewhere Five Star provides certain inpatient and outpatient rehabilitation and wellness services.services clinics. We recognized rental income ofrecorded $398 and $488 for the three months ended June 30, 2021 and 2020, respectively, and $795 and $782 for the three and six months ended June 30, 2021 and 2020, respectively, with respect to these leases.


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

Note 11.10. Business and Property Management Agreements with RMR LLC
We have 0 employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have 2 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
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
operations of our medical office and life science properties.properties and major renovation or repositioning activities at our senior living communities. We also have a subsidiary level management agreement with RMR LLC related to one of ourthe life science propertiesproperty located in Boston, Massachusetts, which we entered in connection with the joint venture arrangement for that life science property. Under that agreement, our subsidiary pays RMR LLC certain business management fees directly, which fees are credited against the business management fees payable by us to RMR LLC. See Note 1211 for further information regarding our relationship, agreements and transactions with RMR LLC.
Pursuant to our business management agreement with RMR LLC, weWe recognized net business management fees of $4,841$6,324 and $6,582$4,841 for the three months ended June 30, 20202021 and 2019,2020, respectively, and $10,610$11,641 and $14,301$10,610 for the six months ended June 30, 20202021 and 2019,2020, respectively. The net business management fees we recognized include $725 and $1,450 of management fees related to our subsidiary level management agreement with RMR LLC entered in connection with our joint venture arrangement for the three and six months ended June 30, 20202021 and 2019,2020, respectively. Based on our common share total return, as defined in our business management agreement, as of each of June 30, 20202021 and 2019,2020, 0 estimated incentive fees are included in the net business management fees we recognized for the three or six months ended June 30, 20202021 or 2019.2020. The actual amount of annual incentive fees for 2020,2021, 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, 2020,2021, and will be payable in 2021.January 2022. We did not incur any incentive fee payable for the year ended December 31, 2019.2020. We recognize business management and incentive fees in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss).
Pursuant to ourWe recognized aggregate net property management agreement withand construction supervision fees payable to RMR LLC weof $3,191 and $3,407 for the three months ended June 30, 2021 and 2020, respectively. Of those amounts, for the three months ended June 30, 2021 and 2020, $2,465 and $2,481, respectively, of property management fees were expensed to property operating expenses in our condensed consolidated statements of comprehensive income (loss) and $726 and $926, respectively, were capitalized as building improvements in our condensed consolidated balance sheets and are being depreciated over the estimated useful lives of the related capital assets. We recognized aggregate net property management and construction supervision fees of $3,407$6,345 and $3,491 for the three months ended June 30, 2020 and 2019, respectively, and $6,599 and $6,555 for the six months ended June 30, 2021 and 2020, respectively. Of those amounts, for the six months ended June 30, 2021 and 2019, respectively. These amounts are included in2020, $4,950 and $5,077, respectively, of property management fees were expensed to property operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements.statements of comprehensive income (loss) and $1,395 and $1,522, respectively, were capitalized as building improvements in our condensed consolidated balance sheets and are being depreciated over the estimated useful lives of the related capital assets.
We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC's employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC's employees assigned to work exclusively or partly at our medical office and life science properties, our share of the wages, benefits and other related costs of RMR LLC's centralized accounting personnel, our share of RMR LLC's costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $3,419$3,202 and $3,352$3,419 for these expenses and costs for the three months ended June 30, 20202021 and 2019,2020, respectively, and $6,862$6,499 and $6,726$6,862 for the six months ended June 30, 20202021 and 2019,2020, respectively. These amounts are included in otherproperty operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).
On June 9, 2021, we and RMR LLC amended our property management agreement to, among other things, provide for RMR LLC's oversight of any major capital projects and repositionings at our senior living communities, including our senior living communities which Five Star is continuing to manage, and that RMR LLC will receive the same fee previously paid to Five Star for such services, which is equal to 3% of the cost of any such major capital project or repositioning.

Note 12.11. Related Person Transactions
We have relationships and historical and continuing transactions with RMR LLC, The RMR Group Inc., or RMR Inc., Five Star and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR Inc. is the managing member of RMR LLC. 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., a managing director and the president and chief executive officer of RMR Inc., an officer and employee of RMR LLC and the chair of the board of directors
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
and a managing director of Five Star. Jennifer Clark,F. Francis, our other Managing Trustee and our President and Chief Executive Officer is an executive vice president of RMR Inc. and she and our Chief Financial Officer and Treasurer are also employees and officers of RMR LLC. 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 LLC, an officer of ABP Trust and a managing director and the secretary of Five Star,Star. Certain of Five Star's officers are officers and each of our officers is also an officer and employeeemployees of RMR LLC. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these companies. Other officers of RMR LLC, including Ms. Clark and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies.

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(dollar amounts in thousands, except per share dataRMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or as otherwise stated)

its subsidiaries provide management services.
Five Star. We are currently Five Star's largest stockholder. As of June 30, 2020,2021, we owned 10,691,658 Five Star common shares, or approximately 33.9%33.7% of Five Star's outstanding common shares. Five Star currently manages for us most of the senior living communities we own. RMR LLC provides management services to both us and Five Star. See Note 109 for further information regarding our relationships, agreements and transactions with Five Star and Note 65 for further information regarding our investment in Five Star.
As of June 30, 2020,2021, ABP Acquisition LLC, a subsidiary of ABP Trust, the controlling shareholder of RMR Inc., together with ABP Trust, owned approximately 6.4% of Five Star's outstanding common shares. RMR LLC provides management services to both us and Five Star and Adam Portnoy is the chair of the board of directors and a managing director of Five Star. Jennifer Clark is a managing director and the secretary of Five Star. Five Star's president and chief executive officer and executive vice president, chief financial officer and treasurer are officers and employees of RMR LLC.
Our Manager, RMR LLC. We have 2 agreements with RMR LLC to provide management services to us. See Note 1110 for further information regarding our management agreements with RMR LLC.
AIC. Until its dissolution in February 2020, we, ABP Trust, Five Star and four other companies to which RMR LLC provides management services owned Affiliates Insurance Company, or AIC, an Indiana insurance company, in equal amounts. Certain of our Trustees and certain directors or trustees of the other AIC shareholders served on the board of directors of AIC until its dissolution.
We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC. The policies under that program expired on June 30, 2019, and we and the other AIC shareholders elected not to renew the AIC property insurance program; we have instead purchased standalone property insurance coverage with unrelated third party insurance providers.
As of each of June 30, 2020 and December 31, 2019, our investment in AIC had a carrying value of $11 and $298, respectively. These amounts are included in other assets, net in our condensed consolidated balance sheets. In June 2020, we received an additional liquidating distribution of approximately $287 from AIC in connection with its dissolution. We did not recognize any income related to our investment in AIC for the three and six months ended June 30, 2020 and recognized $130 and $534 related to our investment in AIC for the three and six months ended June 30, 2019, respectively. These amounts are presented as equity in earnings of an investee in our condensed consolidated statements of comprehensive income (loss). Our other comprehensive income included our proportionate share of unrealized gains on securities that were owned by AIC, related to our investment in AIC.
For further information about these and other such relationships and certain other related person transactions, see 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 our managed senior living communities to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated federal corporate income tax return and are subject to federal and state income taxes. Our consolidated income tax provision includes the income tax provision related to the operations of our TRSs and certain state income taxes we incur despite our taxation as a REIT. During the three months ended June 30, 20202021 and 2019,2020, we recognized income tax expense of $1,126$191 and benefit of $35,$1,126, respectively, and during the six months ended June 30, 20202021 and 2019,2020, we recognized income tax expense of $683$429 and $99,$683, respectively.

Note 14.13. Weighted Average Common SharesShares (share amounts in thousands)
We calculate basic earnings per common share by dividing net income (loss) by the weighted average number of our common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, and the related

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(dollar amounts in thousands, except per share data or as otherwise stated)

impact on earnings, are considered when calculating diluted earnings per share. For the three months ended June 30, 2021 and 2020, 17 and 2019, 346 and 68 unvested common shares, respectively, and for the six months ended June 30, 2021 and 2020, 19 and 2019, 234 and 18 unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.
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Item 2.  Management'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.
Impact of COVID-19OVERVIEW
In March 2020, the World Health Organization declared the outbreak of COVID-19 asWe are a pandemicREIT that was organized under Maryland law and in response to the outbreak, the U.S. Healthwhich owns medical office and Human Services Secretary declared a public health emergency in the United Stateslife science properties, senior living communities and many states and municipalities declared public health emergencies. The virus that causes COVID-19 has continued to spreadother healthcare related properties throughout the United StatesStates. As of June 30, 2021, we owned 392 properties located in 36 states and the world. Various governmental and market responses attempting to contain and mitigate the spread of the virus have negatively impacted, and continue to negatively impact, the global economy,Washington, D.C., including the U.S. economy. As a result, most market observers believe the global economy and the U.S. economy areone life science property owned in a recession. Statesjoint venture arrangement in which we own a 55% equity interest. At June 30, 2021, the gross book value of our real estate assets at cost plus certain acquisition costs, before depreciation and municipalities across the United States have been allowing certain businesses to re-openpurchase price allocations and easing certain restrictions they had previously implemented in response to the COVID-19 pandemic, often in stages that are phased in over time. Recently, economic data have indicated that the U.S. economy has improved since the lowest periods experienced in March and April 2020. However, certain areas of the United States have experienced increased numbers of COVID-19 infections following the re-openings of their economies and easing of restrictions or otherwise and, in some cases, certain states have imposed or re-imposed closings of certain business activities and other restrictions in response. It is unclear whether the increases in the number of COVID-19 infections will continue or amplify or whether any “second wave” of COVID-19 infection outbreaks will occur in the United States or elsewhere and, if so, what the impact of that would be on human health and safety, the economy, our manager and tenants or our business.less impairment write downs, was $8.2 billion.
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 healthcare sector and many of our tenants, managers and operators provide essential services across the United States. Due to restrictions intended to prevent the spread of the virus 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 have experienced disruptions to their businesses. Our senior living community operators have also experienced disruptions, including limitations on in-person tours and new admissions, and are experiencingexperienced challenges in attracting new residents to their communities in addition to experiencing increased expense levelsexpenses due to increased labor costs, including higher health benefits costs, and higherincreased costs and consumption of supplies, including personal protective equipment. There will be lasting impacts of the COVID-19 pandemic, even as states and municipalities re-open their economies.have eased and may further ease restrictions. Our tenants and their businesses may become increasingly negatively impacted, which may result in our tenants seeking assistance from us regarding their rent obligations owed to us, their being unable or unwilling to pay us rent, their ceasing to pay us rent and their ceasing to continue as going concerns.
We are closely monitoring the impacts of the COVID-19 pandemic on all aspects of our business.
With respect to our SHOP segment, we expect that our senior living operatorscommunity managers will be operating our communities at lower average occupancy with higher operating expenses per resident, which will likely lead to decreased returns to us as a result of thisthe COVID-19 pandemic. As of July 31, 2020, we have been notified that 4.5% of residents in our senior living communities have tested positive for COVID-19 since the pandemic began. Our operatorsmanagers continue to follow federal, state and local health department guidelines and their own infection prevention protocols but we expect to see additional cases of COVID-19 in our senior living communities.
We are closely monitoringThroughout the impactfirst quarter of 2021, Five Star coordinated multiple COVID-19 vaccination clinics at senior living communities in our SHOP segment for residents and staff. As previously disclosed, all of the COVID-19 pandemic oncommunities in our SHOP segment have completed vaccination clinics and are accepting new residents. On June 1, 2021, Five Star announced that all aspects of our business, including:
our tenants and their ability to withstand the current economic conditions and continue to pay us rent;
our senior living community operators' ability to operate our communities, mitigate and contain the spread of the virus that causes COVID-19its team members at our communities will be required to be fully vaccinated against COVID-19 by September 1, 2021 in order to protect Five Star's team members and to keep the residents and our operators' employees at our communities safefrom the ongoing threat posed by the COVID-19 virus. Both Five Star's team members and healthy;residents at our communities continue to have access to vaccines.
We also believe that we and our operations, liquidity and capital needs and resources;

conducting financial modeling and sensitivity analyses;
actively communicating with our tenants, ourmanagers, operators and impacted tenants have and may continue to benefit from provisions of the CARES Act, signed into law in March 2020 and further supplemented by the Consolidated Appropriations Act, 2021, or other key constituents and stakeholdersfederal or state relief programs allowing them to continue or resume business activity. During the six months ended June 30, 2021, we recognized $18.2 million in order to help assess market conditions, opportunities, best practices and mitigate risks and potential adverse impacts; and
monitoring, with the assistance of counselinterest and other specialists, possible government relief funding sources and other programs that may be availableincome in our condensed consolidated statement of comprehensive income (loss) related to us, our tenants, or our operators to enable us and them to operate throughfunds received under the current economic conditions and enhance our tenants' ability to pay us rent or our operators' ability to operate our communities.CARES Act.
We believe that our current financial position and recent financing activities will enable us to withstand the COVID-19 pandemic and its aftermath due in part to the following:
On June 2, 2020, we issued $1.0 billion aggregate principal amount of our 9.75% senior notes due 2025. We used the net proceeds from this offering to prepay in full our $250.0 million unsecured term loan that was scheduled to mature on June 12, 2020 and to reduce amounts outstanding under our revolving credit facility;
Beginning in the second quarter of 2020, we reduced our quarterly cash distribution rate on our common shares to $0.01 per share, conserving approximately $33.3 million of cash per calendar quarter compared to our prior quarterly distribution rate;
As of August 3, 2020, we had $1.0 billion of availability under our revolving credit facility; and
Our next debt maturity does not occur until our $300.0 million senior unsecured notes mature in December 2021.
In light of the above actions, resources, expectations and conditions, we believe that we are well positioned to weather the present disruptions facing the real estate industry and, in particular, the real estate healthcare industry, including senior living. However, as a resultIn the first quarter of 2021, following the COVID-19 pandemic, someholiday season, the reopening of our tenants have requested relief from their obligations to pay rent due to us. While the number and value of these monthly requests have been declining, we continue to evaluate these requests as they are made on a tenant-by-tenant basis. As of August 3, 2020, we granted requests to 106 of our tenants to defer rent payments totaling $5.5 million with respect to leases that represent, as of June 30, 2020, approximately 9.4% of our annualized rental income. Those 106 of our tenants consist of 104 tenants in our Office Portfolio segment, one wellness center tenant and one triple net senior living tenant. As of June 30, 2020, we recognized an increase in our accounts receivable balance related to these deferred rent payments of $3.5 million. These tenants are obligated to pay, in most cases, the deferred rents in 12 equal monthly installments commencing in September 2020. For the three months ended June 30, 2020, we collected approximately 99% of our contractual rents due from tenants in our Office Portfolio segment. These deferred amounts did not negatively impact our results for the three and six months ended June 30, 2020. However, the deferred rents have temporarily reduced our operating cash flows.
We do not have any employeeseconomies and the personnel and various services we require to operate our business are provided to us by RMR LLC pursuant to our business and property management agreements with RMR LLC for our Office Portfolio. RMR LLC has implemented enhanced cleaning protocols and social distancing guidelines at its corporate headquarters and regional offices, as well as business continuity plans to ensure that RMR LLC employees remain safe and able to support us and other companies managed by RMR LLC or its subsidiaries, including providing appropriate information technology such as notebook computers, smart phones, computer applications, information technology security applications and technology support.
With respect to our properties where property management is provided by RMR LLC, RMR LLC has implemented enhanced cleaning protocols and has taken measures to reduceeasing of restrictions, the possibility of persons gathering in groups and in close proximity to each other, for the purpose of mitigating the potential for the spreadUnited States experienced peak numbers of COVID-19 infections. Included among these protocols and measures are the following:
focusing on sanitizing high touch points in common areas and restrooms;
shutting downIn some cases, certain building amenities; and
prudently managing the execution or deferment of tenant work orders to limit RMR LLC staff and tenant interactions at our properties.

All RMR LLC property management and engineering personnel have been trained on COVID-19 precaution procedures. As states and local communities acrossmunicipalities again required the country moved to stay at home orders, RMR LLC worked to reduceclosure of certain business activities and optimize our operating costs at our properties by:
deferring non-emergency work;
implementing energy reduction protocols for lighting and HVAC systems;
reducing non-essential building services and staff; and
reducing the frequency of trash removal.
RMR LLC's property management teams have also established business continuity plans to ensure operational stability at our properties. As stay at home orders have been lifted or loosened acrossimposed certain other restrictions. The conditions in the United States RMR LLC has implemented additional procedures at our properties that RMR LLC manages based on recommended guidelines fromsignificantly improved since those periods during the U.S. Centers for Disease Control and Prevention and other regulatory agencies. For example:
installing signage throughout our managed properties with social distancing reminders;
making changes topandemic; however, certain building HVAC systems and equipment, including adjusting indoor air control programs to increase the amount of outside air delivered to interior spaces and to adjust control sequences to maintain relative humidity levels in order to help minimize the concentrationareas of the virus that causes COVID-19;
flushing domestic water systems to prepare for re-occupancy;
performing service calls and preventative maintenance after business hours to limit social interactions;
requiring vendors to follow best practices underUnited States have recently experienced increasing COVID-19 pandemic conditions, including providing RMR LLC with documented preventative measures for their employees and requiring that staff wear appropriate personal protective equipment when working at our properties; and
altering cleaning schedules to perform vacuuming at times intended to reduceinfections. It is unclear whether the potential airborne spread of the virus.
RMR LLC has significantly reduced non-essential work travel and its regional leadership personnel have not been allowed to work in the same locations at the same time. RMR LLC also requires its employees who work at our properties to use personal protective equipment and business continuity bonus payments have been provided to certain essential workers at our properties. RMR LLC regional management offices are currently limiting walk-in visitors and maintain maximum office occupancy limits as required by state and local guidelines, including weekly rotations of employees as needed.
With respect to our SHOP segment, Five Star has taken a number of proactive measures to protect the health and safety of their staff and our residents and patients, including barring all nonessential visitors from our senior living communities and,COVID-19 infections will further increase or amplify in certain cases, limiting new resident admissions, enhancing their established flu and infectious disease prevention and control protocols and providing additional training for their staff in infectious disease prevention and control. Additionally, federal, state or local health departments may ban or limit admissions to our senior living communities as a precautionary measure.
We also believe that we, Five Star and our impacted tenants may benefit from provisions of the CARES Act, signed into law in March 2020, or other federal or state relief programs allowing them to continue or resume business activity. During the three and six months ended June 30, 2020, we recognized other income of $7.3 million related to funds received under the CARES Act.
There are extensive uncertainties surrounding the COVID-19 pandemic and its aftermath. These uncertainties include, among others:
the duration and severity of the negative economic impact;
the strength and sustainability of any economic recovery;

the timing and process for how federal, state and local governments and other market participants may oversee and conduct the return of economic activity when the COVID-19 pandemic abates, such as what continuing restrictions and protective measures may remain in place or be added and what restrictions and protective measures may be lifted or reduced in order to foster a return of increased economic activity in the United States; and
whether, following a recommencing of more normal levels of economic activities, the United States or other countries experience any “second wave” of COVID-19 infection outbreakselsewhere and, if so, what the responsesimpact of governments, businessesthat would be on human health and safety, the general public to those events.
economy, or our managers', operators' and tenants' businesses. As a result of these uncertainties, we are unable to determine what the ultimate impactimpacts 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
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to the COVID-19 pandemic and its aftermath on us and our business, see Part II,I, Item 1, “Business—COVID-19 Pandemic” and Part I, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.
OVERVIEW
We are a REIT organized under Maryland law and own medical office and life science properties, senior living communities and other healthcare related properties throughout the United States. As of June 30, 2020, we owned 412 properties, including 21 properties classified as held for sale, located in 38 states and Washington, D.C., including one life science property owned in a joint venture arrangement in which we own a 55% equity interest. At June 30, 2020, the gross 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 $8.3 billion, including $112.6 million of gross book value classified as held for sale in our condensed consolidated balance sheet. ForAnnual Report.
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 three months ended June 30, 2020, substantially all of our net operating income, or NOI, came from properties where a majority of the revenues are derived from our tenants' and residents' private resources.management arrangements include:
•
RESTRUCTURING OF BUSINESS ARRANGEMENTS WITH FIVE STAR
As of December 31, 2019,that Five Star operated 244is cooperating with us in transitioning 108 of our senior living communities inwith approximately 7,500 living units to other third party managers without our SHOP segment,payment of which 166 communities were leasedany termination fee to Five Star and 78Star;
•that we no longer have the right to sell up to an additional $682 million of senior living communities werecurrently managed by Five Star forand terminate Five Star's management of those communities without our account. Pursuantpayment of a fee to the Restructuring Transaction, effective January 1, 2020, our previously existing master leases and management and pooling agreements with Five Star were terminated and replaced with the New Management Agreements for allupon sale;
•that Five Star is continuing to manage 120 of our senior living communities operated bywith approximately 18,000 living units, and that the skilled nursing units in all of our continuing care retirement communities that Five Star. The Conversion wasStar is continuing to manage, which then included approximately 1,500 living units, are being closed and repositioned;
•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 significant changetarget EBITDA 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 LLC 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 historical arrangementsmanagement agreements with Five Star and has resulted, and likely will continue to result in future periods, in our realizing significantly different operating results fromfor our senior living communities including increased variability. As of June 30, 2020,that Five Star managed 241is continuing to manage was extended by two years to December 31, 2036.
Pursuant to these changes, we and Five Star entered into 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 operators. These agreements replaced our account.prior management and omnibus agreements with Five Star. In addition, Five Star delivered to us a related amended and restated guaranty agreement pursuant to which Five Star is continuing to guarantee the payment and performance of each of its applicable subsidiary's obligations under the applicable management agreements.
We expect that the transition of the management of the 108 senior living communities from Five Star to other third party managers will be completed before year end 2021. As of August 3, 2021, we had executed agreements with four new third party managers to transition 76 senior living communities. Of these 76 senior living communities, 41 have been transitioned to new third party managers. We also expect to incur costs related to retention and other transition costs for these communities, which costs may be significant. For further information regarding the Restructuring Transaction,three and six months ended June 30, 2021, we recorded $11.9 million of these costs to acquisition and certain other transaction related costs in our condensed consolidated statements of comprehensive income (loss).
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The following table presents a pro forma breakout of communities that Five Star is continuing to manage and communities that we are in the Transaction Agreementprocess of transitioning from Five Star to other third party managers (dollars in thousands):
As of and For the Three Months Ended
June 30, 2021		As of and For the Six Months Ended
June 30, 2021
Five Star Retained CommunitiesOperator Transition CommunitiesTotalFive Star Retained CommunitiesOperator Transition CommunitiesTotal
Communities (1)
120 108 228 120 108 228 
Number of units (2)
17,898 7,525 25,423 17,898 7,525 25,423 
Occupancy72.9 %66.5 %71.0 %72.8 %66.1 %70.8 %
Residents fees and services$168,655 $75,266 $243,921 $353,972 $149,736 $503,708 
NOI (3)
$12,509 $(1,257)$11,252 $23,050 $(7,426)$15,624 
(1)Excludes seven closed senior living communities.
(2)Excludes skilled nursing units that have been closed or are being closed and repositioned.
(3)Our definition of NOI and our other business arrangements with Five Star, seereconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”
See Notes 109 and 1211 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.10-Q for more information regarding our management arrangements with Five Star.
PORTFOLIO OVERVIEW
The following tables present an overview of our portfolio (dollars in thousands, except investment per square foot or unit data):
(As of June 30, 2021)Number
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)
Q2 2021 Revenues(3)
% of
Q2 2021 Revenues
Q2 2021 NOI (3)(4)
% of Q2 2021 NOI
Office Portfolio (5)
118 10,926,678 sq. ft.$3,720,717 45.3 %$341 $92,804 26.8 %$61,483 75.2 %
SHOP235 25,423 units4,069,382 49.5 %$160,067 243,947 70.4 %10,636 13.0 %
Other triple net leased senior living communities29 2,327 units250,073 3.0 %$107,466 6,213 1.8 %6,213 7.6 %
Wellness centers10 812,000 sq. ft.178,110 2.2 %$219 3,377 1.0 %3,377 4.2 %
Total392  $8,218,282 100.0 %$346,341 100.0 %$81,709 100.0 %
 Occupancy
As of and For the Three Months Ended June 30,
 20212020
Office Portfolio (6)
91.0 %92.0 %
SHOP70.9 %78.7 %
Other triple net leased senior living communities (7)(8)
74.3 %86.1 %
Wellness centers100.0 %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.
(2)Represents gross book value of real estate assets divided by number of rentable square feet or living units, as applicable, at June 30, 2021.
(3)Includes $772 of revenues and $579 of NOI from properties that we sold.
(4)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”.
(5)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
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(As of June 30, 2020) 
Number
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)
 
Q2 2020 Revenues(3)
 
% of
Q2 2020 Revenues
 
Q2 2020 NOI (3)(4)
 
% of Q2 2020 NOI 
Office Portfolio (5)
 129
 11,668,375
 sq. ft. $3,741,354
 44.9% $321
 $95,510
 23.3% $64,617
 59.6%
SHOP 241
 28,348
 units 4,112,958
 49.4% $145,088
 304,104
 74.1% 33,082
 30.5%
Other triple net leased senior living communities 32
 2,605
 units 296,170
 3.6% $113,693
 7,103
 1.7% 7,103
 6.6%
Wellness centers 10
 812,000
 sq. ft. 178,110
 2.1% $219
 3,594
 0.9% 3,594
 3.3%
Total 412
     $8,328,592
 100.0%   $410,311
 100.0% $108,396
 100.0%
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.

(6)Medical office and life science property occupancy data is as of June 30, 2021 and 2020 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.
(7)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.
  Occupancy
  As of and For the Twelve Months Ended June 30,
  2020 2019
Office Portfolio (6)
 92.0% 92.5%
SHOP 82.7% 84.0%
Other triple net leased senior living communities (7)(8)
 86.8% 87.6%
Wellness centers 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. Amounts include $112,631 of gross book value of 21 properties classified as held for sale as of June 30, 2020, which amounts are included in assets of properties held for sale in our condensed consolidated balance sheet.(8)
(2)
Represents gross book value of real estate assets divided by number of rentable square feet or living units, as applicable, at June 30, 2020.
(3)
Includes $301 of revenues and $(573) of NOI from properties that we sold and $16,683 of revenues and $(1,062) of NOI from properties classified as held for sale in our condensed consolidated balance sheet as of June 30, 2020.
(4)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.”
(5)
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.
(6)Medical office and life science property occupancy data is as of June 30, 2020 and 2019 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.
(7)Excludes data for periods prior to our ownership of certain properties, data for properties sold or classified as held for sale and data for which there was a transfer of operations during the periods presented.
(8)Operating data for other triple net leased senior living communities leased to third party operators other than Five Star and wellness centers are presented based upon the operating results provided by our tenants for the 12 months ended March 31, 2020 and 2019, or the most recent prior period for which tenant operating results are made available to us. We have not independently verified tenant operating data.
Due to the COVID-19 pandemic, we anticipate that leasing activity may remain slow in our Office Portfolio and that we may continue to be prevented from, or impeded in, pursuing or accepting additional residents at our senior living communities dueleased to restrictions intendedthird party operators and wellness centers are presented based upon the operating results provided by our tenants for the three months ended March 31, 2021 and 2020, or the most recent prior period for which tenant operating results are made available to prevent the spread of the virus that causes COVID-19, including restricting nonessential visitors from some of our senior living communities. As a result, we expect to experience further decreases in occupancy at our senior living communities. Further, as noted above, we expect to continue to incur higherus. We have not independently verified tenant operating costs at our senior living communities as a result of the COVID-19 pandemic. These expected declines in occupancy and increases in operating costs at our senior living communities are expected to result in further decreases in income or returns from those properties.data.
During the three and six months ended June 30, 2020,2021, we entered into lease renewals for 51,772 square feetnew and newrenewal leases for 7,550 square feet at our medical office and life science properties. The weighted average annual rental rate for leases entered duringproperties in our Office Portfolio segment as summarized in the quarter was $37.70following tables (dollars and square feet in thousands, except per square foot which was 5.18% higher than the previous weighted average annual rental rate for the same space. amounts):
Three Months Ended June 30, 2021
 New LeasesRenewalsTotal
Square feet leased during the quarter65 567 632 
Weighted average rental rate change (by rentable square feet)13.1 %5.0 %5.9 %
Weighted average lease term (years) (1)
9.3 9.1 9.1 
Total leasing costs and concession commitments (2)
$5,191 $21,241 $26,432 
Total leasing costs and concession commitments per square foot (2)
$80.38 $37.43 $41.82 
Total leasing costs and concession commitments per square foot per year (2)
$8.60 $4.13 $4.60 
Six Months Ended June 30, 2021
 New LeasesRenewalsTotal
Square feet leased during the quarter217 627 844 
Weighted average rental rate change (by rentable square feet)20.1 %4.9 %9.9 %
Weighted average lease term (years) (1)
10.6 9.0 9.6 
Total leasing costs and concession commitments (2)
$37,441 $21,799 $59,240 
Total leasing costs and concession commitments per square foot (2)
$172.73 $34.72 $70.14 
Total leasing costs and concession commitments per square foot per year (2)
$16.28 $3.85 $7.31 
(1)Weighted (bybased on annualized rental income) averageincome pursuant to existing leases as of June 30, 2021, including straight line rent adjustments and estimated recurring expense reimbursements, and excluding lease termvalue amortization.
(2)Includes commitments made for leases entered during the second quarter of 2020 was 6.0 years. Commitments forleasing expenditures and concessions, such as tenant improvements, leasing commission costscommissions, tenant reimbursements and concessions for leases we entered during the second quarterfree rent.
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Table of 2020 totaled $0.7 million, or $12.16 per square foot on average (approximately $2.02 per square foot per year of the lease term).Contents

Lease Expiration Schedules
As of June 30, 2020,2021, lease expirations at our 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
202163340,153 3.4 %3.4 %$13,008 3.5 %3.5 %
20221031,220,308 12.3 %15.7 %30,540 8.3 %11.8 %
202354982,724 9.9 %25.6 %18,959 5.2 %17.0 %
2024811,787,991 18.0 %43.6 %49,578 13.5 %30.5 %
202575909,556 9.1 %52.7 %24,360 6.6 %37.1 %
202665775,788 7.8 %60.5 %24,972 6.8 %43.9 %
202733583,200 5.9 %66.4 %14,354 3.9 %47.8 %
2028291,471,488 14.8 %81.2 %115,781 31.5 %79.3 %
202927338,497 3.4 %84.6 %12,671 3.5 %82.8 %
2030 and thereafter601,533,087 15.4 %100.0 %62,863 17.2 %100.0 %
Total5909,942,792 100.0 %$367,086 100.0 %
Weighted average remaining lease term (in years)5.0 6.0 
Year Number of Tenants Square Feet Percent of Total Cumulative Percent of Total 
Annualized  Rental Income(1)
 Percent of Total Cumulative Percent of Total
2020 87 646,424
 6.0% 6.0% $21,553
 5.7% 5.7%
2021 103 898,127
 8.4% 14.4% 30,350
 8.0% 13.7%
2022 104 1,172,835
 10.9% 25.3% 34,898
 9.2% 22.9%
2023 58 1,026,466
 9.6% 34.9% 20,636
 5.4% 28.3%
2024 78 1,835,297
 17.1% 52.0% 50,937
 13.4% 41.7%
2025 70 1,163,585
 10.8% 62.8% 25,197
 6.6% 48.3%
2026 39 694,235
 6.5% 69.3% 21,272
 5.6% 53.9%
2027 27 462,561
 4.3% 73.6% 11,289
 3.0% 56.9%
2028 17 1,440,951
 13.4% 87.0% 114,664
 30.2% 87.1%
2029 and thereafter 60 1,399,581
 13.0% 100.0% 48,656
 12.9% 100.0%
Total 643 10,740,062
 100.0%   $379,452
 100.0%  
               
Weighted average remaining lease term (in years) 5.3
     6.1
    
(1)Annualized rental income is based on rents pursuant to existing leases as of June 30, 2021, 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 office and life science properties. Annualized rental income also includes 100% of rental income as reported under GAAP from the life science property owned in a joint venture arrangement in which we own a 55% equity interest.
(1)Annualized rental income is based on rents pursuant to existing leases as of June 30, 2020, including straight line rent adjustments, estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our medical office and life science properties. Annualized rental income also includes 100% of rental income as reported under GAAP from our life science property owned in a joint venture arrangement in which we own a 55% equity interest.
Lease expiration data for our other triple net leased senior living communities leased to third party operators and wellness centers has not been provided because there were no changes to the lease expiration schedules from those reported in our Annual Report. As a resultReport, except for the renewal of the COVID-19 pandemic's impact on operations at wellness centers, we are evaluating our optionsleases with respect to athe tenant of six of our wellness centers. Annualized rental income from our leases with the tenant of these wellness centers totals approximately $7.9 million and, as of June 30, 2020, the applicable tenant wasfor a five year term expiring in default on its obligations to us under the applicable leases.2028.

24

RESULTS OF OPERATIONS (dollars and square feet in thousands, unless otherwise noted)
We operate in, and report financial information for, the following two segments: Office Portfolio and SHOP. We aggregate each of these two reporting segments based on their similar operating and economic characteristics. Our Office Portfolio segment consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties leased to biotech laboratories and other similar tenants. Our SHOP segment consists of managed senior living communities that provide short term and long term residential living and in some instances care and other services for residents where we pay fees to a manager to operate the operator to manage the communities for our account. In addition, prior to January 1, 2020, our SHOP segment included triple net leased senior living communities that provided short term and long term residential living and in some instances care and other services for residents and from which we received rents from Five Star. Pursuant to the Restructuring Transaction, effective January 1, 2020, our previously existing master leases and management and pooling agreements with Five Star were terminated and replaced with the New Management Agreements for all of our senior living communities operated by Five Star. Prior periods have been recast to reflect these reportable segments for all periods presented.communities.
We also report “non-segment” operations, which consists of triple net leased senior living communities that are leased to operators other than Five Star from which we receive rents, and wellness centers, 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 and six months ended June 30, 20202021 and 2019:2020:
 Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
 2020    2019 2020 20192021202020212020
Revenues:      
  
Revenues:  
Office Portfolio $95,510
 $104,385
 $194,280
 $207,606
Office Portfolio$92,804 $95,510 $186,127 $194,280 
SHOP 304,104
 142,306
 636,073
 289,664
SHOP243,947 304,104 503,913 636,073 
Non-Segment 10,697
 15,312
 22,425
 31,019
Non-Segment9,590 10,697 19,025 22,425 
Total revenues $410,311
 $262,003
 $852,778
 $528,289
Total revenues$346,341 $410,311 $709,065 $852,778 
        
Net income (loss) attributable to common shareholders:        Net income (loss) attributable to common shareholders:
Office Portfolio $24,340
 $31,951
 $47,099
 $59,320
Office Portfolio$52,177 $24,340 $74,886 $47,099 
SHOP (24,710) 32,583
 (15,242) 56,743
SHOP(6,679)(24,710)(32,093)(15,242)
Non-Segment (25,702) (101,763) (48,194) (123,210)Non-Segment(79,720)(25,702)(144,520)(48,194)
Net income (loss) attributable to common shareholders $(26,072) $(37,229) $(16,337) $(7,147)Net income (loss) attributable to common shareholders$(34,222)$(26,072)$(101,727)$(16,337)
The following sections analyze and discuss the results of operations of each of our segments for the periods presented.
25

Three Months Ended June 30, 20202021 Compared to Three Months Ended June 30, 20192020 (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 June 30, 20202021 to the three months ended June 30, 2019.2020. Our definition of NOI and our reconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”
Three Months Ended June 30,
20212020$ Change% Change
NOI by segment:
Office Portfolio$61,483 $64,617 $(3,134)(4.9)%
SHOP10,636 33,082 (22,446)(67.8)%
Non-Segment9,590 10,697 (1,107)(10.3)%
Total NOI81,709 108,396 (26,687)(24.6)%
Depreciation and amortization67,888 68,825 (937)(1.4)%
General and administrative9,126 7,312 1,814 24.8 %
Acquisition and certain other transaction related costs12,071 87 11,984 nm
Impairment of assets— 31,175 (31,175)(100.0)%
Gain (loss) on sale of properties30,760 (168)30,928 nm
Gains and losses on equity securities, net(3,849)11,974 (15,823)(132.1)%
Interest and other income16,038 7,736 8,302 107.3 %
Interest expense(67,657)(43,974)(23,683)53.9 %
Loss on early extinguishment of debt(370)(181)(189)104.4 %
Loss from continuing operations before income tax expense(32,454)(23,616)(8,838)37.4 %
Income tax expense(191)(1,126)935 (83.0)%
Net loss(32,645)(24,742)(7,903)31.9 %
Net income attributable to noncontrolling interest(1,577)(1,330)(247)18.6 %
Net loss attributable to common shareholders$(34,222)$(26,072)$(8,150)31.3 %
  Three Months Ended June 30,
  2020    2019 $ Change % Change
NOI by segment:        
Office Portfolio $64,617
 $71,860
 $(7,243) (10.1)%
SHOP 33,082
 54,638
 (21,556) (39.5)%
Non-Segment 10,697
 15,312
 (4,615) (30.1)%
Total NOI 108,396
 141,810
 (33,414) (23.6)%
         
Depreciation and amortization 68,825
 73,924
 (5,099) (6.9)%
General and administrative 7,312
 8,867
 (1,555) (17.5)%
Acquisition and certain other transaction related costs 87
 903
 (816) (90.4)%
Impairment of assets 31,175
 2,213
 28,962
 nm
(Loss) gain on sale of properties (168) 17,832
 18,000
 100.9 %
Dividend income —
 923
 (923) (100.0)%
Gains and losses on equity securities, net 11,974
 (64,448) 76,422
 118.6 %
Interest and other income 7,736
 238
 7,498
 nm
Interest expense (43,974) (46,412) (2,438) (5.3)%
Loss on early extinguishment of debt (181) (17) 164
 nm
Loss from continuing operations before income tax (expense) benefit and equity in earnings of an investee (23,616) (35,981) (12,365) (34.4)%
Income tax (expense) benefit (1,126) 35
 1,161
 nm
Equity in earnings of an investee —
 130
 (130) (100.0)%
Net loss (24,742) (35,816) (11,074) (30.9)%
Net income attributable to noncontrolling interest (1,330) (1,413) (83) (5.9)%
Net loss attributable to common shareholders $(26,072) $(37,229) $(11,157) (30.0)%
nm - not meaningful

Office Portfolio:
 
Comparable Properties (1)
All Properties
 As of June 30,As of June 30,
 2021202020212020
Total buildings113 113 118 129 
Total square feet (2)
10,604 10,599 10,927 11,668 
Occupancy (3)
92.3 %93.4 %91.0 %92.0 %
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since April 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
(2)Prior periods exclude space remeasurements made subsequent to those periods.
(3)Medical office and life science property occupancy 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.
Three Months Ended June 30,
Comparable (1)
Non-Comparable
 Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20212020ChangeChange2021202020212020ChangeChange
Rental income$91,511 $90,337 $1,174 1.3 %$1,293 $5,173 $92,804 $95,510 $(2,706)(2.8)%
Property operating expenses(30,725)(29,456)1,269 4.3 %(596)(1,437)(31,321)(30,893)428 1.4 %
NOI$60,786 $60,881 $(95)(0.2)%$697 $3,736 $61,483 $64,617 $(3,134)(4.9)%
26

  
Comparable Properties (1)
 All Properties
  As of June 30, As of June 30,
  2020 2019 2020 2019
Total buildings 122
 122
 129
 145
Total square feet (2)
 11,333
 11,333
 11,668
 12,372
Occupancy (3)
 93.8% 94.3% 92.0% 92.5%
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since April 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since April 1, 2019, including our life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
(2)Prior periods exclude space remeasurements made subsequent to those periods.
(3)Medical office and life science property occupancy 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.
  Three Months Ended June 30,
  
Comparable (1)
 Non-Comparable  
   Properties Results Properties Results Consolidated Properties Results
      $ %         $ %
  2020 2019 Change Change 2020 2019 2020 2019 Change Change
Rental income $94,283
 $95,611
 $(1,328) (1.4)% $1,227
 $8,774
 $95,510
 $104,385
 $(8,875) (8.5)%
Property operating expenses (30,201) (30,793) (592) (1.9)% (692) (1,732) (30,893) (32,525) (1,632) (5.0)%
NOI $64,082
 $64,818
 $(736) (1.1)% $535
 $7,042
 $64,617
 $71,860
 $(7,243) (10.1)%
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since April 1, 2019, including our life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
Rental income. Rental income decreased primarily due to our disposition of 2412 properties since April 1, 20192020 and a decreaseassets being taken out of service and/or undergoing redevelopment, partially offset by an increase in rental income at our comparable properties. Rental income decreasedincreased at our comparable properties primarily due to reducedincreased parking revenue and occupancy at certain of our comparable properties as states and municipalities have eased restrictions related to the COVID-19 pandemic and tenants' employees have increasingly returned to the office and commercial activity has increased and increases in tax escalation income and other property operating expense reimbursements at certain of our comparable properties, partially offset by higher average rents achieved from our new and renewal leasing activitya decrease in occupancy 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 properties. The decreaseincrease in property operating expenses is primarily due to our disposition of 24 properties since April 1, 2019 and a decreasean increase in property operating expenses at our comparable properties.properties, partially offset by our disposition of 12 properties since April 1, 2020. Property operating expenses at our comparable properties decreasedincreased primarily due to decreasesincreases in utility expenses, and other direct costs, partially offset by increases in real estate taxes and insurance expenseother direct costs at certain of our comparable properties.
Net operating income. The change in NOI reflects the net changes in rental income and property operating expenses described above.
SHOP:
 
Comparable Properties (1)
All Properties
 As of and For the Three MonthsAs of and For the Three Months
 Ended June 30,Ended June 30,
 2021202020212020
Total properties228 228 235 241 
Number of units25,423 25,423 25,423 28,348 
Occupancy71.0 %80.7 %70.9 %78.7 %
Average monthly rate (2)
$4,279 $4,207 $4,307 $4,496 
  
Comparable Properties (1)
 All Properties
  As of and For the Three Months As of and For the Three Months
  Ended June 30, Ended June 30,
  2020 2019 2020 2019
Total properties 225
 225
 241
 258
# of units 26,707
 26,707
 28,348
 29,724
Occupancy 78.9% 85.0% 78.7% 84.2%
Average monthly rate (2)
 $4,500
 $4,578
 $4,496
 $4,630
(1)(1)Consists of senior living communities that we have owned and which have been operated by the same operator continuously since April 1, 2019; 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.

  Three Months Ended June 30,
  
Comparable (1)
 Non-Comparable  
  Properties Results Properties Results Consolidated Properties Results
      $ %         $ %
  2020 2019 Change Change 2020 2019 2020 2019 Change Change
Rental income $—
 $32,546
 $(32,546) (100.0)% $—
 $854
 $—
 $33,400
 $(33,400) (100.0)%
Residents fees and services 287,780
 102,921
 184,859
 179.6 % 16,324
 5,985
 304,104
 108,906
 195,198
 179.2 %
Property operating expenses (253,422) (82,087) 171,335
 208.7 % (17,600) (5,581) (271,022) (87,668) 183,354
 209.1 %
NOI $34,358
 $53,380
 $(19,022) (35.6)% $(1,276) $1,258
 $33,082
 $54,638
 $(21,556) (39.5)%
(1)Consists of senior living communities that we have owned and which have been operated by the same operator continuously since April 1, 2019; excludes communities classified as held for sale, if any.
Rental income. Rental income decreased due to the termination of our previously existing master leases with Five Star. Pursuant to the Restructuring Transaction, effective January 1, 2020, our previously existing master leases and management and pooling agreements with Five Star were terminated and replaced with the New Management Agreements for all of our senior living communities that we have owned and which have been operated by Five Star. See Note 10 to our condensed consolidated financial statements included in Part I, Itemthe same operator continuously since April 1, 2020; 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 June 30,
Comparable (1)
Non-Comparable
Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20212020ChangeChange2021202020212020ChangeChange
Residents fees and services$243,921 $291,049 $(47,128)(16.2)%$26 $13,055 $243,947 $304,104 $(60,157)(19.8)%
Property operating expenses(232,669)(255,820)(23,151)(9.0)%(642)(15,202)(233,311)(271,022)(37,711)(13.9)%
NOI$11,252 $35,229 $(23,977)(68.1)%$(616)$(2,147)$10,636 $33,082 $(22,446)(67.8)%
(1)Consists of this Quarterly Report on Form 10-Qsenior living communities that we have owned and which have been operated by the same operator continuously since April 1, 2020; excludes communities classified as held for information regarding the Restructuring Transaction.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 increaseddecreased primarily due to the Restructuring Transaction and the resulting change to our management arrangement with Five Star for alldisposition of our senior living communities that it operates and our acquisition of one active adult rental propertynine properties since April 1, 2019, partially offset by2020 and decreases in occupancy and average monthly rates primarily due to the impact of the COVID-19 pandemic at both comparable and non-comparable properties for the three months ended June 30, 20202021 compared to the three months ended June 30, 2019. We expect to experience continued downward pressure on our occupancy and2020, partially offset by increases in average monthly rates as normal resident move-outs may not be replaced by new resident move-insat certain of our comparable properties. Additionally, residents fees and potential residents may increasingly delay or forgo moving into senior living communities as a resultservices at our comparable properties decreased due to the closure of skilled nursing units during the COVID-19 pandemic.three months ended June 30, 2021.
Property operating expenses. Property operating expenses consist of real estate taxes, utility expenses, insurance, salaries and benefit costs of property level personnel, repairs and maintenance expense, management fees, cleaning expense and other direct
27

costs of operating these communities. Property operating expenses increaseddecreased primarily due to the Restructuring Transaction and the resulting change to our management arrangement with Five Star for alldisposition of our senior living communities that it operates, our acquisition of one active adult rental propertynine properties since April 1, 20192020 and increaseda decrease in property operating expenses at our comparable properties. Property operating expenses at our comparable properties decreased primarily due to decreases in costs associated with staffing and suppliesdietary expenses primarily due to reduced occupancy at our comparable properties as a result of the impact of the COVID-19 pandemic at both comparable and non-comparable properties forthe closure of skilled nursing units during the three months ended June 30, 2020 compared to the three months ended June 30, 2019. As a result of the COVID-19 pandemic, we expect to continue experiencing higher operating expenses primarily driven by increased labor costs and increased cost and consumption of supplies, including personal protective equipment.2021.
Net operating income. The change in NOI reflects the net changes in rental income, residents fees and services and property operating expenses described above.
Non-Segment(1):
 
Comparable Properties (2)
All Properties
 As of and For the Three Months Ended June 30,As of and For the Three Months Ended June 30,
 2021202020212020
Total properties:
Other triple net leased senior living communities29 29 29 32 
Wellness centers10 10 10 10 
Rent coverage:
Other triple net leased senior living communities (3)
1.38 x1.66 x1.38 x1.66 x
Wellness centers (3)
0.94 x1.73 x0.94 x1.73 x
  
Comparable Properties (2)
 All Properties
  As of and For the Three Months Ended June 30, As of and For the Three Months Ended June 30,
  2020 2019 2020 2019
Total properties:        
Other triple net leased senior living communities 29
 29
 32
 43
Wellness centers 10
 10
 10
 10
Rent coverage:        
Other triple net leased senior living communities (3)
 1.66x 1.78x 1.66x 1.78x
Wellness centers (3)
 1.73x 1.93x 1.73x 1.93x
(1)Non-segment operations consists of all of our other operations, including certain senior living communities leased to third party operators other than Five Star and wellness centers, which segment 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.

(2)Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since April 1, 2019; excludes properties classified as held for sale, if any.
(3)All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended March 31, 2020 and 2019 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 during the periods presented.
(1)Non-segment operations consists of all of our other operations, including certain senior living communities leased to third party operators and wellness centers, which segment 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.
  Three Months Ended June 30,
  
Comparable (1)
 Non-Comparable  
  Properties Results Properties Results Consolidated Properties Results
      $ %         $ %
  2020 2019 Change Change 2020 2019 2020 2019 Change Change
Rental income $9,737
 $10,795
 $(1,058) (9.8)% $960
 $4,517
 $10,697
 $15,312
 $(4,615) (30.1)%
NOI $9,737
 $10,795
 $(1,058) (9.8)% $960
 $4,517
 $10,697
 $15,312
 $(4,615) (30.1)%
(2)Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since April 1, 2020; excludes properties classified as held for sale, if any.
(1)Consists of properties that we have owned and which have been leased to the same operator continuously since April 1, 2019; excludes properties classified as held for sale, if any.
(3)All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended March 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, during the periods presented.
Three Months Ended June 30,
Comparable (1)
Non-Comparable
Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20212020ChangeChange2021202020212020ChangeChange
Rental income$9,590 $9,737 $(147)(1.5)%$— $960 $9,590 $10,697 $(1,107)(10.3)%
NOI$9,590 $9,737 $(147)(1.5)%$— $960 $9,590 $10,697 $(1,107)(10.3)%
(1)Consists of properties that we have owned and which have been leased to the same operator continuously since April 1, 2020; excludes properties classified as held for sale, if any.
Rental income. Rental income decreased primarily due to the sale of 11three senior living communities leased to private operators since April 1, 20192020 and a decrease in rental income at our comparable properties, partially offset by increased rents resulting from our purchase of improvements at our comparable properties since April 1, 2019.2020. Rental income decreased at our comparable properties primarily due to a tenant default under leases for sixlease renewals with tenants of our wellness centers.centers at lower average rental rates. As a result of the COVID-19 pandemic, many of our wellness centers havehad been ordered closed by state or local executive orders. In April 2020,February 2021, we agreedentered into lease renewals with the tenant of six of our wellness centers for a five year term at lower cash rental rates until deferred rents become due. We have elected to deferrecognize rental income from this tenant as rent payments are received. In October 2020, the lease for our other four wellness centers in the second quarter of 2020 in exchangewas renewed for the tenant agreeing to pay the deferred rents ina 12 equal monthly installments beginning later in 2020. We continue to evaluate our options for our wellness centers operated by tenants in default of their lease obligations.year term at a lower average rental rate.
Net operating income. The change in NOI reflects the net changes in rental income described above.
Consolidated:
References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended June 30, 2020,2021, compared to the three months ended June 30, 2019.2020.
28

Depreciation and amortization expense. Depreciation and amortization expense decreased primarily due to our disposition of 5624 properties, certain depreciable leasing related assets becoming fully depreciated and certain of our acquired resident agreements becoming fully amortized since April 1, 2019,2020, partially offset by our acquisition of an active adult rental property and the purchase of capital improvements at certain of our properties since April 1, 2019.2020.
General and administrative expense. General and administrative expense consists of fees paid to RMR LLC under our business management agreement, legal and accounting fees, fees and expenses of our Trustees, equity compensation expense and other costs relating to our status as a publicly traded company. General and administrative expense decreasedincreased primarily due to a decreasean increase in our base business management fees expense as a result of lowerhigher trading prices for our common shares during the three months ended June 30, 20202021 compared to the three months ended June 30, 2019.2020.
Acquisition and certain other transaction related costs. AcquisitionFor the three months ended June 30, 2021, acquisition and certain other transaction related costs primarily represent costs incurred in connection with the Master Management Agreement. For the three months ended June 30, 2020, acquisition and certain other transaction related costs primarily represent costs incurred in connection with the 2020 restructuring of our business arrangements with Five Star, or the Restructuring Transaction.
Impairment of assets. For further information about our asset impairment charges,regarding the Master Management Agreement or the Restructuring Transaction, see Note 39 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
(Loss) gain on saleImpairment of propertiesassets. . (Loss) gain on sale of properties is the result ofFor information about our sale of certain senior living communities and medical office properties during the three months ended June 30, 2020 and 2019. For further information regarding (loss) gain on sale of properties,asset impairment charges, see Note 32 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.
Dividend incomeGain (loss) on sale of properties. . The decrease in dividend incomeGain (loss) on sale of properties is the net result of our sale of certain of our properties during the three months ended June 30, 2021 and 2020. For further information regarding gain (loss) on Julysale of properties, see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 2019 of allthis Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of the RMR Inc. class A common stock that we owned.our Annual Report.

Gains and losses on equity securities, net. Gains and losses on equity securities, net, represent the net unrealized gains and losses to adjust our investment in Five Star and formerto its fair value. For further information regarding our investment in RMR Inc.Five Star, see Note 5 to their fair values.our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest and other income. The increase in interest and other income is primarily due to $7,346$15,748 of funds we received from the U.S. Governmentgovernment pursuant to the CARES Act during the three months ended June 30, 2021 compared to $7,346 received during the three months ended June 30, 2020.
Interest expense. Interest expense increased primarily due to an increase in average borrowings under our revolving credit facility and our issuance in June 2020 of $1,000,000 aggregate principal amount of our 9.75% senior notes due 2025, our issuance in 2025. These increases wereFebruary 2021 of $500,000 aggregate principal amount of our 4.375% senior notes due 2031 and an increase in average borrowings under our revolving credit facility. This increase was partially offset by our redemption in May 2019April 2020 of all $400,000$200,000 of our 3.25%6.75% senior notes due 2019,2020, our prepayment in December 2019June 2020 of our $350,000 term loan, a lower interest rate on our new $250,000 term loan, we obtainedour prepayment in December 2019, which we subsequently repaidFebruary 2021 of our $200,000 term loan and our redemption in June 2020, and decreases in LIBOR, resulting in a decrease in interest expense with respect to2021 of all $300,000 of our floating rate debt.6.75% senior notes due 2021.
Loss on early extinguishment of debt. We recorded a loss on early extinguishment of debt in connection with our redemption of all $300,000 of our 6.75% senior notes due 2021 during the three months ended June 30, 2021. We recorded a loss on early extinguishment of debt in connection with our prepayment of our $250,000 term loan and of a mortgage note during the three months ended June 30, 2020. We recorded a loss on early extinguishment of debt in connection with our prepayment of mortgage notes during the three months ended June 30, 2019.
Income tax (expense) benefitexpense.Income tax (expense) benefitexpense is the result of operating income we earned in certain jurisdictions where we are subject to state income taxes.
Equity in earnings of an investee.  Equity in earnings of an investee represents our proportionate share of earnings from our investment in AIC. The decrease in equity in earnings of an investee is due to the dissolution of AIC in February 2020.
29

32


Six Months Ended June 30, 20202021 Compared to Six Months Ended June 30, 20192020 (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 six months ended June 30, 20202021 to the six months ended June 30, 2019.2020. Our definition of NOI and our reconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”
Six Months Ended June 30,
20212020$ Change% Change
NOI by segment:
Office Portfolio$123,513 $130,681 $(7,168)(5.5)%
SHOP14,504 81,172 (66,668)(82.1)%
Non-Segment19,025 22,425 (3,400)(15.2)%
Total NOI157,042 234,278 (77,236)(33.0)%
Depreciation and amortization134,041 137,255 (3,214)(2.3)%
General and administrative16,668 16,144 524 3.2 %
Acquisition and certain other transaction related costs12,071 750 11,321 nm
Impairment of assets(174)42,409 (42,583)(100.4)%
Gain on sale of properties30,638 2,614 28,024 nm
Gains and losses on equity securities, net(12,188)2,031 (14,219)nm
Interest and other income18,873 7,874 10,999 139.7 %
Interest expense(127,748)(85,624)(42,124)49.2 %
Gain on lease termination— 22,896 (22,896)(100.0)%
Loss on early extinguishment of debt(2,410)(427)(1,983)nm
Loss from continuing operations before income tax expense(98,399)(12,916)(85,483)nm
Income tax expense(429)(683)254 (37.2)%
Net loss(98,828)(13,599)(85,229)nm
Net income attributable to noncontrolling interest(2,899)(2,738)(161)5.9 %
Net loss attributable to common shareholders$(101,727)$(16,337)$(85,390)nm
  Six Months Ended June 30,
  2020 2019 $ Change % Change
NOI by segment:        
Office Portfolio $130,681
 $142,904
 $(12,223) (8.6)%
SHOP 81,172
 116,951
 (35,779) (30.6)%
Non-Segment 22,425
 31,019
 (8,594) (27.7)%
Total NOI 234,278
 290,874
 (56,596) (19.5)%
         
Depreciation and amortization 137,255
 146,154
 (8,899) (6.1)%
General and administrative 16,144
 18,683
 (2,539) (13.6)%
Acquisition and certain other transaction related costs 750
 8,717
 (7,967) (91.4)%
Impairment of assets 42,409
 8,419
 33,990
 nm
Gain on sale of properties 2,614
 17,710
 (15,096) (85.2)%
Dividend income —
 1,846
 (1,846) (100.0)%
Gains and losses on equity securities, net 2,031
 (41,516) 43,547
 104.9 %
Interest and other income 7,874
 352
 7,522
 nm
Interest expense (85,624) (92,023) (6,399) (7.0)%
Gain on lease termination 22,896
 —
 22,896
 nm
Loss on early extinguishment of debt (427) (17) 410
 nm
Loss from continuing operations before income tax expense and equity in earnings of an investee (12,916) (4,747) 8,169
 172.1 %
Income tax expense (683) (99) 584
 nm
Equity in earnings of an investee —
 534
 (534) (100.0)%
Net loss (13,599) (4,312) 9,287
 215.4 %
Net income attributable to noncontrolling interest (2,738) (2,835) (97) (3.4)%
Net loss attributable to common shareholders $(16,337) $(7,147) $9,190
 128.6 %
nm - not meaningful
Office Portfolio:
 
Comparable Properties (1)
All Properties
 As of June 30,As of June 30,
 2021202020212020
Total buildings113 113 118 129 
Total square feet (2)
10,604 10,599 10,927 11,668 
Occupancy (3)
92.3 %93.4 %91.0 %92.0 %
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
(2)Prior periods exclude space remeasurements made subsequent to those periods.
(3)Medical office and life science property occupancy 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.
30

  
Comparable Properties (1)
 All Properties
  As of June 30, As of June 30,
  2020 2019 2020 2019
Total buildings 122
 122
 129
 145
Total square feet (2)
 11,333
 11,333
 11,668
 12,372
Occupancy (3)
 93.8% 94.3% 92.0% 92.5%
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2019, including our life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
(2)Prior periods exclude space remeasurements made subsequent to those periods.
(3)Medical office and life science property occupancy 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.

Six Months Ended June 30,
Comparable (1)
Non-Comparable
Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20212020ChangeChange2021202020212020ChangeChange
Rental income$182,124 $183,068 $(944)(0.5)%$4,003 $11,212 $186,127 $194,280 $(8,153)(4.2)%
Property operating expenses(61,217)(60,329)888 1.5 %(1,397)(3,270)(62,614)(63,599)(985)(1.5)%
NOI$120,907 $122,739 $(1,832)(1.5)%$2,606 $7,942 $123,513 $130,681 $(7,168)(5.5)%
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2020, including the life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
  Six Months Ended June 30,
  
Comparable (1)
 Non-Comparable  
  Properties Results Properties Results Consolidated Properties Results
      $ %         $ %
  2020 2019 Change Change 2020 2019 2020 2019 Change Change
Rental income $191,070
 $190,582
 $488
 0.3 % $3,210
 $17,024
 $194,280
 $207,606
 $(13,326) (6.4)%
Property operating expenses (61,906) (61,150) 756
 1.2 % (1,693) (3,552) (63,599) (64,702) (1,103) (1.7)%
NOI $129,164
 $129,432
 $(268) (0.2)% $1,517
 $13,472
 $130,681
 $142,904
 $(12,223) (8.6)%
(1)Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2019, including our life science property owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale or out of service undergoing redevelopment, if any.
Rental income. Rental income decreased primarily due to our disposition of 2620 properties since January 1, 2019, partially offset by an increase2020, assets being taken out of service and/or undergoing redevelopment and a decrease in rental income at our comparable properties. Rental income increaseddecreased at our comparable properties primarily due to increasesdecreases in occupancy and tax escalation income, and other expense reimbursement income and higher average rents achieved from our new and renewal leasing activitypartially offset by increased parking revenue at certain of our comparable properties partially offset by reduced parking revenueas states and occupancymunicipalities have eased restrictions related to the COVID-19 pandemic.pandemic and tenants' employees have increasingly returned to the office and commercial activity has increased.
Property operating expenses. The decrease in property operating expenses is primarily due to our disposition of 2620 properties since January 1, 2019,2020, partially offset by increasesan increase in property operating expenses at our comparable properties. Property operating expenses at our comparable properties increased primarily due to increases in real estate taxes, insurance expenselandscaping expenses, utility expenses and other direct costs, partially offset by decreases in utility expensesreal estate taxes at certain of our comparable properties.
Net operating income. The change in NOI reflects the net changes in rental income and property operating expenses described above.
SHOP:
 
Comparable Properties (1)
All Properties
 As of and For the Six Months Ended June 30,As of and For the Six Months Ended June 30,
 2021202020212020
Total properties228 228 235 241 
Number of units25,423 25,423 25,423 28,348 
Occupancy70.8 %82.5 %70.2 %80.7 %
Average monthly rate (2)
$4,299 $4,223 $4,467 $4,535 
  
Comparable Properties (1)
 All Properties
  As of and For the Six Months Ended June 30, As of and For the Six Months Ended June 30,
  2020 2019 2020 2019
Total properties 224
 224
 241
 258
# of units 26,389
 26,389
 28,348
 29,724
Occupancy 81.2% 85.2% 80.7% 84.2%
Average monthly rate (2)
 $4,553
 $4,615
 $4,535
 $4,677
(1)(1)Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2019; 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.
  Six Months Ended June 30,
  
Comparable (1)
 Non-Comparable  
   Properties Results Properties Results Consolidated Properties Results
      $ %         $ %
  2020 2019 Change Change 2020 2019 2020 2019 Change Change
Rental income $—
 $70,019
 $(70,019) (100.0)% $—
 $2,694
 $—
 $72,713
 $(72,713) (100.0)%
Residents fees and services 592,164
 201,747
 390,417
 193.5 % 43,909
 15,204
 636,073
 216,951
 419,122
 193.2 %
Property operating expenses (508,506) (158,841) 349,665
 220.1 % (46,395) (13,872) (554,901) (172,713) 382,188
 221.3 %
NOI $83,658
 $112,925
 $(29,267) (25.9)% $(2,486) $4,026
 $81,172
 $116,951
 $(35,779) (30.6)%
(1)Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2019; excludes communities classified as held for sale, if any.
Rental income. Rental income decreased due to the termination of our previously existing master leases with Five Star. Pursuant to the Restructuring Transaction, effective January 1, 2020, our previously existing master leases and management and pooling

agreements with Five Star were terminated and replaced with the New Management Agreements for all of our senior living communities that we have owned and which have been operated by Five Star. See Note 10 to our condensed consolidated financial statements included in Part I, Itemthe same operator continuously since January 1, 2020; 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.
Six Months Ended June 30,
Comparable (1)
Non-Comparable
 Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20212020ChangeChange2021202020212020ChangeChange
Residents fees and services$503,708 $603,350 $(99,642)(16.5)%$205 $32,723 $503,913 $636,073 $(132,160)(20.8)%
Property operating expenses(488,084)(517,781)(29,697)(5.7)%(1,325)(37,120)(489,409)(554,901)(65,492)(11.8)%
NOI$15,624 $85,569 $(69,945)(81.7)%$(1,120)$(4,397)$14,504 $81,172 $(66,668)(82.1)%
(1)Consists of this Quarterly Report on Form 10-Qsenior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2020; excludes communities classified as held for information regarding the Restructuring Transaction.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 increaseddecreased primarily due to the Restructuring Transaction and the resulting change to our management arrangement with Five Star for alldisposition of our senior living communities that it operates and our acquisition of one active adult rental propertynine properties since January 1, 2019, partially offset by2020 and decreases in occupancy and average monthly rates primarily due to the impact of the COVID-19 pandemic at both comparable and non-comparable properties for the six months ended June 30, 20202021 compared to the six months ended June 30, 2019. We expect to experience continued downward pressure on our occupancy and2020, partially offset by
31

increases in average monthly rates as normal resident move-outs may not be replaced by new resident move-insat certain of our comparable properties. Additionally, residents fees and potential residents may increasingly delay or forgo moving into senior living communities as a resultservices at our comparable properties decreased due to the closure of skilled nursing units during the COVID-19 pandemic.six months ended June 30, 2021.
Property operating expenses. Property operating expenses increaseddecreased primarily due to the Restructuring Transaction and the resulting change to our management arrangement with Five Star for alldisposition of our senior living communities that it operates, our acquisition of one active adult rental propertynine properties since January 1, 20192020 and increaseda decrease in property operating expenses at our comparable properties. Property operating expenses at our comparable properties decreased primarily due to decreases in costs associated with staffing and suppliesdietary expenses primarily due to reduced occupancy at our comparable properties as a result of the impact of the COVID-19 pandemic at both comparable and non-comparable properties forthe closure of skilled nursing units during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. As a result of the COVID-19 pandemic, we expect to continue experiencing higher operating expenses primarily driven by increased labor costs and increased cost and consumption of supplies, including personal protective equipment.2021.
Net operating income. The change in NOI reflects the net changes in rental income, residents fees and services and property operating expenses described above.
Non-Segment(1):
 
Comparable Properties (2)
All Properties
 As of and For the Six Months Ended June 30,As of and For the Six Months Ended June 30,
 2021202020212020
Total properties:
Other triple net leased senior living communities29 29 29 32 
Wellness centers10 10 10 10 
Rent coverage:
Other triple net leased senior living communities (3)
1.38 x1.66 x1.38 x1.66 x
Wellness centers (3)
0.94 x1.73 x0.94 x1.73 x
  
Comparable Properties (2)
 All Properties
  As of and For the Six Months Ended June 30, As of and For the Six Months Ended June 30,
  2020 2019 2020 2019
Total properties:        
Other triple net leased senior living communities 29
 29
 32
 43
Wellness centers 10
 10
 10
 10
Rent coverage:        
Other triple net leased senior living communities (3)
 1.66x 1.78x 1.66x 1.78x
Wellness centers (3)
 1.73x 1.93x 1.73x 1.93x
(1)Non-segment operations consists of all of our other operations, including certain senior living communities leased to third party operators other than Five Star and wellness centers, which segment 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.
(2)Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2019; excludes properties classified as held for sale, if any.
(3)All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended March 31, 2020 and 2019 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 during the periods presented.
(1)Non-segment operations consists of all of our other operations, including certain senior living communities leased to third party operators and wellness centers, which segment 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.
  Six Months Ended June 30,
  
Comparable (1)
 Non-Comparable  
  Properties Results Properties Results Consolidated Properties Results
      $ %         $ %
  2020 2019 Change Change 2020 2019 2020 2019 Change Change
Rental income $20,505
 $21,601
 $(1,096) (5.1)% $1,920
 $9,418
 $22,425
 $31,019
 $(8,594) (27.7)%
NOI $20,505
 $21,601
 $(1,096) (5.1)% $1,920
 $9,418
 $22,425
 $31,019
 $(8,594) (27.7)%
(2)Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2020; excludes properties classified as held for sale, if any.
(1)Consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2019; excludes properties classified as held for sale, if any.

(3)All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended March 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, during the periods presented.
Six Months Ended June 30,
Comparable (1)
Non-Comparable
Properties ResultsProperties ResultsConsolidated Properties Results
$%$%
 20212020ChangeChange2021202020212020ChangeChange
Rental income$19,025 $20,505 $(1,480)(7.2)%$— $1,920 $19,025 $22,425 $(3,400)(15.2)%
NOI$19,025 $20,505 $(1,480)(7.2)%$— $1,920 $19,025 $22,425 $(3,400)(15.2)%
(1)Consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2020; excludes properties classified as held for sale, if any.
Rental income. Rental income decreased primarily due to the sale of 11three senior living communities leased to private operators the transfer of one senior living community we own from a triple net leased senior living community to a managed senior living community now included in our SHOP segment since January 1, 20192020 and a decrease in rental income at our comparable properties, partially offset by increased rents resulting from our purchase of improvements at our comparable properties since January 1, 2019.2020. Rental income decreased at our comparable properties primarily due to a tenant default under leases for sixlease renewals with tenants of our wellness centers.centers at lower average rental rates. As a result of the COVID-19 pandemic, many of our wellness centers havehad been ordered closed by state or local executive orders. In April 2020,February 2021, we agreedentered into lease renewals with the tenant of six of our wellness centers for a five year term at lower cash rental rates until deferred rents become due. We have elected to deferrecognize rental income from this tenant as rent payments are received. In October 2020, the lease for our other four wellness centers in the second quarter of 2020 in exchangewas renewed for the tenant agreeing to pay the deferred rents ina 12 equal monthly installments beginning later in 2020. We continue to evaluate our options for our wellness centers operated by tenants in default of their lease obligations.year term at a lower average rental rate.
Net operating income. The change in NOI reflects the net changes in rental income described above.
32

Consolidated:
References to changes in the income and expense categories below relate to the comparison of consolidated results for the six months ended June 30, 2020,2021, compared to the six months ended June 30, 2019.2020.
Depreciation and amortization expense. Depreciation and amortization expense decreased primarily due to our disposition of 5832 properties, certain depreciable leasing related assets becoming fully depreciated and certain of our acquired resident agreements becoming fully amortized since January 1, 2019,2020, partially offset by our acquisition of an active adult rental property and the purchase of capital improvements at certain of our properties since January 1, 2019.2020.
General and administrative expense. General and administrative expense decreasedincreased primarily due to a decreasean increase in our base business management fees expense as a result of lowerhigher trading prices for our common shares during the six months ended June 30, 20202021 compared to the six months ended June 30, 2019.2020.
Acquisition and certain other transaction related costs. AcquisitionFor the six months ended June 30, 2021, acquisition and certain other transaction related costs primarily represent costs incurred in connection with the Master Management Agreement. For the six months ended June 30, 2020, acquisition and certain other transaction related costs primarily represent costs incurred in connection with the Restructuring Transaction.
Impairment of assets. For further information about our asset impairment charges,regarding the Master Management Agreement or the Restructuring Transaction, see Note 39 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Impairment of assets. For information about our asset impairment charges, see Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.
Gain on sale of properties. Gain on sale of properties is the net result of our sale of certain senior living communities and officeof our properties during the six months ended June 30, 20202021 and 2019.2020. For further information regarding gain on sale of properties, see Note 32 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Dividend income. The decrease10-Q and Note 3 to our consolidated financial statements included in dividend income is the resultPart IV, Item 15 of our sale on July 1, 2019 of all of the RMR Inc. class A common stock that we owned.Annual Report.
Gains and losses on equity securities, net. Gains and losses on equity securities, net, represent the net unrealized gains and losses to adjust our investment in Five Star and formerto its fair value. For further information regarding our investment in RMR Inc.Five Star, see Note 5 to their fair values.our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest and other income. The increase in interest and other income is primarily due to $7,346$18,181 of funds we received from the U.S. Governmentgovernment pursuant to the CARES Act during the six months ended June 30, 2021 compared to $7,346 received during the six months ended June 30, 2020.
Interest expense. Interest expense decreasedincreased primarily due to our redemption in May 2019 of all $400,000 of our 3.25% senior notes due 2019, our prepayment in December 2019 of our $350,000 term loan, a lower interest rate on our new $250,000 term loan we obtained in December 2019, which we subsequently repaid in June 2020, and decreases in LIBOR, resulting in a decrease in interest expense with respect to our floating rate debt. These decreases were partially offset by an increase in average borrowings under our revolving credit facility and our issuance in June 2020 of $1,000,000 aggregate principal amount of our 9.75% senior notes due 2025 and our issuance in 2025.February 2021 of $500,000 aggregate principal amount of our 4.375% senior notes due 2031. This increase was partially offset by a decrease in average borrowings under our revolving credit facility, our redemption in April 2020 of all $200,000 of our 6.75% senior notes due 2020, our prepayment in June 2020 of our $250,000 term loan, our prepayment in February 2021 of our $200,000 term loan and our redemption in June 2021 of all $300,000 of our 6.75% senior notes due 2021.
Gain on lease termination. Gain on lease termination represents the gain recognized in connection with the Restructuring Transaction. For information regarding the Restructuring Transaction, see Note 109 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Loss on early extinguishment of debt. We recorded a loss on early extinguishment of debt in connection with the amendments to our credit and term loan agreements, our prepayment of our $200,000 term loan and our redemption of all $300,000 of our 6.75% senior notes due 2021 during the six months ended June 30, 2021. We recorded a loss on early extinguishment of debt in connection with our prepayment of our $250,000 term loan and mortgage notes during the six months ended June 30, 2020. We recorded a loss on early extinguishment of debt in connection with our prepayment of mortgage notes during the six months ended June 30, 2019.
Income tax expense.Income tax expense is the result of operating income we earned in certain jurisdictions where we are subject to state income taxes.
33
Equity in earnings of an investee.  Equity in earnings of an investee represents our proportionate share of earnings from our investment in AIC. The decrease in equity in earnings of an investee is due to the dissolution of AIC in February 2020.

Non-GAAP Financial Measures (dollars in thousands, except per share amounts)
We present certain "non-GAAP financial measures" within the meaning of applicable 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 six months ended June 30, 20202021 and 2019.2020. 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 as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income (loss) and net income (loss) attributable to common shareholders as presented in our condensed consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss) and net income (loss) attributable to common shareholders. We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties.
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, loss on impairment of real estate assets and gains or losses on equity securities, net, if any, including adjustments to reflect our proportionate share of FFO of our equity method investment in Five Star, plus real estate depreciation and amortization 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 and include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as an 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.below. 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 debt, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance, and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO 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 six months ended June 30, 20202021 and 20192020 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.

34

 Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30,
 2020 2019 2020 2019 2021202020212020
Net loss attributable to common shareholders $(26,072) $(37,229) $(16,337) $(7,147)Net loss attributable to common shareholders$(34,222)$(26,072)$(101,727)$(16,337)
Depreciation and amortization 68,825
 73,924
 137,255
 146,154
Depreciation and amortization67,888 68,825 134,041 137,255 
Loss (gain) on sale of properties 168
 (17,832) (2,614) (17,710)
(Gain) loss on sale of properties(Gain) loss on sale of properties(30,760)168 (30,638)(2,614)
Impairment of assets 31,175
 2,213
 42,409
 8,419
Impairment of assets— 31,175 (174)42,409 
Gains and losses on equity securities, net (11,974) 64,448
 (2,031) 41,516
Losses (gains) on equity securities, netLosses (gains) on equity securities, net3,849 (11,974)12,188 (2,031)
FFO adjustments attributable to noncontrolling interest (5,275) (5,297) (10,550) (10,594)FFO adjustments attributable to noncontrolling interest(5,275)(5,275)(10,548)(10,550)
Adjustments to reflect our share of FFO attributable to an equity method investmentAdjustments to reflect our share of FFO attributable to an equity method investment(3,005)1,601 (969)(2,814)
FFO attributable to common shareholders 56,847
 80,227
 148,132
 160,638
FFO attributable to common shareholders(1,525)58,448 2,173 145,318 
        
Acquisition and certain other transaction related costs 87
 903
 750
 8,717
Acquisition and certain other transaction related costs12,071 87 12,071 750 
Gain on lease termination —
 —
 (22,896) —
Gain on lease termination— — — (22,896)
Loss on early extinguishment of debt 181
 17
 427
 17
Loss on early extinguishment of debt370 181 2,410 427 
Adjustments to reflect our share of Normalized FFO attributable to an equity method investmentAdjustments to reflect our share of Normalized FFO attributable to an equity method investment1,299 993 1,384 9,127 
Normalized FFO attributable to common shareholders $57,115
 $81,147
 $126,413
 $169,372
Normalized FFO attributable to common shareholders$12,215 $59,709 $18,038 $132,726 
        
Weighted average common shares outstanding (basic) 237,700
 237,580
 237,684
 237,574
Weighted average common shares outstanding (basic)237,871 237,700 237,853 237,684 
Weighted average common shares outstanding (diluted) 237,700
 237,580
 237,684
 237,574
Weighted average common shares outstanding (diluted)237,871 237,700 237,853 237,684 
        
Per common share data (basic and diluted):        Per common share data (basic and diluted):
Net loss attributable to common shareholders $(0.11) $(0.16) $(0.07) $(0.03)Net loss attributable to common shareholders$(0.14)$(0.11)$(0.43)$(0.07)
FFO attributable to common shareholders $0.24
 $0.34
 $0.62
 $0.68
FFO attributable to common shareholders$(0.01)$0.25 $0.01 $0.61 
Normalized FFO attributable to common shareholders $0.24
 $0.34
 $0.53
 $0.71
Normalized FFO attributable to common shareholders$0.05 $0.25 $0.08 $0.56 
Distributions declared $0.01
 $0.15
 $0.16
 $0.54
Distributions declared$0.01 $0.01 $0.02 $0.16 
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 use NOI to evaluate individual and company widecompany-wide property level performance. Other real estate companies and REITs may calculate NOI differently than we do.

35

The calculation of NOI by reportable segment is included above in this Item 2. The following table includes the reconciliation of net income (loss) to NOI for the three and six months ended June 30, 20202021 and 2019,2020, respectively.
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Reconciliation of Net Income (Loss) to NOI:    
Net loss$(32,645)$(24,742)$(98,828)$(13,599)
Income tax expense191 1,126 429 683 
Loss from continuing operations before income tax expense(32,454)(23,616)(98,399)(12,916)
Loss on early extinguishment of debt370 181 2,410 427 
Gain on lease termination— — — (22,896)
Interest expense67,657 43,974 127,748 85,624 
Interest and other income(16,038)(7,736)(18,873)(7,874)
Losses (gains) on equity securities, net3,849 (11,974)12,188 (2,031)
(Gain) loss on sale of properties(30,760)168 (30,638)(2,614)
Impairment of assets— 31,175 (174)42,409 
Acquisition and certain other transaction related costs12,071 87 12,071 750 
General and administrative9,126 7,312 16,668 16,144 
Depreciation and amortization67,888 68,825 134,041 137,255 
Total NOI$81,709 $108,396 $157,042 $234,278 
Office Portfolio NOI$61,483 $64,617 $123,513 $130,681 
SHOP NOI10,636 33,082 14,504 81,172 
Non-Segment NOI9,590 10,697 19,025 22,425 
Total NOI$81,709 $108,396 $157,042 $234,278 
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Reconciliation of Net Income (Loss) to NOI:  
  
  
  
Net loss $(24,742) $(35,816) $(13,599) $(4,312)
         
Equity in earnings of an investee —
 (130) —
 (534)
Income tax expense (benefit) 1,126
 (35) 683
 99
Loss from continuing operations before income tax (expense) benefit and equity in earnings of an investee (23,616) (35,981) (12,916) (4,747)
Loss on early extinguishment of debt 181
 17
 427
 17
Gain on lease termination —
 —
 (22,896) —
Interest expense 43,974
 46,412
 85,624
 92,023
Interest and other income (7,736) (238) (7,874) (352)
Gains and losses on equity securities, net (11,974) 64,448
 (2,031) 41,516
Dividend income —
 (923) —
 (1,846)
Loss (gain) on sale of properties 168
 (17,832) (2,614) (17,710)
Impairment of assets 31,175
 2,213
 42,409
 8,419
Acquisition and certain other transaction related costs 87
 903
 750
 8,717
General and administrative 7,312
 8,867
 16,144
 18,683
Depreciation and amortization 68,825
 73,924
 137,255
 146,154
Total NOI $108,396
 $141,810
 $234,278
 $290,874
         
Office Portfolio NOI $64,617
 $71,860
 $130,681
 $142,904
SHOP NOI 33,082
 54,638
 81,172
 116,951
Non-Segment NOI 10,697
 15,312
 22,425
 31,019
Total NOI $108,396
 $141,810
 $234,278
 $290,874

LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of cash to meet operating and capital expenses, pay debt service obligations and make distributions to our shareholders are the operating cash flows we generate as rental income from our leased properties, residents fees and services revenues from our managed communities, borrowings under our revolving credit facility and proceeds from the disposition of certain properties. We believe that these sources will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders 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 generally;its impact on our tenants' businesses;
•our ability to maintain or increase the occupancy of, and the rental rates at, our properties or reduce the extent of the declines in occupancy and rental rates in response to the COVID-19 pandemic and current economic conditions, particularly at our senior living communities;
•our ability to control operating expenses and capital expenses at our properties, including increased operating expenses that we may incur in response to the COVID-19 pandemic; and
our•each manager's ability to operatemanage our managed senior living communities, duringincluding throughout the COVID-19 pandemic, and generally so as to maintain or increase our returns or, during the COVID-19 pandemic,and to reduce the extent of the declines in our returns.
We continue to carefully monitor the developments of the COVID-19 pandemic and itsthe resulting economic conditions and their impact on our tenants, managers, operators and other stakeholders, including at our senior living communities.

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In response to the operating challenges and uncertain economic challenges as a result of the COVID-19 pandemic, in June 2020,February 2021, we issued $1.0 billion$500.0 million aggregate principal amount of our 9.75%4.375% senior notes due 2025.2031. We used the net proceeds from this offering to prepay in full our $250.0$200.0 million unsecured term loan that was scheduledand used the remaining net proceeds and cash on hand to matureredeem all of our outstanding 6.75% senior notes due 2021 for a redemption price equal to the principal amount of $300.0 million plus accrued and unpaid interest of $10.1 million in June 2021, when these notes became redeemable with no prepayment premium. In addition, on June 12, 2020 and to reduce amounts outstandingMarch 31, 2021, we borrowed $800.0 million under our revolving credit facility. Additionally, beginningfacility as a precautionary measure to increase our cash position and preserve financial flexibility in light of continued uncertainties related to the second quarter of 2020,COVID-19 pandemic. Although we reducedhave taken steps to enhance our quarterly cash distribution rateability to maintain sufficient liquidity, a protracted negative economic impact resulting from the COVID-19 pandemic may cause further increased pressure on our common sharesability to $0.01 per share.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 August 3, 2020, we granted requests for certain of our tenants to defer rent payments totaling $5.5 million with respect to leases that represent, as of June 30, 2020, approximately 9.4%2021, our ratio of consolidated income available for debt service to debt service was below the 1.5x incurrence requirement under our annualized rental income. These tenantsrevolving credit facility and our public debt covenants as the effects of the COVID-19 pandemic continued to adversely impact our operations. We are obligatednot allowed to pay, in most cases,incur additional debt while this ratio is below 1.5x. For additional responses and measures taken relating to the deferred rents in 12 equal monthly installments commencing in September 2020. For the three months ended June 30, 2020, we collected approximately 99%COVID-19 pandemic, see Part II, Item 7, "Management's Discussion and Analysis of our contractual rents due from tenantsFinancial Condition and Results of Operations—Liquidity and Capital Resources” in our Office Portfolio segment.Annual Report and Note 4 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
During the six months ended June 30, 2020,2021, we sold 12five properties for an aggregate sales price of $68.2 million, excluding closing costs. In July and August 2020, we sold four properties for an aggregate sales price of $5.2 million, excluding closing costs, and as of August 3, 2020, we had 24 properties under agreements to sell for an aggregate sales price of approximately $231.7$104.5 million, excluding closing costs. The impact of the COVID-19 pandemic and the resulting economic conditions is likelymeasures we have taken to cause many of these property salesenhance our ability to be delayed or occur over a protracted period of time or not at all. The measures noted above and anticipated sales of our propertiesmaintain sufficient liquidity may not sufficiently offset the decrease in cash flows from operations and essential capital investments we make, particularly during the COVID-19 pandemic, in which may negatively impactcase our liquidity and result in increased borrowings under our revolving credit facility.would be negatively impacted.
The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows (dollars in thousands):
 Six Months Ended June 30, Six Months Ended June 30,
 2020 2019 20212020
Cash and cash equivalents and restricted cash at beginning of period $52,224
 $70,071
Cash and cash equivalents and restricted cash at beginning of period$90,849 $52,224 
Net cash provided by (used in):    Net cash provided by (used in):
Operating activities 110,673
 125,874
Operating activities27,046 110,673 
Investing activities (7,397) (101,634)Investing activities19,589 (7,397)
Financing activities (61,732) (33,145)Financing activities770,605 (61,732)
Cash and cash equivalents and restricted cash at end of period $93,768
 $61,166
Cash and cash equivalents and restricted cash at end of period$908,089 $93,768 
Our Operating Liquidity and Resources
We generally receive minimum rents from our tenants monthly or quarterly, we receive residents fees and services revenues, net of expenses, from our managed senior living communities monthly and we receive percentage rents from certain of our senior living community tenants monthly, quarterly or annually.
The decrease in cash provided by operating activities for the six months ended June 30, 20202021 compared to the prior period was primarily due to the Restructuring Transaction andimpact of the results fromCOVID-19 pandemic on the converted managed communities for the 2020 period being less than our rental income for thesesenior living communities in the 2019 period, as well asour SHOP segment, along with reduced NOI as a result of dispositions of properties during 2019 and 2020 and resulting changes in our working capital assets2021. As previously disclosed, we expect that the transition of the management of the 108 senior living communities from Five Star to other third party managers will be completed before year end 2021. We also expect to incur costs related to retention and liabilities from the converted managedother transition costs for these communities, which are now includedcosts may be significant. For the three and six months ended June 30, 2021, we recorded $11.9 million of these costs to acquisition and certain other transaction related costs in our condensed consolidated balance sheets commencing in the 2020 period. Pursuant to the Restructuring Transaction, effective January 1, 2020, our previously existing master leases and management and pooling agreements with Five Star were terminated and replaced with the New Management Agreements for allstatements of our senior living communities operated by Five Star, as described in Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. The decreases noted above are partially offset by a decrease in business management fee expenses in the 2020 period compared to the 2019 period, particularly as a result of no business management incentive fee expense having been paid in the 2020 period.comprehensive income (loss).
As noted elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, the COVID-19 pandemic has had a substantial adverse impact on the global economy.our industries. Depending on the duration and severity of this pandemic and the resulting economic downturn,conditions, our tenants', managers' and operators' businesses may become significantly adversely impacted,affected, which may result in theirour tenants failing to pay rent to us or to renewnot renewing their leases upon expiration and we will realizein our senior living community managers realizing decreased returns from our senior living communities. We haveAs of August 2, 2021, we granted requests for certain of our tenants to defer rent payments totaling $5.5$1.8 million. As of June 30, 2021, we recognized an increase in our accounts receivable balance related to these deferred rent payments of $0.4 million. These tenants are obligated to pay, in most cases, the deferred rents in 12 equal monthly installments, commencing in September 2020.which payments have commenced. For the three months ended June 30, 2020,2021, we collected approximately 99% of our contractual rents due from tenants in our Office Portfolio segment. As of June 30, 2020, we recognized an increase in our accounts receivable balance related toWhile these deferred rent paymentsamounts have not negatively impacted our results of $3.5 million.operations, the deferred rents have temporarily reduced our operating cash
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flows. We are handling requests from our tenants for relief on an individual basis. We also believe that, other than inAs it relates to our SHOP segment, overall tenant retention levels may increasewe have also deferred approximately $22.2 million of payroll taxes as a resultallowed under the CARES Act. These deferred payroll taxes were included in other liabilities in our condensed consolidated balance sheet as of June 30, 2021 and we expect to pay these deferred taxes in the COVID-19 pandemic.

second half of 2021.
Our Investing Liquidity and Resources
The decreasechange in cash used inprovided by (used in) investing activities for the six months ended June 30, 20202021 compared to the prior year period was primarily due to higher proceeds from the sale of real estate properties in the 20202021 period compared to the 20192020 period, partially offset by an increase in real estate improvements in the 2021 period compared to the 2020 period.
The following is a summary of cash used for capital expenditures, development, redevelopment and other activities for the periods presented (dollars in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Office Portfolio segment capital expenditures:
   Lease related costs (1)
$10,044 $3,918 $18,402 $8,882 
   Building improvements (2)
4,437 3,708 6,613 6,373 
SHOP segment fixed assets and capital improvements19,283 8,505 41,813 21,423 
Recurring capital expenditures$33,764 $16,131 $66,828 $36,678 
Development, redevelopment and other activities - Office Portfolio segment (3)
$9,689 $14,941 $22,407 $23,155 
Development, redevelopment and other activities - SHOP segment (3)
5,345 6,570 11,437 14,999 
Total development, redevelopment and other activities$15,034 $21,511 $33,844 $38,154 
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Office Portfolio segment capital expenditures:        
Lease related costs (1)
 $3,918
 $3,152
 $8,882
 $12,284
Building improvements (2)
 3,708
 2,929
 6,373
 3,924
SHOP segment fixed assets and capital improvements 8,505
 3,487
 21,423
 6,799
Recurring capital expenditures $16,131
 $9,568
 $36,678
 $23,007
         
Development, redevelopment and other activities - Office Portfolio segment (3)
 $14,941
 $9,285
 $23,155
 $15,344
Development, redevelopment and other activities - SHOP segment (3)(4)
 6,570
 9,798
 14,999
 18,877
Total development, redevelopment and other activities $21,511
 $19,083
 $38,154
 $34,221
(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.
(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.
(4)Prior period includes capital improvements for communities that were previously leased to Five Star.
(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.
During the three and six months ended June 30, 2020,2021, we invested $0.5$0.6 million and $0.8 million, respectively, in revenue producing capital improvements at certain of our triple net leased senior living communities leased to private operators, and, as a result, annual rentsrent payable to us increased by approximately $0.02$0.04 million and $0.04$0.05 million, respectively, pursuant to the terms of the applicable leases. We used cash on hand and borrowings under our revolving credit facility to fund these purchases. These capital improvement amounts are not included in the table above.
During the three months ended June 30, 2020, commitments made for expenditures in connection with leasing space in our medical office and life science properties, 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 8
 52
 60
Total leasing costs and concession commitments (1)
 $379
 $343
 $722
Total leasing costs and concession commitments per square foot (1)
 $50.17
 $6.62
 $12.16
Weighted average lease term (years) (2)
 7.2
 5.8
 6.0
Total leasing costs and concession commitments per square foot per year (1)
 $7.01
 $1.13
 $2.02
(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 June 30, 2020, including straight line rent adjustments and estimated recurring expense reimbursements, and excluding lease value amortization.
We plan to continue investing essential capital in our senior living communities to better position these communities in their respective markets in order to increase our returns in future years but certain projects have been delayed and may continue

to be delayed in the future due to COVID-19 related community access restrictions and other state and local ordinances that may limit ouryears. Our ability to proceed with these projects on a timely basis.make capital investments is currently limited to $350.0 million per year pursuant to our credit agreement through the Amendment Period.
As of June 30, 2020,2021, we have estimated unspent leasing related obligations at our triple net leased senior living communities and our medical office and life science properties of approximately $18.9 million.$49.6 million, of which we expect to spend approximately $43.4 million during the 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 and proceeds from the disposition of certain properties.
Our redevelopment in San Diego, CA has been substantially completed and we expect to incur additional leasing costs in 2021 to lease the remaining available space. During the six months ended June 30, 2021, we entered into five leases with a weighted (by annualized rental income) average lease term of approximately 11 years at a weighted average rental rate that is approximately 22% higher than the prior rental rate for the same space at this San Diego, CA property. As of August 2, 2021,
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we have executed new leases for an aggregate 85% of the leasable square footage at this property. We are currently in the process of redeveloping fourtwo properties in our Office Portfolio located in Tempe, AZ San Diego, CA,and Lexington, MA and Washington D.C.MA. These redevelopment projects may require significant capital expenditures and time to complete. We have continued to progress on theseour redevelopments during 2020.2021 and continue to assess opportunities to redevelop other properties in our portfolio.
We expect disruptionsIn June 2021, we terminated a previously announced agreement to future disposition activity dueacquire a property which is adjacent to uncertain market conditions as a resultone of our existing properties located in Silver Springs, Maryland.
As noted above, our ability to make capital investments is currently limited pursuant to our credit agreement through the COVID-19 pandemic and resulting economic conditions.Amendment Period. For further information regarding our acquisitions and dispositions, see Note 32 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Pursuant to the Restructuring Transaction, on January 1, 2020, Five Star issued 10,268,158 Five Star common shares to us and an aggregate of 16,118,849 Five Star common shares to our shareholders of record as of December 13, 2019. In consideration of these share issuances, we provided Five Star with $75.0 million of additional consideration. For further information regarding the Restructuring Transaction, see Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Our Financing Liquidity and Resources
The increasechange in cash used inprovided by (used in) financing activities for the six months ended June 30, 20202021 compared to the prior period was primarily due to our repayment in June 2020 of our $250.0 million senior unsecured term loan and increased repayments ofnet borrowings under our revolving credit facility, net proceeds from our issuance in February 2021 of $500.0 million aggregate principal amount of our 4.75% senior notes, decreased term loan repayment amounts in the 20202021 period compared to the 20192020 period, and a reduction in distributions paid to our shareholders in the 2021 period, partially offset by increased senior unsecured notes repayment amounts in the 2021 period compared to the 2020 period and net proceeds from our issuance in June 2020 of $1.0 billion aggregate principal amount of our 9.75% senior notes and a reduction in distributions paid to our shareholders in the 2020 period.notes.
As of June 30, 2020,2021, we had $78.5$849.1 million of cash and cash equivalents and $1.0 billion 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. The maturity date of our revolving credit facility is January 15, 2022, and, subject to the payment of an extension fee and meeting other conditions, we have the optiontwo, one year options to extend the maturity date of the facility for an additional year.to 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. The facility also includes a feature pursuant to which, following the termination of the Amendment Period, in certain circumstances maximum borrowings under the facility may be increased to up to $2.0 billion. At June 30, 2020,2021, our revolving credit facility required interest to be paid on borrowings at the annual rate of 2.6%2.9%, plus a facility fee of 30 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. On March 31, 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. As of June 30, 20202021 and August 3, 2020,2, 2021, we had no outstanding borrowingswere fully drawn under our revolving credit facility.
In June 2020,January 2021, we amended our credit and term loan agreements. The amendments modify agreements in order to provide us with certain flexibility in light of continued uncertainties related to the COVID-19 pandemic. Pursuant to the amendments:
•certain of the financial covenants under theseour credit and term loan agreements, including covenants that require us to maintain certain financial ratios, have been waived through the Amendment Period, during which, subjectPeriod;
•the revolving credit facility commitments have been reduced from $1.0 billion to $800.0 million;
•we pledged certain conditions, we will continueequity interests of subsidiaries owning properties to have access to undrawn amountssecure our obligations under our revolving credit facility. We have the rightand term loan agreements and agreed to terminateprovide first mortgage liens on 62 medical office and life science properties with an aggregate gross book value of real estate assets of $1.0 billion as of June 30, 2021 to secure our obligations, which pledges and/or mortgage liens may be removed or new ones may be added during the Amendment Period priorbased on outstanding debt amounts, among other things;
•we have the ability to June 30, 2021, subjectfund $350.0 million of capital expenditures per year and we are restricted in our ability to certain conditions. During the Amendment Period:acquire real property as defined in our credit agreement;
our•the interest rate premium over LIBOR under our revolving credit facility and term loan increased by 5030 basis points;
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•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 $200.0 million will remain in place during the Amendment Period; and
•we willare generally be required to apply the net cash proceeds from the disposition of assets, capital markets transactions, and debt financings or COVID-19 government stimulus programs, if allowed, to the repayment of any amounts outstanding loans under our revolving credit facility, if any;facility.
we will be subject to certain additional covenants, including additional restrictions on our ability to incur indebtedness (with exceptions for borrowings under our revolving credit facility and certain other categories of secured and

unsecured indebtedness), and to acquire real property or make other investments (with exceptions for, among other things, certain categories of capital expenditures and costs);
we will be required to maintain unrestricted liquidity (unrestricted cash and undrawn availability under our revolving credit facility) of not less than $200.0 million; and
our ability to pay distributions on our common shares will be limited to paying a cash dividend of $0.01 per common share per quarter and amounts required to maintain our qualification for taxation as a REIT and to avoid the payment of certain income and excise taxes.
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 debt in connection with our acquisitions of properties or place new debt on properties we own.
We 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. At June 30, 2020, this term loan required interest to be paid at the annual rate of 2.4%. The interest rate premium is subject to adjustment based upon changes to our credit ratings.
During the six months ended June 30, 2020,2021, we paid quarterly cash distributions to our shareholders totaling approximately $38.1$4.8 million using existing cash balances and borrowings under our revolving credit facility.balances. On July 16, 2020,15, 2021, we declared a quarterly distribution payable to common shareholders of record on July 27, 2020,26, 2021 in the amount of $0.01 per share, or approximately $2.4 million. We expect to pay this distribution on or about August 20, 202019, 2021 using cash on hand. For further information regarding the distribution we paid during 2020,2021, see Note 87 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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 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 recently downgraded, 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. As noted elsewhere in this Quarterly Report on Form 10-Q, itIt is uncertain what the duration and severity of the currentCOVID-19 pandemic and its economic downturn resulting from the COVID-19 pandemicimpact will be. A protracted economic downturn may have various negative consequences including a decline in financing availability and increased costs for financing. Further, suchthose 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 February 2020, we prepaid a mortgage note secured by one of our life science properties with an outstanding principal balance of approximately $1.6 million, a maturity date in March 2026 and an annual interest rate of 6.25%. We prepaid this mortgage using cash on hand and borrowings under our revolving credit facility.
In March 2020, our issuer credit rating was downgraded from BB+ to BBby S&P Global, or S&P, following our fourth quarter 2019 earnings release and the beginning of the awareness of the possible impact of the COVID-19 pandemic in the United States. Our unsecured debt rating was downgraded below BBB- by S&P and, as a result, the interest rate premiums under our revolving credit facility and then existing term loans increased effective April 1, 2020.
In April 2020, we redeemed all of our outstanding 6.75% senior notes due 2020 for a redemption price equal to the principal amount of $200.0 million plus accrued and unpaid interest of $6.75 million. We funded this redemption with cash on hand and borrowings under our revolving credit facility.

In May 2020, Moody's Investors Service, or Moody's, downgraded our senior unsecured debt rating from Ba1 to Ba2. However, Moody's assigned a Ba1 rating to our recently issued 9.75% senior notes due 2025.
Also in May 2020, we prepaid a mortgage note secured by one of our medical office properties with an outstanding principal balance of approximately $1.2 million, a maturity date in January 2022 and an annual interest rate of 7.49%. We prepaid this mortgage using cash on hand and borrowings under our revolving credit facility.
In June 2020,2021, we issued $1.0 billion$500.0 million aggregate principal amount of our 9.75%4.375% senior notes due 20252031 in an underwritten public offering. These notes are guaranteed by all of our subsidiaries, except for certain excluded subsidiaries.subsidiaries, including pledged subsidiaries under our credit agreement. We used the net proceeds from this offering to prepay in full our $250.0$200.0 million unsecured term loan thatwhich was scheduled to mature in September 2022. In June 2021, we used the remaining net proceeds from this offering and cash on June 12, 2020hand to redeem all of our outstanding 6.75% senior notes due 2021 for a redemption price equal to the principal amount of $300.0 million plus accrued and unpaid interest of $10.1 million, when these notes became redeemable with no prepayment premium. Our next significant debt maturity does not occur until $250.0 million of our senior notes mature in May 2024.
In February 2021, Moody's Investors Service downgraded our senior unsecured debt rating from Ba2 to reduce amounts outstanding underB1 and our revolving credit facility.9.75% senior notes due 2025 rating from Ba1 to Ba3 and assigned a Ba3 rating to our 4.375% senior notes due 2031, and Standard & Poor's Ratings Services downgraded our senior unsecured debt rating from BB to BB- and our 9.75% senior notes due 2025 rating from BB+ to BB and assigned a BB rating to our 4.375% senior notes due 2031.
For further information regarding our outstanding debt, see Note 54 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 and term loan agreementsagreement described above, our strategy related to property acquisitions and dispositions is materially unchanged from that disclosed in our Annual Report. 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. Further, suchthose plans may continue to be further impacted by the scope and duration of the COVID-19 pandemic.
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Off Balance Sheet ArrangementsTable of Contents
As of June 30, 2020, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 
Debt Covenants
Our principal debt obligations at June 30, 20202021 were: (1) $2.7outstanding borrowings under our $800.0 million revolving credit facility; (2) $2.9 billion outstanding principal amount of senior unsecured notes; (2) $200.0 million outstanding principal amount under our term loan; and (3) $685.4$683.5 million aggregate principal amount of mortgage notes (excluding premiums, discounts and net debt issuance costs) secured by seven properties. For further information regarding our indebtedness, see Note 54 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Our senior unsecured notes are governed by our senior unsecured notes indentures and their supplements. Our credit 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 credit 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 credit and term loan agreementsagreement also contain covenants that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts and require us to maintain various financial ratios, and our credit and term loan agreements containagreement contains covenants that restrict our ability to make distributions to our shareholders in certain circumstances. As of June 30, 2020,2021, 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 not allowed to incur additional debt while this ratio is below 1.5x, 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 in light of continued uncertainties related to the COVID-19 pandemic. The proceeds from this borrowing may be used for general business purposes. As of June 30, 2021, we believe we were in compliance with all of the other covenants under our senior unsecured notes indentures and their supplements, our credit 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 economic impact resulting from the COVID-19 pandemic 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 would not be able to satisfy our financial or other covenants, we would seek waivers, amendments, or amendmentsin the case of our public debt covenants, draw upon any undrawn amounts if again available from our revolving credit facility prior to any covenant violation, consistent with our previous approach in March 2021, which may lead to increased costs and interest rates, additional restrictive covenants or other lender protections. We can provide no assurance that we would be able to obtain these waivers or amendments or repay the related debt facilities when due, which would lead to an event of default or potential acceleration of amounts due on our outstanding debt.
Neither our senior unsecured notes indentures and their supplements, nor our credit and term loan agreements,agreement, contain provisions for acceleration which could be triggered by our debt ratings. However, under our credit and term loan agreements,agreement, our senior unsecured debt ratings are used to determine the fees and interest rates we pay. Accordingly, following our debt ratings downgrades, our interest expense and related costs under our credit and term loan agreements haveagreement 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.

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 indentures and supplements entered in February 2016, February 2018, June 2020 and June 2020)February 2021). Similarly, our credit 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 on the property owned by our 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.
Supplemental Guarantor Information
In March 2020, the SEC released Release No. 33-10762, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities, or Release 33-10762. Release 33-10762 amendsamended the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rules 3-10 and 3-16, permitting registrants to provide certain alternative financial disclosures and non-financial disclosures in lieu of
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separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities if certain conditions are met. The amendments in Release 33-10762 are generally effective for filings on or after January 4,
On May 28, 2020, we issued $1.0 billion of our 9.75% senior notes due 2025. On February 3, 2021, with early adoption permitted. We adopted the new disclosure requirements permitted under Release 33-10762 effective for the period ended March 31, 2020.
Allwe issued $500.0 million of our 4.375% senior notes due 2031. As of June 30, 2021, all $1.0 billion of our 9.75% senior notes due 2025 areand 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.subsidiaries, including pledged subsidiaries under our credit agreement. The notes and the guarantees will beare 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 will beare 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 $1.85$1.35 billion of senior unsecured notes do not have the benefit of any guarantees.guarantees as of June 30, 2021.
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 will 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 2025 and our 4.375% senior notes due 2031 and the respective guarantees will beare 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:non-guarantor (dollars in thousands):
As of June 30, 2021As of December 31, 2020
Real estate properties, net$4,092,063 $4,097,573 
Other assets, net1,105,632 285,747 
Total assets$5,197,695 $4,383,320 
Indebtedness, net$3,610,731 $2,815,049 
Other liabilities285,967 252,956 
Total liabilities$3,896,698 $3,068,005 
Six Months Ended June 30, 2021
Revenues$575,540 
Expenses625,053 
Loss from continuing operations(160,716)
Net loss(161,145)
Net loss attributable to DHC(161,145)
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  December 31, 2019 June 30, 2020
Real estate properties, net $5,212,252
 $5,138,196
Other assets, net 260,169
 359,147
Total assets $5,472,421
 $5,497,343
     
Indebtedness, net $2,815,796
 $2,812,282
Other liabilities 182,092
 266,679
Total liabilities $2,997,888
 $3,078,961
     
  Year Ended December 31, 2019 Six Months Ended June 30, 2020
Revenues $888,704
 $787,108
Expenses 819,054
 765,875
Loss from continuing operations (84,136) (16,542)
Net loss (84,172) (17,225)
Net loss attributable to DHC (84,172) (17,225)
Related Person Transactions
We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., Five Star 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 business and property management agreements with RMR LLC; RMR Inc. is the managing member of RMR LLC; Adam Portnoy, the Chair of our Board of Trustees and one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a managing director and the president and chief executive officer of RMR Inc., an officer and employee of RMR LLC and the chair of the board of directors and a managing director of Five Star; Jennifer Clark, our other Managing Trustee and our Secretary, is a managing director and the executive vice president, general counsel and secretary of RMR Inc., an officer and employee of RMR LLC, an officer of ABP Trust and a managing director and the secretary of Five Star; and each of our officers is also an officer and employee of RMR LLC. We have relationships and historical and continuing transactions with other companies to which RMR LLC or its subsidiaries provide management services, and some of which have trustees, directors or officers who are also trustees, directors or officers of us, RMR LLC or RMR Inc. and some of our Trustees and officers serve as trustees, directors or officers of these companies. For example, Five Star is our former subsidiary and former largest tenant, and it currently manages most of our senior living communities and we and Five Star restructured our business arrangements as of January 1, 2020. We and Adam Portnoy, directly and indirectly through ABP Trust and its subsidiaries, are significant stockholders of Five Star, owning, as of June 30, 2020, 33.9% and 6.4%, respectively, of outstanding Five Star common shares.
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 20202021 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our Annual Report and in this Quarterly Report on Form 10-Q 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 and 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. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.

Impact of Government Reimbursement
For the six months ended June 30, 2020,2021, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and the remaindera 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 medical office and life science property tenants participate in federal Medicare and state Medicaid programs and other government healthcare payment programs.
Under the CARES Act, HHS established a Provider Relief Fund as noted elsewhere in this Quarterly Report on Form 10-Q. We have recognized $18,181 as other income with respect to our SHOP segment for the six months ended June 30, 2021.
For more information regarding the government healthcare funding and regulation of our business, please see the section captioned “Business—Government Regulation and Reimbursement” in our Annual Report and the section captioned “Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of Government Reimbursement” in our Annual Report.
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, 2019.2020. 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.
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Fixed Rate Debt
At June 30, 2020,2021, our outstanding fixed rate debt included the following (dollars in thousands):
   Annual Annual      AnnualAnnual  
 Principal Interest Interest   Interest PrincipalInterestInterest Interest
Debt 
Balance (1)
 
Rate (1)
 Expense Maturity Payments DueDebt
Balance (1)
Rate (1)
ExpenseMaturityPayments Due
Senior unsecured notes $300,000
 6.75% $20,250
 2021 Semi-AnnuallySenior unsecured notes$250,000 4.750 %$11,875 2024Semi-Annually
Senior unsecured notes 250,000
 4.75% 11,875
 2024 Semi-AnnuallySenior unsecured notes1,000,000 9.750 %97,500 2025Semi-Annually
Senior unsecured notes 1,000,000
 9.75% 97,500
 2025 Semi-AnnuallySenior unsecured notes500,000 4.750 %23,750 2028Semi-Annually
Senior unsecured notes 500,000
 4.75% 23,750
 2028 Semi-AnnuallySenior unsecured notes500,000 4.375 %21,875 2031Semi-Annually
Senior unsecured notes 350,000
 5.63% 19,705
 2042 QuarterlySenior unsecured notes350,000 5.625 %19,688 2042Quarterly
Senior unsecured notes 250,000
 6.25% 15,625
 2046 QuarterlySenior unsecured notes250,000 6.250 %15,625 2046Quarterly
Mortgage note 12,181
 6.28% 765
 2022 MonthlyMortgage note11,485 6.280 %721 2022Monthly
Mortgage note 10,843
 4.85% 526
 2022 MonthlyMortgage note10,603 4.850 %514 2022Monthly
Mortgage note 15,970
 5.75% 918
 2022 MonthlyMortgage note15,632 5.750 %899 2022Monthly
Mortgage note 15,854
 6.64% 1,053
 2023 MonthlyMortgage note15,427 6.640 %1,024 2023Monthly
Mortgage notes (2)
 620,000
 3.53% 21,886
 2026 Monthly
Mortgage notes (2)
620,000 3.530 %21,886 2026Monthly
Mortgage note 10,580
 4.44% 470
 2043 MonthlyMortgage note10,355 4.444 %460 2043Monthly
 $3,335,428
   $214,323
     $3,533,502 $215,817   
(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.
(2)The life science property encumbered by these mortgages is owned in a joint venture arrangement in which we own a 55% equity interest. The principal amounts listed in the table for these debts have not been adjusted to reflect the equity interest in the joint venture that we do not own.
(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.
(2)The life science property encumbered by these mortgages is owned in a joint venture arrangement in which we own a 55% equity interest. The principal amounts listed in the table for these debts have not been adjusted to reflect the equity interest in the joint venture that we do not own.
No principal repayments are due under our unsecured notes until maturity. Our mortgage notes 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 one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $33.4$35.3 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 June 30, 2020,2021, 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 one percentage point increase in interest rates would change the fair value of those obligations by approximately $35.9$31.4 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.
Floating Rate Debt
At June 30, 2020,2021, our floating rate debt obligations consisted of $800.0 million outstanding under our $1.0 billion revolving credit facility, under which we had no outstanding borrowings, and our $200.0 million term loan.facility. Our revolving credit facility matures in January 2022, and, subject to ourthe payment of an extension fee and our meeting other conditions, we have the optiontwo, one year options to extend the stated maturity date by one yearof the facility to January 2023.2024. 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 $200.0 million term loan matures in September 2022 and is prepayable without penalty at any time.
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Borrowings under our revolving credit facility and term loan 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, and to changes in our credit ratings. In addition, upon renewal or refinancing of our revolving credit facility, or our term loan, 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 one percentage point increase in interest rates would have on our annual floating rate interest expense as of June 30, 20202021 (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 June 30, 20212.85 %$800,000 $22,800 $0.10 
One percentage point increase3.85 %$800,000 $30,800 $0.13 
  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 June 30, 2020 2.43% $200,000
 $4,860
 $0.02
One percentage point increase 3.43% $200,000
 $6,860
 $0.03
(1)Weighted based on the respective interest rates and outstanding borrowings(1)Interest rate under our revolving credit facility and term loan as of June 30, 2020.
(2)Based on weighted average number of shares outstanding (basic and diluted) for the six months ended June 30, 2020.

The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of June 30, 2020 if we were fully drawn2021.
(2)Based on our revolving credit facilityweighted average number of shares outstanding (basic and our term loan remained outstanding (dollars in thousands except per share amounts):diluted) for the six months ended June 30, 2021.
  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 June 30, 2020 2.53% $1,200,000
 $30,360
 $0.13
One percentage point increase 3.53% $1,200,000
 $42,360
 $0.18
(1)Weighted based on the respective interest rates and outstanding borrowings under our credit facility (assuming fully drawn) and term loan as of June 30, 2020.
(2)Based on weighted average number of shares outstanding (basic and diluted) for the six months ended June 30, 2020.
The foregoing tables showtable shows the impact of an immediate increase in floating interest rates. If interest rates were to increase 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 amount of our borrowings outstanding under our revolving credit facility or other floating rate debt.
LIBOR Phase Out

LIBOR is currently expected to be phased out in 2021.for new contracts by December 31, 2021 and for pre-existing contracts by June 30, 2023. We are required to pay interest on borrowings under our revolving credit facility and term loan at floating rates based on LIBOR. FutureInterest we may pay on any future debt that we may incur may also require that we pay interest based upon LIBOR. We currently expect that the determination of interest under our credit facility and term loan agreementsagreement would be revised as provided under the agreement or amended as necessary to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR. Despite our current expectations, we cannot be sure that, if LIBOR is phased out or transitioned, the changes to the determination of interest under our agreementsagreement would approximate the current calculation in accordance with LIBOR. We do not know what standard, if any, will replace LIBOR if it is phased out or transitioned.

Item 4.  Controls and Procedures.
 
As of the end of the period covered by this 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 June 30, 20202021 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
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 economic downturn resulting from the COVID-19 pandemic and its impact on us and our tenants', managers' and operators' businesses,
The likelihood and extent to which including the COVID-19 pandemic and its aftermath will negatively impactability of our tenants'tenants and senior living community residents' abilityresidents to pay rent to us,
•Our ability to pay distributions to our shareholders and to sustain the amount of such distributions,
•The ability of Five Star, the manager of our managed senior living communities,community managers to manageminimize the negative impact from the COVID-19 pandemic on our senior living communities during the COVID-19 pandemic and to manage them profitably and maintain or increase our returns, from
•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 managedtenants, managers and operators provide essential services across the United States and the implication that our and our tenants', managers' and 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 41 senior living communities orwe have recently transitioned from Five Star and the 35 senior living communities we expect to limittransition from Five Star in the extentnear term,
•Our expectation that we will execute agreements to transition 32 of decreases in our returns duringsenior living communities that are currently being managed by Five Star to new managers by the COVID-19 pandemic and economic downturn,end of 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 ability to maintain and increase occupancy, revenues and NOI at our properties, or to limit their decline duringpotential receipt of any additional funding under the COVID-19 pandemic and economic downturn,CARES Act,
•Our expectations regarding the impact of the COVID-19 pandemic on our tenants, the healthcare sector and our financial condition,
The expectation that as a result ofour redevelopment projects will be completed on budget by the COVID-19 pandemic, overall tenant retention levels may increase,estimated completion dates,
•Our acquisitions and sales of properties,
•Our closures of senior living communities,
•Our ability to raise debt or equity capital,
•Our ability to complete our target dispositions,
•The future availability of borrowings under our revolving credit facility,
•Our policies and plans regarding investments, financings and dispositions,
•Whether we may contribute additional properties to our joint venture and receive proceeds from the other investors in the joint venture in connection with those contributions,
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•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 relationships with RMR LLC, and RMR Inc.,
•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 impactimpacts of the COVID-19 pandemic and its aftermath on us and our tenants', managers' and operators' businesses,
•The impact of conditions in the economy and the capital markets on us and our tenants, managers and operators,
•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, Five Star, RMR LLC RMR Inc. 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:
If the severity of the COVID-19 pandemic continues for an extended period or if business activity and the economy fail to sufficiently improve if and when the substantial adverse impacts of the COVID-19 pandemic abate, we may realize sustained losses and liquidity challenges. Further, we may incur increased operating expenses, particularly at our senior living communities, for supplies and personnel to address the current COVID-19 pandemic and we may be prevented from accepting additional residents at certain of our senior living communities if we become restricted from doing so due to the COVID-19 pandemic. In addition, under•Under the current economic conditions, our tenants, managers and operators may not be able to profitably operate their businesses at our properties, our tenants may become unable or unwilling to pay rent owed to us, or the managermanagers or operators of our senior living communities may be unable to generate our minimum returns for sustained periods.periods as a result of the COVID-19 pandemic or otherwise. Additionally, our ability to borrow under our credit facility is subject to us satisfying financial and other covenants, and if we default under our credit facility or other debt obligations due to the impactimpacts of the COVID-19 pandemic or otherwise, 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, such as emergencies in addition to, or as an expansion of, the current impactimpacts of the COVID-19 pandemic, may require us to expend amounts not currently planned,
The Conversion was a significant change in our business arrangements with Five Star and has resulted, and will likely continue to result in the future, in our realizing significantly different operating results from our•This Quarterly Report on Form 10-Q states that vaccination clinics at senior living communities managed by in our SHOP segment have been completed; however, even though vaccinations have been administered, the senior living industry may not recover to pre-pandemic levels for an extended period of time or at all if market preferences and practices result in older adults utilizing less services of the type offered at our communities,
•Five Star including increased variability in such results,
If Five Star fails to provide quality services athas experienced, and our other senior living communities, the NOI generated by these communitiescommunity managers may be adversely affected,
Five Star, the manager of our managed senior living communities, has experienced significantexperience, operating and financial challenges resulting from a number of factors, some of which are beyond Five Star's or any such other manager's control, and which challenges directly impact our operating results from our managed senior living communities, including, but not limited to:
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•The impact of the COVID-19 pandemic,
Increases in Five Star's labor costs or in costs Five Star pays for goods and services,

Competition within the senior living industry,
Seniors delaying or forgoing moving into senior living communities or purchasing healthcare services that Five Star provides,
The impact of changesconditions in the economy and the capital markets on Five Star and itsour other senior living community managers and their residents, clients and other customers,
•Competition within the senior living and other health and wellness related services businesses,
•Older adults delaying or forgoing moving into senior living communities or purchasing health and wellness services from Five Star and our other senior living community managers,
•Increases in Five Star's and our other senior living community managers' labor costs or in costs Five Star or any such other manager pays for goods and services,
•Increases in tort and insurance liability costs,
•Five Star's and our other senior living community managers' operating and debt leverage,
•Changes in Medicare or Medicaid policies and regulations or the possible future repeal, replacement or modification of these or other existing or proposed legislation or regulations,
Increases in compliance costs,•Delays or nonpayment of government payments to Five Star or any of our other senior living community managers,
Continued efforts by third party payers•Compliance with, and changes to, reduce healthcare costs,
Increases in tortfederal, state and insurance liabilitylocal laws and regulations that could affect Five Star's and our other senior living community managers' services or impose requirements, costs and
administrative burdens that may reduce Five Star's and such other managers' ability to profitably operate their businesses,
•Five Star's and our other senior living community managers' exposure to litigation and regulatory and government proceedings due to the nature of its business.their businesses, including adverse determinations resulting from government reviews, audits and investigations and unanticipated costs to comply with legislative or regulatory developments, and
If Five Star's other operations are•Ongoing healthcare reform efforts, including continued efforts by third-party payers to reduce costs,
•We have not profitable or if it does not operate our managedexecuted any new management agreement for the 32 remaining senior living communities successfully, it could become insolvent,to be transitioned from Five Star to other third party managers, and we may be unable to identify new managers for those communities that we believe are sufficiently qualified or we may be unable to reach agreement with any such managers on management terms before year end 2021 or at all, and any agreement we may reach with any such managers may not be on the terms we currently expect or desire, and may not be equal to or more favorable to us than the terms of our current management arrangements with Five Star, and further, transitions may not be successful and such managers may not be able to manage our senior living communities profitably or increase our returns,
•We own a significant number of Five Star common shares and we expect to own these shares for the foreseeable future. However, we may sell some or all of our Five Star common shares, or our ownership interest in Five Star may otherwise be diluted in the future,
Beginning in the second quarter of 2020, we reduced our quarterly•Our current cash distribution rate on ourto common shares toshareholders is $0.01 per share ($0.04 per commonquarter, or $0.04 per share annually)per year, due to the operating challenges and uncertain economic challenges as a result of 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, our then current and expected needs and availability of cash to pay our obligations, distributions which we may be required to payrequirements 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 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,
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•We may be unable to repay our debt obligations when they become due,
•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, subject to limitations on acquisitions in agreements governing our debt, and to strategically update, rebalance and reposition our investment portfolio, which we refer to as our capital recycling program. In addition, to reduce our leverage, we have sold properties and other assets and have identified additional properties to sell. We expect that the pace of our future asset sales will slow considerably because of current market conditions related to the COVID-19 pandemic.assets. 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, in the case of our capital recycling program, we cannot be sure that we will acquire replacement properties that improve the quality of our portfolio or our ability to increase our distributions to shareholders, and, we may sell properties at prices that are less than expected and less than their carrying values and therefore incur losses,
•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 essential capital investments we are making at our senior living communities and our plan to invest additional capital into 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 due to the COVID-19 pandemic,
•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 any letters of intent we entered and may enter into to lease our redevelopment projects may not materialize,
•We may spend more for capital expenditures than we currently expect,
•Our existing joint venture and any other joint ventures that we may enter 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,
•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 prohibited from making acquisitions pursuant to our credit agreement during the Amendment Period. In addition, even after these restrictions expire, we may be unable to identify properties that we want to acquire, and are currently subject to limitations from making acquisitions under the agreements governing our debt, 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 may acquire, may not provide us with rents or revenues less property operating costs that exceed our capital costs or achieve our expected returns. If our cash flows are reduced and our leverage increases, we may need to sell additional properties,
•Rents that we can charge at our properties may decline upon renewals or expirations because of changing market conditions or otherwise,
We expect•Although we have obtained a waiver from compliance with certain financial covenants under our credit agreement through June 2022, if our operating results and financial condition are further significantly and adversely impacted by current economic conditions or otherwise, we may fail to enter into additional management arrangementscomply with Five Starthe 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 additional senior living communities that we own or may acquire indebt service to debt service was below the future. However,1.5x incurrence requirement under our credit agreement and our public debt covenants as of June 30, 2021, and we cannot be sure that wecertain how long this ratio will enter into anyremain below 1.5x. We are prohibited from incurring additional management or other arrangementsdebt while this ratio is below 1.5x, but are not required to repay outstanding debt as a result of failure to comply with Five Star,
Continued availability of borrowingsthis financial requirement. We are currently fully drawn under our revolving credit facility is subjectand could also be required to
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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 prohibited from incurring 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 satisfying certain financial covenants andcash on hand or be forced to raise additional sources of capital or take other credit facility conditions that we may be unablemeasures to satisfy,maintain adequate liquidity,
•Actual costs under our revolving credit facility or other floating rate debt will be higher than LIBOR plus a premiumthe stated rates because of fees and expenses associated with such debt,
The maximum borrowing availability under our revolving credit facility and our $200.0 million term loan may be increased to up to $2.4 billion on a combined basis in certain circumstances. However, increasing the maximum borrowing availability under our revolving credit facility and this term loan is subject to our obtaining additional commitments from lenders, which may not occur,
•We have the optionoptions 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 loan and the facility fee payable on our revolving credit facility are based on our credit ratings. In March 2020, our issuer credit rating was downgraded as a result ofratings, which our revolving credit facility and term loan premiums and facility fee increased,are subject to change,
We may be unable to repay our debt obligations when they become due,
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,
•For the three months ended June 30, 2020,2021, 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,
•Circumstances that adversely affect the ability of seniors or their families to pay for our manager's and othermanagers' or operators' 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,
•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,
•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,
•We believe that our relationships with our related parties, including Five Star and RMR LLC RMR Inc., ABP Trust 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 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 the COVID-19 pandemic and its aftermath, new legislation or regulations affecting our business or the businesses of our tenants, managers or operators, changes in our tenants', managers' or operators' revenues or costs, worsening or lack of improvement of Five Star's financial condition or changes in our other tenants', managers' or operators' financial conditions, deficiencies in operations by a tenant, manager or manageroperator of one or more of our senior living communities, changed Medicare or Medicaid rates, acts of terrorism, pandemics, natural disasters 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.
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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
 
Item 1A. Risk Factors.
Our business faces many risks, a number of which are described under the caption “Risk Factors”There have been no material changes to risk factors from those we previously disclosed in our Annual Report. The COVID-19 pandemic may subject us to additional risks that are described below. The risks described in our Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report and below, and the information contained under the caption “Warning Concerning Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

Our business, operations, financial results and liquidity have been materially and adversely impacted by the COVID-19 pandemic, and it is not known what the duration of this pandemic will be or what its ultimate adverse impact on us and our business will be, but we expect it will be substantial.

COVID-19 has been declared a pandemic by the World Health Organization, and in response to the outbreak, the U.S. Health and Human Services Secretary has declared a public health emergency in the United States. The COVID-19 pandemic has had a substantial adverse impact on the global economy, including the U.S. economy, and has resulted in a global economic recession. These conditions have materially and adversely impacted our and many of our tenants' and our senior living communities' manager's businesses, results of operations and liquidity.

Our senior living communities have experienced increased operating costs. These increased costs result from staffing, including overtime, particularly if a community experiences a reduction in available personnel due to illness or otherwise, the increased need and cost for supplies, including personal protective equipment, adopting enhanced disinfection measures and/or implementing quarantines for residents. In addition, our senior living communities are experiencing downward pressures on occupancy as a result of restrictions on allowing outside persons to enter senior living communities due to social distancing and other containment measures, limitations on prospective residents being able to visit our senior living communities and perceptions that senior living communities are unsafe during a pandemic or other widespread illness. The occupancy at our senior living communities has declined since the start of the pandemic and we expect occupancy to continue to decline as a result of the pandemic and economic downturn, and the costs for operating those senior living communities have increased and we expect they may continue to increase during the COVID-19 pandemic and its aftermath, and these declines in occupancy and increases in operating costs may be significant. Those conditions would reduce the returns we realize from our senior living communities and the fees earned by the manager of our senior living communities, and these conditions may result in residents at our senior living communities being unable or unwilling to pay us rent and resident fees. Further, our manager and tenants may be limited in operating our senior living communities if they are unable to obtain the necessary staffing and supplies, such as a result of illness of staff, shortages of supplies due to supply chain or production challenges, or for other reasons. Additionally, downturns or stagnation in the U.S. housing market as a result of an economic downturn could adversely affect the ability, or perceived ability, of seniors to afford the resident fees and services at our senior living communities as prospective residents may use the proceeds from the sale of their homes to cover the cost of such fees.

In addition, economic downturns and recessions in the United States have historically negatively impacted the commercial office real estate market, including increased tenant defaults, decreased occupancies and reduced rental rates. The current economic conditions have had, and we expect that they will continue to have, similar negative impacts on our Office Portfolio and we expect that the extent of those negative consequences will depend to a large extent on the duration and depth of the economic recession in the United States and the strength and sustainability of any economic recovery that may follow.

We cannot predict the extent and duration of the COVID-19 pandemic or the severity and duration of its economic impact, but we expect it will be substantial.

Further, the extent and strength of any economic recovery after the COVID-19 pandemic abates, including following any "second wave" or other intensifying of the pandemic, are uncertain and subject to various factors and conditions. Our, the manager of our senior living communities and our tenants' businesses, operations and financial positions may continue to be negatively impacted after the COVID-19 pandemic abates and may remain at depressed levels compared to prior to the outbreak of the COVID-19 pandemic and those conditions may continue for an extended period.


We have taken several actions in an attempt to address the operating and financial impact from the COVID-19 pandemic, and we continue to assess and explore other actions, but those actions and plans may not be sufficient to avoid continued and potentially increased substantial harm to our business, operations and financial condition.

We have taken several actions in an attempt to address the operating and financial impact from the COVID-19 pandemic, including:

we reduced our quarterly cash distribution rate on our common shares to $0.01 per share payable;

we amended certain financial covenants under our credit and term loan agreements through June 30, 2021 in order to provide us with additional flexibility;

we have been in regular, frequent contact with our senior living communities' manager to adopt measures to minimize losses, preserve liquidity and maintain operations; and

we have communicated with many of our medical office, life science and other tenants regarding their operation of or at our properties in the current challenging economic conditions, and we have agreed to provide deferrals of approximately $5.5 million of rent owed to us that are generally required to be repaid in installments beginning later this year.

There can be no assurance that these actions or others that we may take will be successful or that they will enable us to maintain sufficient liquidity and withstand the current economic challenges.

We recently reduced our quarterly cash distribution rate on our common shares to $0.01 per share; future distributions may remain at this level for an indefinite period or be eliminated and the form of payment could change.

Beginning in the second quarter of 2020, we reduced our quarterly cash distributions on our common shares to $0.01 per share. We currently intend to continue to make quarterly distributions to our shareholders at this rate for at least the Amendment Period, subject to applicable REIT tax requirements. However:

our ability to make or sustain the rate of distributions may continue to be adversely affected by the negative impact of the COVID-19 pandemic and its aftermath on our business, results of operations and liquidity;

our making of distributions is subject to restrictions contained in our credit and term loan agreements, including being limited to amounts required to maintain our qualification for taxation as a REIT and $0.01 per common share per quarter during the Amendment Period, and may be subject to restrictions in future debt obligations we may incur; during the continuance of any event of default under our credit and term loan agreements, we may be limited or in some cases prohibited from making distributions to our shareholders; and

the timing and amount of any distributions will be determined at the discretion of our Board of Trustees and will depend on various factors that our Board of Trustees deems relevant, including our historical and projected net income, Normalized FFO, our then current and expected needs and availability of cash to pay our obligations, distributions which we may be required to pay to maintain our qualification for taxation as a REIT, limitations in the agreements governing our debt and other factors deemed relevant by our Board of Trustees in its discretion.

For these reasons, among others, our distribution rate may not increase for an indefinite period and could be eliminated.

In order to preserve liquidity, we may elect to pay distributions to our shareholders, in part, in a form other than cash, such as issuing additional common shares of ours to our shareholders, as permitted by the applicable tax rules.

Our investment activities, other than maintenance and any urgent capital expenditures at our existing properties, have been significantly curtailed and we expect that to continue for an indefinite period.

We are not actively pursuing acquisitions at this time. In addition, we have reduced our expectations for capital spending significantly. In addition, our credit and term loan agreements limit our ability to make acquisitions and capital expenditures. As a result, we will be limited in pursuing investments, which may limit our ability to grow and to act upon opportunities we believe would benefit us. Further, to the extent we defer capital expenditures, we may be required to make increased capital expenditures in later periods as a result and some of the expenditures may be greater in scope and amount than they may have been if made sooner.


We expect that the sale of assets that we previously announced an intention to sell will be delayed and could be changed or abandoned.

We expect that the sales of some of our assets that we had previously identified for sale will be delayed until 2021 as a result of current market conditions. However, any sales of these assets may be delayed beyond our current expectations, they may not occur or, if they do occur, they may be sold at prices less than previously expected and we may realize losses from those assets. Our ability to sell these assets, and the prices we receive upon a sale, may continue to be affected by the impact of the COVID-19 pandemic, and we may be unable to execute our strategy.

Some of our tenants have requested relief from their obligations to pay rent due to us as a result of market disruptions due to the COVID-19 pandemic and we expect to receive additional similar requests in the future; we have provided certain limited relief in response to these requests and may determine to grant additional relief in the future if we determine it prudent or appropriate to do so.

The current economic conditions resulting from the COVID-19 pandemic have negatively impacted our tenants' businesses, operations and liquidity. As a result of market disruptions due to the COVID-19 pandemic, some of our tenants have requested relief from their obligations to pay rent due to us. As of August 3, 2020, we granted requests for certain of our tenants to defer rent payments totaling $5.5 million. These tenants are obligated to pay, in most cases, the deferred rents in 12 equal monthly installments commencing in September 2020. We expect to receive additional similar requests in the future, and we may determine to grant additional relief in the future, which may vary from the type of relief we have granted to date, and could include more substantial relief, if we determine it prudent or appropriate to do so. If conditions do not sufficiently and sustainably improve for these tenants, they may be unable to pay deferred or future rent owed to us when due or otherwise. In addition, if our tenants and senior living communities' manager are unable to continue as going concerns as a result of the current economic conditions or otherwise, we will experience a reduction in rents and returns received and we may be unable to find suitable replacement tenants and managers for an extended period or at all and the terms of our agreements with those replacement tenants and managers may not be as favorable to us as the terms of our agreements with our existing tenants and manager.

We may need waivers or amendments from our lenders in order to avoid defaulting under our revolving credit facility.

We may need to obtain waivers or amendments from our lenders under our revolving credit facility in the future in order to avoid failing to satisfy certain financial covenants under our credit and term loan agreements, but our lenders are not required to grant any such waivers and may determine not to do so. If we fail to receive any required waiver, we may default under our credit and term loan agreements and the lenders could terminate the credit facility and require us to pay our then outstanding borrowings under our credit facility. Any future waiver we may obtain may impose restrictions, which may limit our ability to pay distributions to our shareholders, make investments that we believe we should make and could reduce our ability to pursue business opportunities, grow our business and improve our operating results.

We do not expect to reduce our debt leverage in accordance with the timing contemplated by our previous plans and our debt leverage may remain at or above current levels for an indefinite period.

We previously announced an intention to reduce our debt leverage from proceeds from the planned sales of certain of our assets. As noted elsewhere in this Quarterly Report on Form 10-Q, we expect that the sale of some of these assets will be delayed, they may not occur and, if they do occur, they may be sold at prices less than previously expected. We expect the delay in these sales will also delay our ability to reduce our debt leverage. Further, if we realize a lower amount of proceeds from any asset sales than we previously expected, any corresponding reduction in our debt leverage would be similarly reduced. In addition, we may elect to incur additional debt in order to try to ensure that we have sufficient liquidity to manage through the current economic conditions and any extended economic downturn or recession that may result.

The COVID-19 pandemic may have significant impacts on workplace practices and those changes could be detrimental to our business.

Temporary closures of businesses and stay in place orders and the resulting remote working arrangements for nonessential personnel in response to the COVID-19 pandemic may result in long-term changed work practices that could negatively impact us and our business. For example, the increased adoption of and familiarity with remote work practices could result in decreased demand for office space, which could materially adversely impact our Office Portfolio and the values of our office properties. In addition, certain of our tenants' businesses depend on people gathering in close proximity, including fitness centers, among others. To the extent that social distancing practices that have been adopted in response to the COVID-19

pandemic become sustained practices, those tenants' businesses may be materially adversely impacted, which will reduce their ability to pay us rent, increase the likelihood they will default in paying us rent and likely reduce the value of those properties.

The high levels of infected COVID-19 patients and deaths at senior living communities and resulting negative publicity may have a long term significant detrimental impact on the senior living industry, including us, even if our senior living communities do not experience similar levels of COVID-19 infections and deaths as others in the industry.

COVID-19 has proven to be particularly harmful to seniors and persons with other pre-existing health conditions. If the senior living industry continues to experience high levels of residents infected with COVID-19 and related deaths, and news accounts emphasize these experiences, seniors may increasingly delay or forgo moving into senior living communities or using other services provided by senior living operators. These trends could be realized across the senior living industry and not discriminate among owners and operators that have higher or lower levels of residents experiencing COVID-19 infections and related deaths. As a result, our operating results from our senior living communities, and the values of those communities, may experience a long term significant detrimental impact.

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 June 30, 2020:2021:
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
June 202113,906 $4.18 — $— 
Total13,906 $4.18 — $— 
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
June 2020 1,757
 $4.43
 —
 $—
Total 1,757
 $4.43
 —
 $—

(1) ThisThese common share withholdingwithholdings and purchases waswere made to satisfy tax withholding and payment obligations of acertain former employeeofficers and employees of RMR LLC in connection with the vesting of awards of our common shares. We withheld and purchased these shares at their fair market value based upon the trading pricesprice of our common shares at the close of trading on Nasdaq on the purchase date.
Item 6. Exhibits.
Exhibit
Number		Description
3.1
3.2
3.3
Articles Supplementary, dated May 11, 2000. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.)
3.43.3
3.53.4
3.63.5
4.1
4.2
4.3
Supplemental Indenture No. 4, dated as of April 9, 2010, between the Company and U.S. Bank National Association, related to 6.75% Senior Notes due 2020, including form thereof. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.)

4.4
4.54.4
4.64.5
4.74.6
4.84.7
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4.94.8
4.104.9
4.114.10
4.11
4.12
4.13
10.1
10.2
First Amendment to Amended and Restated $200.0 Million Term Loan Agreement, dated as of June 30, 2020, among the Company, Wells Fargo Bank, National Association, as Administrative Agent and each of the other institutions party thereto. (Incorporated by reference to the Company's Current Report on Form 8-K filed on July 2, 2020.)
10.3
Form of Indemnification Agreement. (Filed herewith.)
10.4
Summary of Trustee Compensation. (Incorporated by reference to the Company'sCompany’s Current Report on Form 8-K filed May 20, 2020.June 4, 2021.)
22.110.2
10.3
10.4
22.1
31.1
31.2
31.332.1
31.4
Rule 13a-14(a) Certification. (Filed herewith.)
32.1
Section 1350 Certification. (Furnished herewith.)
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the 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.
 
DIVERSIFIED HEALTHCARE TRUST
By:/s/ Jennifer F. (Francis) Mintzer
Jennifer F. (Francis) Mintzer
President and Chief OperatingExecutive Officer
Dated: August 6, 20204, 2021
By:/s/ Richard W. Siedel, Jr.
Richard W. Siedel, Jr.
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
Dated: August 6, 20204, 2021


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