Real Estate and Other Investments

6 Months Ended

Jun. 30, 2024

As of June 30, 2024, we owned 370 properties located in 36 states and Washington, D.C., including five properties classified as held for sale and two closed senior living communities, and we owned an equity interest in each of two unconsolidated joint ventures that own medical office and life science properties located in five states.

Acquisitions and Dispositions:

We did not acquire any properties during the six months ended June 30, 2024.

During the six months ended June 30, 2024, we sold two properties for an aggregate sales price of $7,800, excluding closing costs, as presented in the table below. The sales of these properties do not represent a significant disposition and we do not believe these sales represent a strategic shift in our business. As a result, the results of operations for these properties are included in continuing operations through the date of sale of such properties in our condensed consolidated statements of comprehensive income (loss).


Date of Sale	Location	Type of Property	Number of Properties	Sales Price (1)		Loss on Sale
March 2024	Arizona	Medical Office	1	$	3,600	$	5,874
June 2024	Texas	Medical Office	1	4,200		13,213
			2	$	7,800	$	19,087

(1)Sales price excludes closing costs.

As of June 30, 2024, we had five properties classified as held for sale in our condensed consolidated balance sheet as follows:


Type of Property	Number of Properties	Real Estate Properties, Net
Medical Office and Life Science	4	$	39,650
Senior Living	1	1,523
	5	$	41,173

Subsequent to June 30, 2024, we sold two of these properties for an aggregate sales price of $21,275, excluding closing costs, and as of July 31, 2024, we had an additional property under agreement to sell for a sales price of $5,500, excluding closing costs. We may not complete the sales of any or all of the properties we currently plan to sell. Also, we may sell some or all of these properties at amounts that are less than currently expected and/or less than the carrying values of such properties and we may incur losses on any such sales as a result.

Impairment:

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

During the six months ended June 30, 2024, we recorded impairment charges of $18,789 related to three medical office properties that were classified as held for sale as of June 30, 2024.

Equity Method Investments in Unconsolidated Joint Ventures:

As of June 30, 2024, we had equity investments in unconsolidated joint ventures as follows:


Joint Venture	DHC Ownership	DHC Carrying Value of Investment at June 30, 2024		Number of Properties	Location	Square Feet
Seaport Innovation LLC	10%	$	64,223	1	MA	1,134,479
The LSMD Fund REIT LLC	20%	44,583		10	CA, MA, NY, TX, WA	1,068,763
		$	108,806	11		2,203,242

The following table provides a summary of the mortgage debts of these joint ventures:


Joint Venture	Coupon Rate	Maturity Date	Principal Balance at June 30, 2024 (1)
Mortgage Notes Payable (secured by one property in Massachusetts) (2) (3)	3.53%	11/6/2028	$	620,000
Mortgage Notes Payable (secured by nine properties in five states) (4)	3.46%	2/11/2032	189,800
Mortgage Notes Payable (secured by one property in California) (4) (5)	6.38%	2/9/2025	266,825
	4.22%		$	1,076,625

(1)Amounts are not adjusted for our minority equity interest.

(2)We provide certain guaranties on this debt.

(3)This mortgage loan requires interest only payments until the anticipated repayment date on August 6, 2026, at which time all accrued and unpaid interest along with the principal balance of $620,000 is expected to be repaid. This mortgage loan matures on November 6, 2028 and any unpaid principal from the anticipated repayment date through the maturity date bears interest at a variable rate of the greater of 6.53% or the then effective U.S. swap rate terminating on the maturity date plus 5.00%.

(4)The debt securing these properties is non-recourse to us.

(5)This mortgage loan matures on February 9, 2025 and requires interest to be paid at an annual rate of the one month term secured overnight financing rate, or SOFR, plus a premium of 1.90%. This joint venture has also purchased an interest rate cap through February 2025 with a SOFR strike rate equal to 4.48% and an initial premium of $1,200. The maturity date of this mortgage loan is subject to two remaining one-year extension options.

We account for the unconsolidated joint venture for 10 medical office and life science properties in which we own a 20% equity interest, or the LSMD JV, and the unconsolidated joint venture for a life science property located in Boston, Massachusetts in which we own a 10% equity interest, or the Seaport JV, using the equity method of accounting under the fair value option. We recognized changes in the fair value of our investments in our unconsolidated joint ventures of $(21,493) and $2,929 during the three months ended June 30, 2024 and 2023, respectively, and $(19,880) and $2,282 during the six months ended June 30, 2024 and 2023, respectively. These amounts are included in equity in net earnings (losses) of investees in our condensed consolidated statements of comprehensive income (loss). See Note 6 for further information regarding the valuation of our investment in these joint ventures.

Equity Method Investment in AlerisLife:

As of June 30, 2024, we owned approximately 34.0% of the outstanding common shares of AlerisLife Inc., or AlerisLife. We account for our 34.0% non-controlling interest in AlerisLife using the equity method of accounting.

As of June 30, 2024, our investment in AlerisLife had a carrying value of $24,905. The cost basis of our investment in AlerisLife exceeded our proportionate share of AlerisLife's total stockholders' equity book value on the date of acquisition of our initial interest in AlerisLife, which was February 16, 2024, by an aggregate of $29,500. As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 21 years, the weighted average remaining useful life of the real estate assets owned by AlerisLife and the intangible contract asset with us as of the date of acquisition. We recorded amortization of the basis difference of $352 and $526 for the three and six months ended June 30, 2024, respectively. We recognized income of $8,834 and $8,945 related to our investment in AlerisLife for the three and six months ended June 30, 2024, respectively. These amounts are included in equity in net earnings (losses) of investees in our condensed consolidated statements of comprehensive income (loss). See Note 11 for further information regarding our investment in AlerisLife.