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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended September 30, 2020
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Commission File Number 1-15319 
DIVERSIFIED HEALTHCARE TRUST
(Exact Name of Registrant as Specified in Its Charter) 
Maryland 04-3445278
(State or Other Jurisdiction of Incorporation or
Organization)
 (IRS Employer Identification No.)
 Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634
(Address of Principal Executive Offices) (Zip Code) 
617 - 796 - 8350
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title Of Each ClassTrading Symbol(s)Name Of Each Exchange On Which Registered
Common Shares of Beneficial InterestDHCThe Nasdaq Stock Market LLC
5.625% Senior Notes due 2042DHCNIThe Nasdaq Stock Market LLC
6.25% Senior Notes due 2046DHCNLThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large Accelerated Filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 
Number of registrant's common shares outstanding as of November 2, 2020: 238,268,478


Table of Contents
DIVERSIFIED HEALTHCARE TRUST
FORM 10-Q
 
September 30, 2020
 
INDEX
  Page
 
   
   
 
   
 
   
 
   
 
   
   
   
   
 
   
 
   
   
   
 
 
References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Diversified Healthcare Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.



Table of Contents
PART I.  Financial Information
 
Item 1.  Financial Statements.
 
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
(unaudited) 
 September 30,December 31,
 20202019
Assets  
Real estate properties:  
Land$792,343 $793,123 
Buildings and improvements6,579,388 6,668,463 
Total real estate properties, gross7,371,731 7,461,586 
Accumulated depreciation(1,651,864)(1,570,801)
Total real estate properties, net5,719,867 5,890,785 
Assets of properties held for sale164,363 209,570 
Cash and cash equivalents82,241 37,357 
Restricted cash16,134 14,867 
Acquired real estate leases and other intangible assets, net298,429 337,875 
Other assets, net254,084 163,372 
Total assets$6,535,118 $6,653,826 
Liabilities and Equity  
Unsecured revolving credit facility$ $537,500 
Unsecured term loans, net198,913 448,741 
Senior unsecured notes, net2,606,550 1,820,681 
Secured debt and finance leases, net692,385 694,739 
Liabilities of properties held for sale7,834 6,758 
Accrued interest53,681 24,060 
Assumed real estate lease obligations, net70,046 76,705 
Other liabilities264,003 167,592 
Total liabilities3,893,412 3,776,776 
Commitments and contingencies
Equity:  
Equity attributable to common shareholders:
Common shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 238,268,478 and 237,897,163 shares issued and outstanding, respectively
2,383 2,379 
Additional paid in capital4,613,501 4,612,511 
Cumulative net income1,929,337 2,052,562 
Cumulative distributions(4,031,177)(3,930,933)
Total equity attributable to common shareholders
2,514,044 2,736,519 
Noncontrolling interest:
Total equity attributable to noncontrolling interest
127,662 140,531 
Total equity2,641,706 2,877,050 
Total liabilities and equity$6,535,118 $6,653,826 
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1

Table of Contents
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
(unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Revenues:    
Rental income$104,238 $148,011 $320,943 $459,349 
Residents fees and services290,101 107,816 926,174 324,767 
Total revenues394,339 255,827 1,247,117 784,116 
Expenses:    
Property operating expenses315,650 125,083 934,150 362,498 
Depreciation and amortization67,211 73,368 204,466 219,522 
General and administrative6,988 9,604 23,132 28,287 
Acquisition and certain other transaction related costs53 2,492 803 11,209 
Impairment of assets64,202 33,099 106,611 41,518 
Total expenses454,104 243,646 1,269,162 663,034 
(Loss) gain on sale of properties(211)4,183 2,403 21,893 
Dividend income   1,846 
Gains and losses on equity securities, net12,510 40 14,541 (41,476)
Interest and other income134 238 8,008 590 
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $2,448, $1,421, $5,574 and $4,592, respectively)
(58,091)(44,817)(143,715)(136,840)
Gain on lease termination  22,896  
Loss on early extinguishment of debt  (427)(17)
Loss from continuing operations before income tax (expense) benefit and equity in earnings of an investee(105,423)(28,175)(118,339)(32,922)
Income tax (expense) benefit(365)146 (1,048)47 
Equity in earnings of an investee 83  617 
Net loss(105,788)(27,946)(119,387)(32,258)
Net income attributable to noncontrolling interest(1,100)(1,444)(3,838)(4,279)
Net loss attributable to common shareholders$(106,888)$(29,390)$(123,225)$(36,537)
Other comprehensive (loss) income:    
Equity in unrealized (loss) gain of an investee (46) 91 
Other comprehensive (loss) income (46) 91 
Comprehensive loss(105,788)(27,992)(119,387)(32,167)
Comprehensive income attributable to noncontrolling interest(1,100)(1,444)(3,838)(4,279)
Comprehensive loss attributable to common shareholders$(106,888)$(29,436)$(123,225)$(36,446)
Weighted average common shares outstanding (basic)237,752 237,608 237,707 237,585 
Weighted average common shares outstanding (diluted)237,752 237,608 237,707 237,585 
Per common share amounts (basic and diluted):    
Net loss attributable to common shareholders$(0.45)$(0.12)$(0.52)$(0.15)
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2

Table of Contents
DIVERSIFIED HEALTHCARE TRUST
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
(unaudited)
Number of
Shares
Common
Shares
Additional
Paid In
Capital
Cumulative
Net Income
Cumulative DistributionsTotal Equity Attributable to Common ShareholdersTotal Equity Attributable to Noncontrolling
Interest
Total Equity
Balance at December 31, 2019:237,897,163 $2,379 $4,612,511 $2,052,562 $(3,930,933)$2,736,519 $140,531 $2,877,050 
Net income— — — 9,735 — 9,735 1,408 11,143 
Distributions— — — — (35,684)(35,684)— (35,684)
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock— — — — (59,801)(59,801)— (59,801)
Share grants— — 249 — — 249 — 249 
Share repurchases(3,438)— (21)— — (21)— (21)
Distributions to noncontrolling interest— — — — — — (5,767)(5,767)
Balance at March 31, 2020:237,893,725 2,379 4,612,739 2,062,297 (4,026,418)2,650,997 136,172 2,787,169 
Net (loss) income— — — (26,072)— (26,072)1,330 (24,742)
Distributions— — — — (2,379)(2,379)— (2,379)
Share grants60,000 1 415 — — 416 — 416 
Share repurchases(1,757)— (8)— — (8)— (8)
Distributions to noncontrolling interest— — — — — — (5,616)(5,616)
Balance at June 30, 2020:237,951,968 2,380 4,613,146 2,036,225 (4,028,797)2,622,954 131,886 2,754,840 
Net (loss) income— — — (106,888)— (106,888)1,100 (105,788)
Distributions— — — — (2,380)(2,380)— (2,380)
Share grants360,000 3 503 — — 506 — 506 
Share repurchases(42,180)— (142)— — (142)— (142)
Share forfeitures(1,310)— (6)— — (6)— (6)
Distributions to noncontrolling interest— — — — — — (5,324)(5,324)
Balance at September 30, 2020:238,268,478 $2,383 $4,613,501 $1,929,337 $(4,031,177)$2,514,044 $127,662 $2,641,706 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)
(dollars in thousands)
(unaudited)
Number of
Shares
Common
Shares
Additional
Paid In
Capital
Cumulative
Net Income
Cumulative Other
Comprehensive
Income (Loss)
Cumulative DistributionsTotal Equity Attributable to Common ShareholdersTotal Equity Attributable to Noncontrolling
Interest
Total Equity
Balance at December 31, 2018:237,729,900 $2,377 $4,611,419 $2,140,796 $(266)$(3,731,214)$3,023,112 $156,758 $3,179,870 
Net income— — — 30,082 — — 30,082 1,422 31,504 
Other comprehensive income— — — — 66 — 66 — 66 
Distributions— — — — — (92,714)(92,714)— (92,714)
Share grants— — 215 — — — 215 — 215 
Distributions to noncontrolling interest— — — — — — — (5,503)(5,503)
Balance at March 31, 2019:237,729,900 2,377 4,611,634 2,170,878 (200)(3,823,928)2,960,761 152,677 3,113,438 
Net (loss) income— — — (37,229)— — (37,229)1,413 (35,816)
Other comprehensive income— — — — 71 — 71 — 71 
Distributions— — — — — (35,659)(35,659)— (35,659)
Share grants15,000 — 395 — — — 395 — 395 
Share repurchases(3,529)— (33)— — — (33)— (33)
Share forfeitures(610)— (3)— — — (3)— (3)
Distributions to noncontrolling interest— — — — — — — (5,684)(5,684)
Balance at June 30, 2019:237,740,761 2,377 4,611,993 2,133,649 (129)(3,859,587)2,888,303 148,406 3,036,709 
Net (loss) income— — — (29,390)— — (29,390)1,444 (27,946)
Other comprehensive loss— — — — (46)— (46)— (46)
Distributions— — — — — (35,661)(35,661)— (35,661)
Share grants187,500 2 530 — — — 532 — 532 
Share repurchases(27,984)— (259)— — — (259)— (259)
Distributions to noncontrolling interest— — — — — — — (5,107)(5,107)
Balance at September 30, 2019:237,900,277 $2,379 $4,612,264 $2,104,259 $(175)$(3,895,248)$2,823,479 $144,743 $2,968,222 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
 Nine Months Ended September 30,
 20202019
Cash flows from operating activities:  
Net loss$(119,387)$(32,258)
Adjustments to reconcile net loss to cash provided by operating activities:
  
Depreciation and amortization204,466 219,522 
Amortization of debt issuance costs and debt discounts and premiums
5,574 4,592 
Straight line rental income(3,029)(3,550)
Amortization of acquired real estate leases and other intangible assets(5,559)(4,922)
Loss on early extinguishment of debt51 17 
Gain on lease termination(22,896) 
Impairment of assets106,611 41,518 
Gain on sale of properties(2,403)(21,893)
Gains and losses on equity securities, net(14,541)41,476 
Other non-cash adjustments, net(1,662)(2,828)
Equity in earnings of an investee (617)
Change in assets and liabilities:  
Other assets(39,358)(6,139)
Accrued interest29,604 4,126 
Other liabilities21,508 (43,374)
Net cash provided by operating activities158,979 195,670 
Cash flows from investing activities:  
Real estate acquisitions and deposits(2,526) 
Real estate improvements(118,141)(175,146)
Proceeds from sale of properties, net78,244 50,355 
Proceeds from sale of RMR Inc. common shares, net 98,557 
Distributions in excess of earnings from Affiliates Insurance Company287  
Net cash used in investing activities(42,136)(26,234)
Cash flows from financing activities:  
Proceeds from issuance of senior unsecured notes, net985,000  
Proceeds from borrowings on revolving credit facility430,500 803,000 
Repayments of borrowings on revolving credit facility(968,000)(353,000)
Repayment of senior unsecured notes(200,000)(400,000)
Repayment of unsecured term loan(250,000) 
Repayment of other debt(5,189)(45,438)
Loss on early extinguishment of debt settled in cash(376) 
Payment of debt issuance costs(5,306) 
Repurchase of common shares(171)(292)
Distributions to noncontrolling interest(16,707)(16,294)
Distributions to shareholders(40,443)(164,034)
Net cash used in financing activities(70,692)(176,058)
Increase (decrease) in cash and cash equivalents and restricted cash46,151 (6,622)
Cash and cash equivalents and restricted cash at beginning of period52,224 70,071 
Cash and cash equivalents and restricted cash at end of period$98,375 $63,449 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
(unaudited)
Nine Months Ended September 30,
20202019
Supplemental cash flow information:  
Interest paid$109,689 $129,010 
Income taxes paid$381 $452 
Non-cash investing activities:
Five Star Senior Living Inc. common stock$97,896 $— 
Transaction Agreement additional consideration(75,000)— 
Capitalized interest$1,152 $888 
Non-cash financing activities:
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock$(59,801)$— 
Supplemental disclosure of cash and cash equivalents and restricted cash:
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within our condensed consolidated balance sheets to the amount shown in our condensed consolidated statements of cash flows:
As of September 30,
20202019
Cash and cash equivalents$82,241 $49,462 
Restricted cash (1)
16,134 13,987 
Total cash and cash equivalents and restricted cash shown in our condensed consolidated statements of cash flows$98,375 $63,449 
(1) Restricted cash consists of amounts escrowed for real estate taxes, insurance and capital expenditures at certain of our mortgaged properties and cash held for the operations of one of our life science properties that is owned in a joint venture arrangement in which we own a 55% equity interest.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
 
Note 1.  Basis of Presentation
The accompanying condensed consolidated financial statements of Diversified Healthcare Trust and its subsidiaries, or we, us, or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2019, or our Annual Report.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets and impairments of real estate and intangible assets. We have made reclassifications to the financial statements of prior periods to conform to the current period presentation. These reclassifications had no effect on net income (loss) or equity.
We have been, are currently, and expect in the future to be involved in claims, lawsuits, and regulatory and other governmental audits, investigations and proceedings arising in the ordinary course of our business, some of which may involve material amounts. Also, the defense and resolution of these claims, lawsuits, and regulatory and other governmental audits, investigations and proceedings may require us to incur significant expense. We account for claims and litigation losses in accordance with FASB ASC Topic 450, Contingencies, or ASC 450. Under ASC 450, loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, we are often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero, is recorded; and then, as information becomes known, the minimum loss amount is updated, as appropriate. A minimum or best estimate amount may be increased or decreased when events result in a changed expectation.
We have a joint venture arrangement with an institutional investor for one of our life science properties located in Boston, Massachusetts. The investor owns a 45% equity interest in the joint venture, and we own the remaining 55% equity interest in the joint venture. We have determined that this joint venture is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification. We concluded that we must consolidate this VIE because we are the entity with the power to direct the activities that most significantly impact the VIE's economic performance and we have the obligation to absorb losses of, and the right to receive benefits from, the VIE that could be significant to the VIE, and therefore are the primary beneficiary of the VIE. The assets of this VIE were $981,204 and $1,015,661 as of September 30, 2020 and December 31, 2019, respectively, and consist primarily of the net real estate owned by the joint venture. The liabilities of this VIE were $698,667 and $704,344 as of September 30, 2020 and December 31, 2019, respectively, and consist primarily of mortgage debts secured by the property. The investor's interest in this consolidated entity is reflected as a noncontrolling interest in our condensed consolidated financial statements. See Note 7 for further information about this joint venture.

Note 2.  Recent Events and Accounting Pronouncements
Recent Events. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic and, in response to the outbreak, the U.S. Health and Human Services Secretary declared a public health emergency in the United States and many states and municipalities declared public health emergencies. Various governmental and market responses attempting to contain and mitigate the spread of the virus have negatively impacted, and continue to negatively impact, the global economy, including the U.S. economy, and our results of operations, financial position and cash flow. In the United States, individuals are being encouraged to practice social distancing, are generally restricted from gathering in groups and, in
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
some areas, either have been or are subject to stay at home orders, which restrict or prohibit social gatherings, travel and non-essential activities outside of their homes. We do not know when these restrictions will abate.
Our result of operations and cash flows from our senior living communities are dependent on our operators' ability to generate returns to us. Senior living community operators have experienced disruptions, including limitations on in-person tours and new move-ins, and are experiencing challenges in attracting new residents to our communities. In addition, our operators are experiencing increased expenses due to increased labor costs, including higher health benefits costs, and increased costs and consumption of supplies, including personal protective equipment, which costs reduce our returns.
As a result of the disruptions caused by the pandemic, we have taken various measures to improve our liquidity and financial flexibility. Since March 2020, we have reduced our quarterly cash distribution rate on our common shares to $0.01 per common share, reduced our planned capital expenditures, issued $1,000,000 of senior notes, repaid all amounts outstanding under our $1,000,000 unsecured revolving credit facility, sold assets for aggregate sales prices of $120,776 and entered agreements to sell additional properties for $167,392. In addition, on June 30, 2020, we amended the agreements that govern our revolving credit facility and our $200,000 term loan. Among other things, the amendments require that we maintain $200,000 of unrestricted cash and/or undrawn availability under our revolving credit facility and restrict our ability to incur additional debt (with the exception of borrowings under our revolving credit facility).
Recent Accounting Pronouncements. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. We adopted this standard which was effective as of January 1, 2020 using the modified retrospective approach. The implementation of this standard did not have a material impact in our condensed consolidated financial statements.

Note 3.  Real Estate Properties
As of September 30, 2020, we owned 407 properties located in 37 states and Washington, D.C., including 22 properties classified as held for sale, 10 properties scheduled for closure and/or sale and one life science property owned in a joint venture arrangement in which we own a 55% equity interest.
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 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.
Acquisition Activities:
In January 2020, we acquired a vacant land parcel adjacent to a property we own in our portfolio of medical office and life science properties, or our Office Portfolio, segment located in Tempe, Arizona for $2,600, excluding acquisition costs.
Disposition Activities:
During the nine months ended September 30, 2020, we sold 17 properties for an aggregate sales price of $80,601, excluding closing costs, as presented in the table below. The sales of these properties do not represent significant dispositions individually or in the aggregate, nor do we believe they represent a strategic shift in our business. As a result, the results of the
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
operation 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 SaleLocationType of PropertyNumber of PropertiesSquare Feet or Number of Units
Sales Price (1)
Gain (loss) on SaleImpairment of Assets
January 2020
LouisianaMedical Office640,575 sq. ft.$5,925 $(81)$ 
February 2020
PennsylvaniaMedical Office150,000 sq. ft.2,900  (47)
March 2020TexasMedical Office170,229 sq. ft.8,779 2,863  
April 2020CaliforniaManaged Senior Living3599 units47,000 (168)5,465 
June 2020South CarolinaMedical Office149,242 sq. ft.3,550  2,753 
July 2020TexasMedical Office16,849 sq. ft.2,072 (30) 
July 2020ConnecticutMedical Office132,162 sq. ft.625 (25)267 
August 2020MississippiManaged Senior Living2116 units2,500 (42)227 
September 2020MississippiMedical Office178,747 sq. ft.7,250 (114)148 
17$80,601 $2,403 $8,813 
(1)Sales price excludes closing costs.

As of September 30, 2020, we had 22 properties classified as held for sale in our condensed consolidated balance sheet as follows:
Type of PropertyNumber of PropertiesGross Book Value
Impairment of Assets(1)
Managed Senior Living14$52,958 $33,356 
Medical Office569,230 1,524 
Triple Net Leased, Senior Living343,603  
22$165,791 $34,880 
(1)We recorded an aggregate of $34,880 impairment of real estate during the nine months ended September 30, 2020 to adjust the carrying values of certain of these properties to their estimated fair values less costs to sell.
In October and November 2020, the three triple net leased senior living communities and one of the 14 managed senior living communities classified as held for sale in the table above were sold for an aggregate sales price of $49,000, excluding closing costs.
We recorded impairment charges of $3,071 related to six medical office properties and one senior living community that were classified as held for sale during the three months ended March 31, 2020. These properties were subsequently reclassified to held and used as of June 30, 2020.
We also recorded impairment charges of $59,847 during the three and nine months ended September 30, 2020 related to nine of the 10 senior living communities that were scheduled for closure and/or sale as of September 30, 2020.
As of November 2, 2020, we had 21 properties under agreements to sell for an aggregate sales price of approximately $167,392, 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.

Note 4.  Leases
We are a lessor of medical office and life science properties, senior living communities and other healthcare related properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the premises demised under the leases; therefore, we have determined to evaluate our leases as lease arrangements.
Certain of our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market based indices, is recognized on a straight line basis over
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term.
We increased rental income to record revenue on a straight line basis by $491 and $1,186 for the three months ended September 30, 2020 and 2019, respectively, and $3,029 and $3,550 for the nine months ended September 30, 2020 and 2019, respectively. Rents receivable, excluding properties classified as held for sale, include $102,691 and $99,297 of straight line rent receivables at September 30, 2020 and December 31, 2019, respectively, and are included in other assets, net in our condensed consolidated balance sheets.
We do not include in our measurement of our lease receivables certain variable payments, including changes in the index or market based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. We recognized such payments totaling $18,501 and $19,317 for the three months ended September 30, 2020 and 2019, respectively, of which tenant reimbursements totaled $1,428 and $1,506, respectively, and $56,792 and $57,687 for the nine months ended September 30, 2020 and 2019, respectively, of which tenant reimbursements totaled $3,522 and $3,906, respectively.
Certain of our tenants have requested relief from their obligations to pay rent due to us in response to the current economic conditions resulting from the COVID-19 pandemic. As of November 2, 2020, we granted requests for certain of our tenants to defer rent payments totaling $2,152. These tenants are obligated to pay, in most cases, the deferred rents in 12 equal monthly installments beginning in 2020. We have elected to use the FASB relief package regarding the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. The FASB relief package provides entities with the option to account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance if the resulting cash flows from the modified lease are substantially the same as the original lease. Because the majority of the deferred rents referenced above will generally be repaid, the cash flows from the respective leases are substantially the same as before the rent deferrals. These deferred amounts did not negatively impact our operating results for the three and nine months ended September 30, 2020 and, as of September 30, 2020, we recognized $4,467 in our accounts receivable related to these deferred amounts.
Right of Use Asset and Lease Liability. For leases where we are the lessee, we recognized a right of use asset and a lease liability equal to the present value of the minimum lease payments with rental payments being applied to the lease liability and the right of use asset being amortized over the term of the lease. The values of the right of use asset and related liability representing our future obligation under the lease arrangement for which we are the lessee were $4,256 and $4,423, respectively, as of September 30, 2020, and $4,319 and $4,461, respectively, as of December 31, 2019. The right of use asset and related lease liability are included within other assets, net and other liabilities, respectively, within our condensed consolidated balance sheets. In addition, we lease equipment at certain of our managed senior living communities. These leases are short term in nature, are cancelable with no fee or do not result in an annual expense in excess of our capitalization policy and, as a result, are not recorded on our condensed consolidated balance sheets.

Note 5.  Indebtedness
Our principal debt obligations at September 30, 2020 were: (1) $2,650,000 outstanding principal amount of senior unsecured notes; (2) $200,000 outstanding principal amount under our term loan; and (3) $684,962 aggregate principal amount of mortgage notes (excluding premiums, discounts and net debt issuance costs) secured by seven properties, of which $620,000 is related to a joint venture arrangement in which we own a 55