Real Estate Investments

12 Months Ended

Dec. 31, 2023

As of December 31, 2023, our owned properties include: 102 medical office and life science properties with approximately 8.6 million rentable square feet; 259 senior living communities, including independent living (including active adult), assisted living, memory care and skilled nursing facilities, or SNFs, with 27,271 living units; and 10 wellness centers with approximately 812,000 square feet of interior space plus outdoor developed facilities.

Acquisitions:

The table below represents the purchase price allocations (including net closing adjustments) of acquisitions for the years ended December 31, 2023, 2022 and 2021:

Date

Location

Type of Property

Number of Properties

Square Feet

Cash Paid (1)

Land

Buildings
and
Improvements

Acquired
Real Estate
Leases

Acquisitions during the year ended December 31, 2023:

We did not acquire any properties during the year ended December 31, 2023.

Acquisitions during the year ended December 31, 2022 (2):

July 2022

California

Life Science

88,508

75,105

15,774

45,249

14,082

Acquisitions during the year ended December 31, 2021:

We did not acquire any properties during the year ended December 31, 2021.

(1)Cash paid includes closing costs.

(2)We have accounted for our 2022 acquisition as an acquisition of assets. We funded this acquisition using cash on hand.

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 2023, we recorded impairment charges of $14,034 to adjust the carrying value of four life science and medical office properties to their estimated fair value. We sold three of these life science and medical office properties in 2023. One of these medical office properties was classified as held for sale in our consolidated balance sheet as of December 31, 2023. During 2023, we also recorded impairment charges of $4,346 to adjust the carrying values of two senior living communities to their aggregate estimated fair value. We sold one of these senior living communities in 2023. These impairment charges, in aggregate, are included in impairment of assets in our consolidated statements of operations.

During 2022, no impairment charges were recorded.

Dispositions:

During the years ended December 31, 2023 and 2021, we sold eight and five properties, respectively, for aggregate sales prices of $18,880 and $104,500, respectively, excluding closing costs, as presented in the table below. During the year ended December 31, 2022, we did not dispose of any properties. The sales of these properties do not represent significant dispositions, individually or in the aggregate, 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 consolidated statements of operations.


Date of Sale	Location	Type of Property	Number of Properties	Square Feet or Number of Units		Sales Price (1)		Gain (Loss) on Sale
Dispositions during the year ended December 31, 2023:
February 2023	Pennsylvania and South Carolina	Senior Living	3	—	units (2)	$	2,800	$	293
October 2023	Pennsylvania	Medical Office	1	30,866	sq. ft.	1,800		15
October 2023	Tennessee	Senior Living	1	—	units (2)	2,830		627
October 2023	Maryland	Life Science	1	58,880	sq. ft.	6,200		(360)
November 2023	Virginia	Senior Living	1	—	units (2)	1,800		945
December 2023	South Carolina	Medical Office	1	115,108	sq. ft.	3,450		(1,255)
			8			$	18,880	$	265

Dispositions during the year ended December 31, 2022:
We did not dispose of any properties during the year ended December 31, 2022.

Dispositions during the year ended December 31, 2021:
February 2021	Pennsylvania	Medical Office	1	92,000	sq. ft.	$	9,000	$	(122)
April 2021	Florida	Life Science / Medical Office	4	263,656	sq. ft.	95,500		30,760
			5			$	104,500	$	30,638

(1)Sales price excludes closing costs.

(2)These communities were closed prior to their respective dispositions.

During the year ended December 31, 2023, we recognized a gain of $940 related to the sales of skilled nursing bed licenses at certain of our senior living communities.

We classify all properties as held for sale in our consolidated balance sheets that meet the applicable criteria for that treatment as set forth in the Property, Plant and Equipment Topic of the Codification. As of December 31, 2023, we had one medical office property classified as held for sale. As of December 31, 2022, we had one closed senior living community classified as held for sale.

Investments and Capital Expenditures:

During 2023, we committed an aggregate $62,180 for leasing related costs related to 0.9 million and 0.2 million square feet of leases executed at our medical office and life science properties and wellness centers, respectively. During 2022, we committed $22,911 for leasing related costs related to 0.9 million square feet of leases executed at our medical office and life science properties.

Committed and unspent tenant related obligations based on executed leases as of December 31, 2023 and 2022 were $54,124 and $39,314, respectively.

Other:

In September 2022, certain of our managed senior living communities located in Florida experienced hurricane related damage. We carry comprehensive property, casualty, flood and business interruption insurances that we anticipate will cover our losses at these senior living communities, subject to a deductible. During the year ended December 31, 2022, we incurred total losses of $11,253 related to the property damage sustained and deductible incurred. For the year ended December 31, 2022, we recognized a loss of $7,635 for the involuntary conversion of nonmonetary assets and wrote off a portion of the net book value of the damaged assets and included this amount in our consolidated statements of operations. During the year ended December 31, 2022, we received $14,466 in cash from our insurance provider, and as such, we have recovered the total losses of $11,253 incurred during the year ended December 31, 2022. The loss of $7,635 for the involuntary conversion of nonmonetary assets, recovery of those $7,635 in losses and the deductible of $3,618 are included in property operating expenses in our consolidated statements of operations. We received $534 and $3,213 in cash in excess of our losses during the

years ended December 31, 2023 and 2022, respectively. These amounts are included in other liabilities in our consolidated balance sheets.

Unconsolidated Joint Venture Investments:

As of December 31, 2023, we had equity investments in unconsolidated joint ventures as follows:


Equity Method Investments in Joint Venture	DHC Ownership	DHC Carrying Value of Investment at December 31, 2023		Number of Properties	Location	Square Feet
Seaport Innovation LLC	10%	$	85,699	1	MA	1,134,479
The LSMD Fund REIT LLC	20%	44,217		10	CA, MA, NY, TX, WA	1,068,763
		$	129,916	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 December 31, 2023 (1)
Mortgage Notes Payable (secured by one property in Massachusetts) (2)	3.53%	8/6/2026	$	620,000
Mortgage Notes Payable (secured by nine properties in five states) (3)	3.46%	2/11/2032	189,800
Mortgage Notes Payable (secured by one property in California) (3)(4)	5.90%	2/9/2025	266,825
Weighted Average / Total	4.10%		$	1,076,625

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

(2)Following the deconsolidation in December 2021 of the net assets of the Seaport JV, we no longer include this $620,000 of secured debt financing in our consolidated balance sheet; however, we continue to provide certain guaranties on this debt.

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

(4)The joint venture exercised its option to extend the maturity date of this mortgage loan by one year to February 9, 2025, and this mortgage loan requires interest to be paid at an annual rate of SOFR, plus a premium of 1.90%. The interest rate is as of December 31, 2023. 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.

In March 2017, we entered into the Seaport JV with an institutional investor. The investor owned a 45% equity interest in the joint venture, and we owned the remaining 55% equity interest in the joint venture. We determined that, while we owned a 55% equity interest in this joint venture, this joint venture was a VIE as defined under the Consolidation Topic of the Financial Accounting Standards Board Codification. We concluded that we must consolidate this VIE, and we did so, until we sold an additional 35% equity interest in the joint venture in December 2021. We reached this determination because we were the entity with the power to direct the activities that most significantly impacted the VIE's economic performance and we had the obligation to absorb losses of, and the right to receive benefits from, the VIE that could be significant to the VIE, and therefore were the primary beneficiary of the VIE. The joint venture investor's interest in this consolidated entity was reflected as noncontrolling interest in our consolidated financial statements.

In December 2021, we sold an additional 35% equity interest from our then remaining 55% equity interest in the Seaport JV to another third party institutional investor for $378,000, before closing costs and other adjustments. Effective as of the date of the sale, we deconsolidated the net assets of this joint venture and recognized a net gain on sale of $461,434 related to this transaction during the year ended December 31, 2021, which is included in gain on sale of properties in our consolidated statements of operations. After giving effect to the sale, we owned a 20% equity interest in this joint venture but determined that we were no longer the primary beneficiary. Effective as of the date of the sale, we deconsolidated this joint venture, and we now account for this joint venture using the equity method of accounting under the fair value option. Prior to the deconsolidation of the net assets of this joint venture, the joint venture investor's interest in this consolidated entity was reflected as noncontrolling interest in our consolidated financial statements. In June 2022, we sold an additional 10% equity interest from our then remaining 20% equity interest in the Seaport JV to an existing joint venture investor for $108,000, before closing costs and other adjustments. We received net proceeds of $108,424 from this transaction, which included working capital prorations and formation costs. We recognized a net loss on sale of $1,428 related to this transaction during the year ended December 31, 2022, which is included in gain on sale of properties in our consolidated statements of operations. After giving effect to these sales, we continue to own a 10% equity interest in this joint venture. Our initial investment amount was based on a property valuation of $1,700,000, less $620,000 of existing mortgage debts on the property that this joint venture assumed. See Note 10 for more information regarding the valuation of our investment in this joint venture.

In January 2022, we entered into the LSMD JV with two unrelated third party institutional investors. We sold equity interests in this joint venture to those investors for aggregate proceeds, before closing costs and other adjustments, of approximately $653,300. We deconsolidated the net assets of these properties effective as of the date of the sale and recognized a net gain on sale of $322,468 related to this transaction during the year ended December 31, 2022, which is included in gain on sale of properties in our consolidated statements of operations. The equity interests that the investors acquired from us equaled 41% and 39%, respectively, of the total equity interests in the joint venture, and we retained a 20% equity interest in the joint venture. Following the sale, we account for this joint venture using the equity method of accounting under the fair value option. The initial investment amounts were based upon a property valuation of approximately $702,500, less approximately $456,600 of secured debt on the properties incurred by this joint venture. See Note 10 for more information regarding the valuation of our investment in this joint venture.