DHC

Financial Position and Capital Allocation

• Ended Q2 2026 with $267 million in total liquidity, consisting of $117 million in cash and an undrawn $150 million secured revolving credit facility.
• Net debt to EBITDA improved to 7.1x from 8.7x year-over-year, a 1.6x leverage reduction, driven by strong shop segment performance and over $600 million in asset sales completed since early 2025. Adjusted EBITDA RE to interest expense improved to 2.2x from 1.4x year-over-year.
• The large-scale capital recycling program is substantially complete; current priorities are improving operations, reducing leverage, and deploying growing free cash flow to high-return internal projects, with flexibility to evaluate shareholder return strategies including potential dividend reinstatement.
• 2026 recurring CapEx guidance is maintained at $100 to $115 million; year-to-date 2026 capital spend was $47.6 million, 28% lower than the same period in 2025.

Shop Segment Strategic and Operational Updates

• Completed operator transitions in late 2025, and is now in the early stages of capturing benefits from regionalized oversight and shared best practices.
• Renegotiating contracts with the legacy operator base to align with the new aligned operator framework, featuring lower base fees and tiered performance-tied incentive fees, plus tighter cost controls. New contracts are expected to launch in January 2027, delivering $2 million in annual immediate cost savings.
• Initiating a repositioning program for 16 shop communities, converting closed skilled nursing wings into high-demand independent living, assisted living, and memory care units. The first phase will invest ~$20 million in 6 communities to add 150 units, with construction starting in late 2026 and first units coming online in H2 2027. The project is expected to deliver unlevered mid-teens returns and eliminate existing carrying costs for closed wings.
• New food and beverage procurement contracts with operators are expected to deliver $14 to $16 million in annualized cost savings, with $8 million of savings recognized in 2026.

General Performance Highlights

• DHC has delivered top-tier total shareholder returns among U.S. REITs over the past 1 and 3-year periods, with a year-to-date 2026 stock price appreciation of 81.7%.
• Q2 2026 G&A included $10 million in incentive management fees and $2.3 million in non-cash share-based compensation; adjusted G&A (excluding these items) was $7.1 million for the quarter.

• Management reaffirms the full-year 2026 guidance raised in June 2026: total NOI of $307 to $323 million, shop NOI of $185 to $195 million, adjusted EBITDA RE of $300 to $315 million, and normalized FFO of $0.56 to $0.62 per share.
• Updated underlying assumptions for 2026: annual occupancy growth revised down 100 basis points to 200 basis points, total revenue growth revised down 140 basis points to 6.6%, average monthly rate growth revised up 20 basis points to 5.5%, operating expense growth revised down 200 basis points to 2.5%, and expense per unit growth revised down 70 basis points to 1.5%. The downward top-line revisions are fully offset by expense savings, leaving the overall guidance range unchanged.
• Shop segment NOI is currently tracking towards the high end of the 2026 guidance range, after accounting for a one-time $1.5 million Q2 2026 expense benefit that will not repeat in Q3.
• Additional operating expense synergies are expected in 2027 from new operator contracts and legacy contract renegotiations, beyond the 2026 guidance.

1. Shop Segment: Same property NOI increased 37.2% year-over-year to $52 million, contributing 61.9% of total consolidated Q2 2026 same property NOI. Same property occupancy increased 160 basis points year-over-year to 83.1%, with a 6.2% year-over-year increase in average monthly rate. Sequentially, same property NOI grew 17.3%, and occupancy grew 70 basis points.
2. Medical Office and Life Science Segment: Same property NOI was essentially flat year-over-year at $24.1 million, contributing 28.7% of total consolidated Q2 2026 same property NOI. Same property occupancy increased 110 basis points year-over-year to 95.8%. There was $477,000 square feet of new and renewal leasing, with a 6.7% rent roll-up and 7.1-year weighted average lease term. Three known tenant vacates are scheduled, representing 4.6% of the segment's annualized revenue, with two vacating 3.5% of annualized revenue in July 2026. Consolidated Q2 2026 results: Total same property NOI increased 20.4% year-over-year to $84 million; consolidated same property cash basis NOI was $83 million, up 20.2% year-over-year and 9.3% sequentially. Normalized FFO was $39 million (16 cents per share), and adjusted EBITDA RE was $82 million.

• Temporary slower-than-expected occupancy growth in the shop segment resulting from the post-operator transition process of rebuilding local sales and leadership teams and establishing new operational infrastructure, which has delayed occupancy ramp-up timing.
• Upcoming known tenant vacates in the medical office and life science segment representing 4.6% of the segment's annualized revenue, which creates near-term vacancy risk for the segment.
• Forward-looking statements carry inherent uncertainty, and actual results may differ materially from projections due to unforeseen factors, as disclosed in DHC's SEC filings.

Q: Why is shop segment top-line revenue tracking below initial projections, and is the slowdown driven by temporary transition factors or broader demand issues? / A: The lower top-line is purely a timing delay from post-transition operational restructuring. New operators spent the first six months rebuilding local sales and leadership teams after the 2025 transition; these teams are now fully in place, and steady month-over-month occupancy improvement is already visible in Q2 results. Management remains confident that full projected occupancy levels will be achieved, just on a delayed timeline. /

Q: Once the 2027 legacy operator contract updates are implemented, will the entire portfolio be aligned to the new framework, and are further major contract changes expected? / A: The 2027 updates will bring the entire remaining portfolio (all communities outside of the already transitioned ALERIS contract, covering over 80 communities) into the new aligned framework. No further major contract overhauls are anticipated in the near term, though management continues to evaluate minor operational optimization opportunities with operators. /

Q: Beyond the one-time Q2 2026 expense benefit, is there seasonal or other factors that justify keeping guidance unchanged despite 1H results tracking near the high end of the range? / A: DHC is indeed tracking to the high end of the current shop NOI guidance. A minor seasonal headwind from higher utility costs is expected in Q3, but this is not material and does not change management's confidence in the high end of the guidance range. For average monthly rate growth, management chose to keep the 5.5% full-year guidance unchanged given the multiple moving pieces from the ongoing transition, though it acknowledges there is upside to this metric that could materialize into 2027. /

Q: What caused the quarter-over-quarter rental revenue decline in the medical office and life science segment, and is it related to the upcoming announced vacancies? / A: The decline was driven by a one-time $1 million unrelated bad debt charge in Q2, and has no connection to the upcoming announced tenant vacates.