SNH Announces Financial Results For The Quarter And Year Ended December 31, 2001

Cautionary Language

The information appearing on DHC ’s website includes statements which constitute forward looking statements. These forward looking statements are based upon DHC ’s present intents, beliefs or expectations, but forward looking statements are not guaranteed to occur and may not occur. DHC ’s actual results may differ materially from those contained in DHC ’s forward looking statements. The information contained in DHC ’s filings with the Securities and Exchange Commission, including under “Risk Factors" and “Warnings Concerning Forward Looking Statements” in DHC ’s periodic reports and other filings, identifies important factors that could cause DHC ’s actual results to differ materially from those stated in DHC ’s forward looking statements. DHC ’s filings with the SEC are available on the SEC’s website at www.sec.gov and are also accessible on DHC ’s website at the following link: SEC Filings. You should not place undue reliance upon forward looking statements.

The documents provided in this archived section are provided for historical purposes only. The information contained in each document is accurate only as of the date each document was originally issued or such earlier date stated in those documents. Diversified Healthcare Trust does not undertake any obligation to update any information contained in these documents. For current information about the company, please refer to our most recent public SEC Filings.

Cautionary Statement Regarding Forward Looking Statements

The information appearing on Diversified Healthcare Trust’s (“DHC”) website contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever DHC uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, it is making forward-looking statements. These forward-looking statements are based upon DHC’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by DHC’s forward-looking statements as a result of various factors. For example: (a) Office Properties Income Trust (“OPI”) and DHC have entered into a definitive merger agreement and the proposed merger is expected to close in the third quarter of 2023. However, the closing of the proposed merger is subject to the satisfaction or waiver of closing conditions, including DHC shareholder approval and the financing or any consents or approvals required or contemplated in connection with the proposed merger, some of which are beyond DHC’s control, and DHC cannot be sure that any or all of these conditions will be satisfied or waived. Accordingly, the proposed merger may not close on the contemplated terms or at all or it may be delayed; (b) DHC shareholders are expected to benefit from an annual dividend of $1.00 per share of the combined company. However, the Board of Trustees of the combined company will consider many factors when setting distribution rates, and thus future distribution rates may be increased or decreased and DHC cannot be sure as to the rate at which future distributions will be paid; (c) the transactions contemplated by the merger agreement and the terms thereof were evaluated, negotiated and recommended to DHC’s Board of Trustees by a special committee of DHC’s Board of Trustees, comprised solely of DHC’s disinterested, Independent Trustees, and were separately approved by DHC’s Independent Trustees and by DHC’s Board of Trustees. Despite this process, DHC could be subject to claims challenging the proposed merger or other transactions or DHC’s entry into the merger and related agreements because of the multiple relationships among DHC, OPI and The RMR Group LLC (“RMR”) and their related persons and entities or other reasons, and defending even meritless claims could be expensive and distracting to management; and (d) DHC’s website contains statements regarding the expectations for proposed merger and the combined company which may imply that the combined company will achieve its expected strategic and financial goals and the shareholders will benefit from the growth potential of the combined company. However, the combined company will be subject to various risks, including: the risk that the combined businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated; the risk that cost savings and synergies anticipated to be realized by the merger may not be fully realized or may take longer to realize than expected; risks related to future opportunities, plans and strategy for the combined company, including the uncertainty of expected future financial performance, expected access to cash flows and capital, timing of accretion, distribution rates and results of the combined company following completion of the proposed merger and the challenges facing the industries in which each company currently operates and the combined company will, following the closing of the transaction, operate; risks related to the market value of the OPI common shares of beneficial interest to be issued in the proposed merger; risks associated with indebtedness incurred in connection with the proposed merger, including the potential inability to access, or reduced access to, the capital markets or other capital resources or increased cost of borrowings, including as a result of a credit rating downgrade; risks associated with the level of capital expenditures of each company and the combined company following the proposed merger; and risks associated with the impact of general economic, political and market factors on the combined company. As a result, the combined company may not achieve the long-term growth and value creation for shareholder as expected.

The information contained in DHC's periodic reports filed with the Securities and Exchange Commission (the “SEC”), including under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or incorporated therein, also identifies important factors that could cause DHC's actual results to differ materially from those stated in or implied by DHC's forward-looking statements. DHC's filings with the SEC are available on the SEC's website at www.sec.gov and are also accessible on DHC ’s website at the following link: SEC Filings.

You should not place undue reliance upon any forward-looking statements. Except as required by law, DHC does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

The documents provided in this section are provided for historical purposes only. The information contained in each document is accurate only as of the date each document was originally issued or such earlier date stated in those documents. DHC does not undertake any obligation to update any information contained in these documents. For current information about DHC, please refer to DHC’s most recent public SEC Filings.

IMPORTANT ADDITIONAL INFORMATION ABOUT THE MERGER

The information appearing on DHC ’s website may be deemed to be solicitation material in respect of the proposed merger between DHC and OPI. In connection with the proposed merger, OPI filed a registration statement on Form S-4 with the SEC containing a joint proxy statement/prospectus of DHC and OPI. On July 21, 2023, the registration statement was declared effective by the SEC and DHC and OPI each filed with the SEC and commenced mailing to their respective shareholders the definitive joint proxy statement/prospectus. The proposed transaction involving DHC and OPI will be submitted to DHC’s and OPI’s shareholders for their consideration at special meetings of shareholders to be held on August 30, 2023. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT DHC, OPI AND THE MERGER. Investors are also able to obtain copies of the registration statement and the joint proxy statement/prospectus and other relevant documents (when they become available) free of charge at the SEC’s website (www.sec.gov). Additional copies of documents filed by DHC with the SEC may be obtained for free on DHC’s Investor Relations website at www.dhcreit.com/investors or by contacting the DHC Investor Relations department at 1-617-796-8234. In addition to the registration statement and the joint proxy statement/prospectus, DHC files annual, quarterly and current reports and other information with the SEC. DHC’s filings with the SEC are also available to the public from commercial document-retrieval services and at the website maintained by the SEC at www.sec.gov.

NO OFFER OR SOLICITATION

The information appearing on DHC ’s website is for informational purposes only and is not intended to and does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, any securities or a solicitation of any vote or approval in any jurisdiction with respect to the merger or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

PARTICIPANTS IN THE SOLICITATION

DHC and certain of its trustees and executive officers, OPI and certain of its trustees and executive officers, and RMR, the manager of DHC and OPI, and its parent and certain of their respective directors, officers and employees may be deemed to be participants in the solicitation of proxies from DHC’s and OPI’s shareholders in connection with the merger. Certain information regarding these trustees, executive officers, directors, officers and employees and a description of their direct and indirect interests are set forth in the registration statement and the joint proxy statement/prospectus filed with the SEC by DHC and/or OPI. Information about DHC’s trustees and executive officers is also included in the proxy statement for DHC’s 2023 annual meeting of shareholders, which was filed with the SEC on April 20, 2023. Information about OPI’s trustees and executive officers is included in the proxy statement for OPI’s 2023 annual meeting of shareholders, which was filed with the SEC on April 6, 2023. Copies of the foregoing documents may be obtained as provided above.

SNH Announces Financial Results For The Quarter And Year Ended December 31, 2001

Newton, MA (March 7, 2002): Senior Housing Properties Trust (NYSE: SNH) today announced its financial results for the quarter and year ended December 31, 2001, as follows (in thousands, except per share data):

December 31, 2001 financial revenues

* Funds from operations, or FFO, is net income: plus depreciation, amortization, other non-cash expenses and non-recurring items; and less gains on property sales and gain on foreclosures and lease terminations. FFO is further defined in the White Paper on Funds from Operations as approved by the Board of Governors of the National Association of Real Estate Investments Trusts ("NAREIT") in March 1995 and as clarified from time to time thereafter. SNH considers FFO to be an appropriate measure of performance for an equity REIT, along with cash flow from operating activities, financing activities and investing activities, because it provides investors with an indication of an equity REIT's ability to incur and service debt, make capital expenditures, pay distributions and fund other cash needs. SNH computes FFO in accordance with the standards established by NAREIT, but excluding unusual and non-recurring items, certain non-cash items, and gains on sales of undepreciated properties, which may not be comparable to FFO reported by other REITs that define the term differently. FFO does not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of financial performance or cash flow from operating activities, determined in accordance with GAAP, as a measure of liquidity.

Because of changes in the composition of its assets and operations since the beginning of 2000, SNH believes the information presented above is not readily comparable and is not indicative of expected future financial performance. These changes include, but are not limited to, the following:

During the first quarter of 2000, two nursing home tenants of SNH filed for bankruptcy. Prior to these bankruptcies these tenants paid approximately half of SNH's total rental income.
During February 2000, SNH repossessed three nursing homes which were leased to a third bankrupt tenant and sold those three properties for $13 million.
During 2000, SNH settled with two bankrupt tenants and repossessed certain facilities from the bankrupt tenants.
As a result of these repossessions and settlements, SNH recognized a non-recurring gain on foreclosures and lease terminations of $7.1 million in the quarter and year ended December 31, 2000.
As a result of the settlements, SNH became financially responsible for the operations of repossessed nursing homes effective July 1, 2000. However, these settlements were conditioned upon regulatory approvals, and the financial results of the repossessed nursing homes were reported as other real estate income under the equity method of accounting until all conditions to closing were satisfied. Effective January 1, 2001, regulatory approvals for implementation of these settlements were received and the nursing home operations were consolidated into SNH. Accordingly, the revenues reported for the quarter and year ended December 31, 2000, included other real estate income of $1.3 million and $2.5 million, respectively; while the 2001 periods included zero other real estate income. Similarly, the revenues reported for the quarter and year ended December 31, 2001, included facilities' operating revenues of $58.6 million and $229.2 million, respectively, but there are zero comparable revenues reported in 2000.
In October 2000, SNH sold four independent living communities for $123 million and realized a capital gain of $27.4 million, which is not recurring.
In the 12 months between July 1, 2000 and June 30, 2001, SNH incurred general and administrative expenses arising because of its tenant bankruptcies, settlements, regulatory approvals and the establishment of operating systems for the repossessed nursing homes. In the quarter and year ended December 31, 2000, these non-recurring charges were $2.6 million and $3.5 million, respectively. In the quarter and year ended December 31, 2001, these non-recurring charges were zero and $4.2 million, respectively.
At year-end 2001, the repossessed nursing operations were leased to a SNH subsidiary corporation and the share ownership of that subsidiary was distributed to SNH shareholders in a spin off transaction. Accordingly, future financial reports by SNH will not include operating revenues or expenses of these properties, but will include rental income from the former subsidiary of $7 million/year.

During 2001, SNH's capital structure changed, as follows:

In June and July 2001, SNH issued 1,095,780 trust preferred securities with a total liquidation value of $27.4 million. These securities mature in 2041.
In July and October 2001, SNH issued 17,492,000 common shares for net proceeds, after underwriting and issuance costs, of $213.7 million.
In December 2001, SNH issued $245 million of senior unsecured notes. These notes mature in 2012.

Besides the foregoing events reflected in the historical financial results presented, the following recent developments are expected to have material effects upon SNH's future operating results.

On January 2, 2002, SNH entered an exchange transaction with HEALTHSOUTH Corporation. Five nursing homes were transferred by SNH to HEALTHSOUTH in exchange for two rehabilitation hospitals which were transferred by HEALTHSOUTH to SNH. Also, HEALTHSOUTH's rent obligations to SNH were reduced from $10.0 million to $8.7 million per year and the term of HEALTHSOUTH's lease was extended from year end 2005 through year end 2011.
Also in January 2002, SNH purchased 31 up-market senior living communities with 7,487 apartments or living units for $600 million. These were purchased using cash on hand from previous equity and debt offerings, borrowing on our bank credit facility and assumption of certain obligations. These properties are managed by a subsidiary of Marriott International, Inc. and they are leased to SNH's former subsidiary for minimum rent of $63 million per year.
In February 2002, SNH issued 15,000,000 common shares for net proceeds, after underwriting and issuance costs, of $195.2 million.

Commenting upon these year end results, David J. Hegarty, President of SNH, issued the following statement:

"During the past two years SNH has undergone a remarkably successful transformation. Our troubled nursing home portfolio has been sold, swapped or stabilized and leased. We have about doubled the size of SNH by buying up-market properties where revenues are principally derived from residents' private resources. And we have materially strengthened our capital structure.

"I want to express SNH management's sincere appreciation to all our continuing shareholders, many of whom called to express support during our transition period. I also want to express our gratitude to our new investors who demonstrated faith in our ability to accomplish this transition by providing the capital we needed to do it."

Senior Housing Properties Trust is a real estate investment trust headquartered in Newton, MA that owns 112 senior living properties located in 28 states.

THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON SNH'S CURRENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR. FOR EXAMPLE, THE DESCRIPTION OF RENTAL PAYMENTS WHICH SNH EXPECTS TO RECEIVE FROM HEALTHSOUTH AND FROM ITS FORMER SUBSIDIARY MAY IMPLY THAT THIS RENT WILL BE RECEIVED. SNH BELIEVES THAT SUCH RENT WILL BE RECEIVED, BUT THE FINANCIAL CIRCUMSTANCES OF THESE TENANTS MAY CHANGE AND THEY MAY BECOME UNABLE TO PAY SNH'S RENTS. INVESTORS SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

December 31, 2001 financial data

In early 2000, two large SNH tenants filed for bankruptcy. SNH entered settlements with these tenants which were financially effective on July 1, 2000. However, these settlements were conditioned upon certain regulatory approvals which were not obtained during 2000. The financial results for repossessed facilities' operations were reported in 2000 as other real estate income under the equity method of accounting. Beginning in 2001, the settlement contingencies were satisfied and SNH consolidated the repossessed operations and reported their revenues and expenses as facilities' operations revenues and as facilities' operations expenses, respectively. As a result of the settlements with the former tenants certain properties were transferred to SNH and certain security deposits were forfeit to SNH. The net effect of these transfers and forfeitures is reported as gain on foreclosures and lease terminations. Also, as a result of these tenant bankruptcies, settlements, regulatory approvals and the establishment of operating systems for the repossessed facilities, SNH incurred certain non-recurring general and administrative expenses which are separately identified on these financial statements.
The repossessed facilities described in footnote 1 were leased to a subsidiary of SNH, Five Star Quality Care, Inc. On December 31, 2001, substantially all of the shares of Five Star were distributed to SNH shareholders in a spin off transaction.
In October 2000, SNH sold four senior living properties for $123 million and realized a capital gain of $27.4 million.
Funds from operations, or FFO, is net income: plus depreciation, amortization, other non-cash expenses and non-recurring items; and less gains on property sales and gain on foreclosures and lease terminations. FFO is further defined in the White Paper on Funds from Operations as approved by the Board of Governors of the National Association of Real Estate Investments Trusts ("NAREIT") in March 1995 and as clarified from time to time thereafter. SNH considers FFO to be an appropriate measure of performance for an equity REIT, along with cash flow from operating activities, financing activities and investing activities, because it provides investors with an indication of an equity REIT's ability to incur and service debt, make capital expenditures, pay distributions and fund other cash needs. SNH computes FFO in accordance with the standards established by NAREIT, but excluding unusual and non-recurring items, certain non-cash items, and gains on sales of underpreciated properties, which may not be comparable to FFO reported by other REITS that define the term differently. FFO does not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, determined in accordance with GAAP, as an indication of financial performance or cash flow from operating activities, determined in accordance with GAAP, as a measure of liquidity.
The Securities and Exchange Commission Staff Accounting Bulletin No. 101 generally requires SNH to defer recognition of percentage rental income for the first, second and third quarters to the fourth quarter. Although recognition of revenue is deferred for purposes of calculating net income, SNH's calculations of FFO include estimated percentage rental amounts on a quarterly basis. This adjustment is intended to deduct percentage rent income included in the fourth quarter which was included in FFO for prior quarters.

Contact:
David J. Hegarty,
President, or John R. Hoadley
Treasurer
(617) 796-8350
www.snhreit.com

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Cautionary Language

Cautionary Statement Regarding Forward Looking Statements

IMPORTANT ADDITIONAL INFORMATION ABOUT THE MERGER

NO OFFER OR SOLICITATION

PARTICIPANTS IN THE SOLICITATION

SNH Announces Financial Results For The Quarter And Year Ended December 31, 2001