DIVERSIFIED HEALTHCARE TRUSTDHC
DIVERSIFIED HEALTHCARE TRUST Fair Value Disclosure
Fair Value of Assets and Liabilities
The following table presents certain of our assets that are measured at fair value at December 31, 2025 and 2024, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||
| Description | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||||||||||||
| Recurring Fair Value Measurements Assets: | ||||||||||||||||||||||||||
Investment in unconsolidated joint venture (Level 3) (1) | $ | 73,471 | $ | 73,471 | $ | 81,949 | $ | 81,949 | ||||||||||||||||||
Investment in unconsolidated joint venture (Level 3) (2) | $ | 46,655 | $ | 46,655 | $ | 44,910 | $ | 44,910 | ||||||||||||||||||
Interest rate cap (Level 2) (3) | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
| Non-Recurring Fair Value Measurements Assets: | ||||||||||||||||||||||||||
Real estate properties held for sale (Level 2) (4) | $ | 22,048 | $ | 22,048 | $ | — | $ | — | ||||||||||||||||||
(1)The 10% equity interest we own in the Seaport JV is included in investments in unconsolidated joint ventures in our consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The assumptions made in the fair value analysis are based on the location, type and nature of the property, and current and anticipated market conditions. See Note 3 for further information regarding this joint venture.
(2)The 20% equity interest we own in the LSMD JV is included in investments in unconsolidated joint ventures in our consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The assumptions we made in the fair value analysis are based on the location, type and nature of each property, and current and anticipated market conditions. See Note 3 for further information regarding this joint venture.
(3)The fair value of our interest rate cap derivative is based on prevailing market prices in secondary markets for similar derivative contracts as of the measurement date.
(4)We have assets in our consolidated balance sheets that are measured at fair value on a non-recurring basis. During the year ended December 31, 2025, we recorded impairment charges of $30,999 to reduce the carrying value of 13 SHOP communities that were classified as held for sale to their estimated aggregate sales price, less estimated costs to sell, of $22,048 under an agreement we have entered into with a third party. See Note 3 for further information about impairment charges and the properties we have classified as held for sale.
The discount rates, exit capitalization rates and holding periods used to determine the fair value of our investment in the unconsolidated joint venture are Level 3 significant unobservable inputs and are shown in the table below:
| Valuation Technique | Discount Rates | Exit Capitalization Rates | Holding Periods | |||||||||||||||||||||||
As of December 31, 2025 | ||||||||||||||||||||||||||
Investment in unconsolidated joint venture (Level 3) (1) | Discounted cash flow | 7.00% | 6.00% | 10 years | ||||||||||||||||||||||
Investment in unconsolidated joint venture (Level 3) (2) | Discounted cash flow | 6.25% - 8.75% | 5.25% - 8.00% | 10 - 12 years | ||||||||||||||||||||||
As of December 31, 2024 | ||||||||||||||||||||||||||
Investment in unconsolidated joint venture (Level 3) (1) | Discounted cash flow | 7.00% | 6.00% | 10 years | ||||||||||||||||||||||
Investment in unconsolidated joint venture (Level 3) (2) | Discounted cash flow | 6.25% - 7.75% | 5.00% - 7.00% | 10 years | ||||||||||||||||||||||
(1)The 10% equity interest we own in the Seaport JV is included in investments in unconsolidated joint ventures in our consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The assumptions made in the fair value analysis are based on the location, type and nature of the property, and current and anticipated market conditions. See Note 3 for further information regarding this joint venture.
(2)The 20% equity interest we own in the LSMD JV is included in investments in unconsolidated joint ventures in our consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3
inputs). The assumptions we made in the fair value analysis are based on the location, type and nature of each property, and current and anticipated market conditions. See Note 3 for further information regarding this joint venture.
In addition to the assets described in the tables above, our financial instruments at December 31, 2025 and December 31, 2024 included cash and cash equivalents, restricted cash, certain other assets, our revolving credit facility, senior unsecured notes, senior secured notes, secured debt and finance leases and certain other unsecured obligations and liabilities. The fair values of these financial instruments approximated their carrying values in our consolidated financial statements as of such dates, except as follows:
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||
| Description | Carrying Value (1) | Estimated Fair Value | Carrying Value (1) | Estimated Fair Value | ||||||||||||||||||||||
Senior unsecured notes, 9.750% coupon rate, due 2025 | $ | — | $ | — | $ | 379,392 | $ | 379,970 | ||||||||||||||||||
Senior secured notes, zero coupon rate, due 2026 | — | — | 826,974 | 885,108 | ||||||||||||||||||||||
Senior unsecured notes, 4.750% coupon rate, due 2028 | 497,290 | 482,635 | 496,018 | 429,170 | ||||||||||||||||||||||
Senior secured notes, 7.250% coupon rate, due 2030 | 365,005 | 383,434 | — | — | ||||||||||||||||||||||
Senior unsecured notes, 4.375% coupon rate, due 2031 | 495,561 | 440,000 | 494,702 | 368,240 | ||||||||||||||||||||||
Senior unsecured notes, 5.625% coupon rate, due 2042 | 343,683 | 224,140 | 343,302 | 218,260 | ||||||||||||||||||||||
Senior unsecured notes, 6.250% coupon rate, due 2046 | 244,192 | 175,000 | 243,905 | 157,700 | ||||||||||||||||||||||
| Secured debt and finance leases | 455,093 | 484,932 | 126,611 | 126,001 | ||||||||||||||||||||||
| $ | 2,400,824 | $ | 2,190,141 | $ | 2,910,904 | $ | 2,564,449 | |||||||||||||||||||
(1)Includes unamortized net discounts, premiums and debt issuance costs, if any.
We estimated the fair values of our two issuances of senior unsecured notes due 2042 and 2046 based on the closing price on Nasdaq (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of December 31, 2025 and 2024. We estimated the fair values of our three issuances of senior unsecured notes due 2025, 2028 and 2031 and our two issuances of senior secured notes due 2026 and 2030 using an average of the bid and ask price on Nasdaq on or about December 31, 2025 and 2024 (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair values of our secured debts by using discounted cash flows analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 24, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.