What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-13 compared with 2020-05-14 · 377 added, 217 removed, 659 unchanged (47% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2020 and December 31, 2019

March 31, 2020

As of June 30, 2020 and December 31, 2019

June 30, 2020

December 31, 2019

26 unchanged sentences

900,000,000 shares authorized;

74,891,729 and 74,244,823 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

74,975,127 and 74,244,823 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

Class I common stock, $0.01 par value per share;

100,000,000 shares authorized;

5,682,901 and 5,655,051 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

5,624,179 and 5,655,051 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

7 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

As of March 31, 2020 and December 31, 2019

As of June 30, 2020 and December 31, 2019

Such liabilities of Griffin-American Healthcare REIT IV, Inc.

as of March 31, 2020 and December 31, 2019 represented liabilities of Griffin-American Healthcare REIT IV Holdings, LP or its consolidated subsidiaries.

as of June 30, 2020 and December 31, 2019 represented liabilities of Griffin-American Healthcare REIT IV Holdings, LP or its consolidated subsidiaries.

Griffin-American Healthcare REIT IV Holdings, LP is a variable interest entity, or VIE, and a consolidated subsidiary of Griffin-American Healthcare REIT IV, Inc.

The creditors of Griffin-American Healthcare REIT IV Holdings, LP or its consolidated subsidiaries do not have recourse against Griffin-American Healthcare REIT IV, Inc., except for the 2018 Credit Facility, as defined in Note 7, held by Griffin-American Healthcare REIT IV Holdings, LP in the amount of $473,100,000 and $396,800,000 as of March 31, 2020 and December 31, 2019 , respectively, which is guaranteed by Griffin-American Healthcare REIT IV, Inc.

The creditors of Griffin-American Healthcare REIT IV Holdings, LP or its consolidated subsidiaries do not have recourse against Griffin-American Healthcare REIT IV, Inc., except for the 2018 Credit Facility, as defined in Note 7, held by Griffin-American Healthcare REIT IV Holdings, LP in the amount of $479,500,000 and $396,800,000 as of June 30, 2020 and December 31, 2019 , respectively, which is guaranteed by Griffin-American Healthcare REIT IV, Inc.

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2020 and 2019

Three Months Ended March 31,

For the Three and Six Months Ended June 30, 2020 and 2019

Three Months Ended June 30,

Six Months Ended June 30,

Real estate revenue

10 unchanged sentences

Interest expense (including amortization of deferred financing costs and debt discount/premium)

Loss in fair value of derivative financial instruments

Gain (loss) in fair value of derivative financial instruments

Income from unconsolidated entity

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended March 31, 2020 and 2019

For the Three and Six Months Ended June 30, 2020 and 2019

Three Months Ended June 30, 2020

Stockholders’ Equity

3 unchanged sentences

Noncontrolling

BALANCE — March 31, 2020

Offering costs — common stock

Issuance of common stock under the DRIP

Issuance of vested and nonvested restricted common stock

Amortization of nonvested common stock compensation

Repurchase of common stock

Distributions to noncontrolling interest

Fair value adjustment to redeemable noncontrolling interests

Distributions declared ($0.10 per share)

BALANCE — June 30, 2020

Three Months Ended June 30, 2019

Stockholders’ Equity

Class T and Class I Common Stock

Paid-In Capital

Stockholders’

BALANCE — March 31, 2019

Issuance of common stock

Offering costs — common stock

Issuance of common stock under the DRIP

Issuance of vested and nonvested restricted common stock

Amortization of nonvested common stock compensation

Repurchase of common stock

Fair value adjustment to redeemable noncontrolling interests

Distributions declared ($0.15 per share)

BALANCE — June 30, 2019

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)

For the Three and Six Months Ended June 30, 2020 and 2019

Six Months Ended June 30, 2020

Stockholders’ Equity

Class T and Class I Common Stock

Paid-In Capital

Stockholders’

Noncontrolling

BALANCE — December 31, 2019

1 unchanged sentence

Issuance of common stock under the DRIP

Issuance of vested and nonvested restricted common stock

Amortization of nonvested common stock compensation

Repurchase of common stock

Contribution from noncontrolling interest

Distributions to noncontrolling interest

Fair value adjustment to redeemable noncontrolling interests

Distributions declared ($0.25 per share)

BALANCE — March 31, 2020

BALANCE — June 30, 2020

Six Months Ended June 30, 2019

Stockholders’ Equity

6 unchanged sentences

Issuance of common stock under the DRIP

Issuance of vested and nonvested restricted common stock

Amortization of nonvested common stock compensation

2 unchanged sentences

Distributions declared ($0.30 per share)

BALANCE — March 31, 2019

Amount excludes $83,000 and $25,000 of net loss attributable to redeemable noncontrolling interests for the three months ended March 31, 2020 and 2019, respectively.

BALANCE — June 30, 2019

Amount excludes $122,000 and $32,000 for the three months ended June 30, 2020 and 2019, respectively, and $205,000 and $57,000 for the six months ended June 30, 2020 and 2019, respectively, of net loss attributable to redeemable noncontrolling interests.

See Note 11, Redeemable Noncontrolling Interests , for a further discussion.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2020 and 2019

Three Months Ended March 31,

For the Six Months Ended June 30, 2020 and 2019

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

7 unchanged sentences

Bad debt expense

Deferred income taxes

Change in fair value of derivative financial instruments

7 unchanged sentences

Acquisitions of real estate investments

Capital expenditures

Investment in unconsolidated entity

Distributions in excess of earnings from unconsolidated entity

Capital expenditures

Real estate deposits

8 unchanged sentences

Contribution from noncontrolling interest

Distributions to noncontrolling interest

Contributions from redeemable noncontrolling interest

10 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

For the Three Months Ended March 31, 2020 and 2019

Three Months Ended March 31,

For the Six Months Ended June 30, 2020 and 2019

Six Months Ended June 30,

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

12 unchanged sentences

Accrued capital expenditures

Accrued pre-acquisition expenses

Tenant improvement overage

Accrued pre-acquisition expenses

The following represents the increase in certain assets and liabilities in connection with our acquisitions of real estate investments:

Right-of-use asset

Mortgage loan payable, net

Accounts payable and accrued liabilities

Operating lease liability

Security deposits and prepaid rent

2 unchanged sentences

Distributions declared but not paid

Accrued Contingent Advisor Payment

Accrued stockholder servicing fee

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

For the Three and Six Months Ended June 30, 2020 and 2019

The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT IV, Inc.

14 unchanged sentences

See Note 12, Equity — Distribution Reinvestment Plan, for a further discussion.

As of June 30, 2020 , a total of $33,043,000 in distributions were reinvested that resulted in 3,458,656 shares of our common stock being issued pursuant to the 2019 DRIP Offering.

We collectively refer to the DRIP portion of our initial offering and the 2019 DRIP Offering as our DRIP Offerings.

As of March 31, 2020 , a total of $28,046,000 in distributions were reinvested that resulted in 2,934,920 shares of our common stock being issued pursuant to the 2019 DRIP Offering.

We conduct substantially all of our operations through Griffin-American Healthcare REIT IV Holdings, LP, or our operating partnership.

14 unchanged sentences

medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities.

As of March 31, 2020 , we had completed 46 property acquisitions whereby we owned 89 properties, comprising 94 buildings, or approximately 4,863,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $1,087,588,000 .

As of March 31, 2020 , we also owned a 6.0% interest in a joint venture which owns a portfolio of integrated senior health campuses and ancillary businesses.

As of June 30, 2020 , we had completed 46 property acquisitions whereby we owned 89 properties, comprising 94 buildings, or approximately 4,863,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $1,089,071,000 .

As of June 30, 2020 , we also owned a 6.0% interest in a joint venture which owns a portfolio of integrated senior health campuses and ancillary businesses.

Summary of Significant Accounting Policies

6 unchanged sentences

We operate and intend to continue to operate in an umbrella partnership REIT structure in which our operating partnership, or wholly owned subsidiaries of our operating partnership, will own substantially all of the interests in properties acquired on our behalf.

We a re the sole general partner of our operating partnership, and as of March 31, 2020 and December 31, 2019 , we owned greater than a 99.99% general partnership interest therein.

Our advisor is a limited partner, and as of March 31, 2020 and December 31, 2019 , owned less than a 0.01% noncontrolling limited partnership interest in our operating partnership.

We a re the sole general partner of our operating partnership, and as of June 30, 2020 and December 31, 2019 , we owned greater than a 99.99% general partnership interest therein.

Our advisor is a limited partner, and as of June 30, 2020 and December 31, 2019 , owned less than a 0.01% noncontrolling limited partnership interest in our operating partnership.

Because we are the sole general partner of our operating partnership and have unilateral control over its management and major operating decisions (even if additional limited partners are admitted to our operating partnership), the accounts of our operating partnership are consolidated in our accompanying condensed consolidated financial statements.

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The preparation of our accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant items subject to such estimates and assumptions include, but are not limited to, the initial and recurring valuation of certain assets acquired and liabilities assumed through

Significant items subject to such estimates and assumptions include, but are not limited to, the initial and recurring valuation of certain assets acquired and liabilities assumed through property acquisitions, allowance for credit losses, impairment of long-lived assets and contingencies.

These estimates are made

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

property acquisitions, allowance for credit losses, impairment of long-lived assets and contingencies.

These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances.

and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances.

Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

1 unchanged sentence

Disaggregation of Resident Fees and Services Revenue

The following table disaggregates our resident fees and services revenue by line of business, according to whether such revenue is recognized at a point in time or over time:

Three Months Ended March 31,

The following tables disaggregate our resident fees and services revenue by line of business, according to whether such revenue is recognized at a point in time or over time:

Three Months Ended June 30,

Point in Time

1 unchanged sentence

Senior housing — RIDEA

The following table disaggregates our resident fees and services revenue by payor class:

Three Months Ended March 31,

Six Months Ended June 30,

Point in Time

Senior housing — RIDEA

The following tables disaggregate our resident fees and services revenue by payor class:

Three Months Ended June 30,

Six Months Ended June 30,

Private and other payors

3 unchanged sentences

Beginning balance — January 1, 2020

Ending balance — March 31, 2020

Ending balance — June 30, 2020

(Decrease)/increase

7 unchanged sentences

Our determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, the residents’ financial condition, security deposits, cash collection patterns by payor and by state, current economic conditions, future expectations in estimating credit losses and other relevant factors.

Tenant receivables and unbilled deferred rent receivables are recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of operations.

As of March 31, 2020 and December 31, 2019, we had $1,033,000 and $902,000 , respectively, in allowances, which was determined necessary to reduce receivables by our expected future credit losses.

For the three months ended March 31, 2020 and 2019, we increased allowances by $213,000 and $1,187,000 , respectively, and reduced allowances for collections or adjustments by $43,000 and $10,000 , respectively.

For the three months ended March 31, 2020 and 2019, $39,000 and $13,000 , respectively, of our receivables were written off against the related allowances.

Tenant receivables and unbilled deferred rent receivables are reduced for uncollectible amounts, which are recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of operations.

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Recently Issued Accounting Pronouncement

In March 2020, the FASB issued Accounting Standards Update, or ASU, 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, or ASU 2020-04, which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

ASU 2020-04 is effective for fiscal years and interim periods beginning after March 12, 2020 through December 31, 2022.

As of June 30, 2020 and December 31, 2019, we had $1,330,000 and $902,000 , respectively, in allowances, which was determined necessary to reduce receivables by our expected future credit losses.

For the six months ended June 30, 2020 and 2019, we increased allowances by $541,000 and $1,406,000 , respectively, and reduced allowances for collections or adjustments by $74,000 and $721,000 , respectively.

For the six months ended June 30, 2020 and 2019, $39,000 and $332,000 , respectively, of our receivables were written off against the related allowances.

We qualified, and elected to be taxed, as a REIT under the Code for federal income tax purposes beginning with our taxable year ended December 31, 2016, and we intend to continue to qualify to be taxed as a REIT.

To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute to our stockholders a minimum percentage of our annual taxable income, excluding net capital gains.

Such distributions are required to be paid at least 20.0% in cash and 80.0% in stock.

In May 2020, in response to the coronavirus, or COVID-19, pandemic, the Internal Revenue Service, or IRS, temporarily reduced the cash distribution requirement from a minimum of 90.0% of our taxable income to a minimum of 10.0% , which is applicable with respect to the aggregate distributions declared on or after April 1, 2020 until December 31, 2020.

As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders.

If we fail to maintain our qualification as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the IRS grants us relief under certain statutory provisions.

Such an event could have a material adverse effect on our net income and net cash available for distribution to our stockholders.

We may be subject to certain state and local income taxes on our income, property or net worth in some jurisdictions, and in certain circumstances we may also be subject to federal excise taxes on undistributed income.

In addition, certain activities that we undertake are conducted by subsidiaries, which we elected to be treated as taxable REIT subsidiaries, or TRS, to allow us to provide services that would otherwise be considered impermissible for REITs.

Accordingly, we recognize income tax benefit or expense for the federal, state and local income taxes incurred by our TRS.

We follow ASC Topic 740, Income Taxes , or ASC Topic 740, to recognize, measure, present and disclose in our accompanying condensed consolidated financial statements uncertain tax positions that we have taken or expect to take on a tax return.

As of and for the six months ended June 30, 2020 and 2019, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.

We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns.

Under this method, we determine deferred tax assets and liabilities based on the temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse.

Deferred tax assets reflect the impact of the future deductibility of operating loss carryforwards.

A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized.

Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes us to change our judgment about the realizability of the related deferred tax asset, is included in income tax benefit or expense in our accompanying condensed consolidated statements of operations when such changes occur.

Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes us to change our judgment about expected future tax consequences of events, is recorded in income tax benefit or expense in our accompanying condensed consolidated statements of operations.

Deferred tax assets are included in other assets, net, and deferred tax liabilities are included in security deposits, prepaid rent and other liabilities, in our accompanying condensed consolidated balance sheets.

See Note 15, Income Taxes , for a further discussion.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update, or ASU, 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, or ASU 2020-04, which provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Inter-bank Offered Rate, or LIBOR, or another reference rate expected to be discontinued.

ASU 2020-04 is effective for fiscal years and

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

interim periods beginning after March 12, 2020 through December 31, 2022.

We are currently evaluating this guidance to determine the impact on our disclosures.

In April 2020, the FASB issued a question and answer document, or the Lease Modification Q&A, to provide guidance for the application of lease accounting modifications within ASC Topic 842, Leases , or ASC Topic 842, to lease concessions granted by lessors related to the effects of the COVID-19 pandemic.

Lease accounting modification guidance in ASC Topic 842 addresses routine changes or enforceable rights and obligations to lease terms as a result of negotiations between the lessor and the lessee;

however, the guidance does not take into consideration concessions granted to address sudden liquidity constraints of lessees arising from the COVID-19 pandemic.

The underlying premise of ASC Topic 842 requires a modified lease to be accounted for as a new lease if the modified terms and conditions affect the economics of the lease for the remainder of the lease term.

Further, a lease modification resulting from lease concessions would require the application of the modification framework pursuant to ASC Topic 842 on a lease-by-lease basis.

The potential large volume of contracts to be assessed due to the COVID-19 pandemic may be burdensome and complex for entities to evaluate the lease modification accounting for each lease.

Therefore, the Lease Modification Q&A allows entities to elect to account for lease concessions related to the effects of the COVID-19 pandemic as if they were granted under the enforceable rights included in the original contract and are outside of the lease modification framework pursuant to ASC Topic 842.

Such election is available for lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee (e.g., total payments required by the modified contract being substantially the same as or less than total payments required by the original contract) and is to be applied consistently to leases with similar characteristics and circumstances.

As a result of the COVID-19 pandemic, we have granted lease concessions to an insignificant number of tenants within our medical office building segment, such as in the form of rent abatements with lease term extensions and rent payment deferrals requiring payment within one year .

Such concessions were not material to our condensed consolidated financial statements, and as such, we elected not to apply the relief from lease modification accounting provided in the Lease Modification Q&A.

We evaluate each lease concession granted as a result of COVID-19 to determine whether the concession reflects:

(i) a resolution of contractual rights in the original lease and is thus outside of the lease modification framework of ASC Topic 842;

or (ii) a modification for which we would be required to apply the lease modification framework of ASC Topic 842.

The application of the lease modification framework of ASC Topic 842 to lease concessions granted due to the effects of the COVID-19 pandemic did not have a material impact on our condensed consolidated financial statements.

Real Estate Investments, Net

Our real estate investments, net consisted of the following as of March 31, 2020 and December 31, 2019 :

Our real estate investments, net consisted of the following as of June 30, 2020 and December 31, 2019 :

Building and improvements

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accumulated depreciation

Depreciation expense for the three months ended March 31, 2020 and 2019 was $7,839,000 and $6,960,000 , respectively.

In addition to the property acquisitions discussed below, for the three months ended March 31, 2020 , we incurred capital expenditures of $1,151,000 for our medical office buildings, $532,000 for our skilled nursing facilities and $405,000 for our senior housing — RIDEA facilities.

We did not incur any capital expenditures for our senior housing facilities for the three months ended March 31, 2020.

Depreciation expense for the three months ended June 30, 2020 and 2019 was $7,893,000 and $6,490,000 , respectively, and for the six months ended June 30, 2020 and 2019 was $15,732,000 and $13,450,000 , respectively.

In addition to the property acquisition transactions discussed below, for the three and six months ended June 30, 2020 , we incurred capital expenditures of $1,796,000 and $2,947,000 , respectively, for our medical office buildings, $961,000 and $1,366,000 , respectively, for our senior housing — RIDEA facilities and $125,000 and $657,000 , respectively, for our skilled nursing facilities.

We did no t incur any capital expenditures for our senior housing facilities for the three and six months ended June 30, 2020 .

In June 2020, we paid an earn-out of $1,483,000 in connection with Overland Park MOB, originally purchased in August 2019, which we capitalized and included in real estate investments, net in our accompanying condensed consolidated balance sheets.

Such amount was paid upon the condition being met for an existing tenant to lease and occupy additional space.

In addition, we paid our advisor a base acquisition fee, as defined in Note 13, Related Party Transactions — Acquisition and Development Stage — Acquisition Fee, of $34,000 , or 2.25% of the earn-out amount.

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Acquisitions in 2020

For the three months ended March 31, 2020 , using cash on hand and debt financing, we completed the acquisition of seven buildings from unaffiliated third parties.

The following is a summary of our property acquisitions for the three months ended March 31, 2020 :

For the six months ended June 30, 2020 , using cash on hand and debt financing, we completed the acquisition of seven buildings from unaffiliated third parties.

The following is a summary of our property acquisitions for the six months ended June 30, 2020 :

Catalina West Haven ALF(3)

10 unchanged sentences

Our ownership of the joint venture is approximately 90.0% .

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

On January 3, 2020, we completed the acquisition of Louisiana Senior Housing Portfolio pursuant to a joint venture with an affiliate of Senior Solutions Management Group, or SSMG, an unaffiliated third party.

Our ownership of the joint venture is approximately 90.0% .

We accounted for our property acquisitions completed for the three months ended March 31, 2020 as asset acquisitions.

We accounted for our property acquisitions completed for the six months ended June 30, 2020 as asset acquisitions.

We incurred and capitalized base acquisition fees and direct acquisition related expenses of $2,538,000 .

4 unchanged sentences

Total assets acquired

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Identified Intangible Assets, Net

Identified intangible assets, net consisted of the following as of March 31, 2020 and December 31, 2019:

Identified intangible assets, net consisted of the following as of June 30, 2020 and December 31, 2019:

Amortized intangible assets:

In-place leases, net of accumulated amortization of $21,851,000 and $18,273,000 as of March 31, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 8.5 years and 9.5 years as of March 31, 2020 and December 31, 2019, respectively)

Above-market leases, net of accumulated amortization of $719,000 and $609,000 as of March 31, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 9.4 years and 9.5 years as of March 31, 2020 and December 31, 2019, respectively)

In-place leases, net of accumulated amortization of $25,021,000 and $18,273,000 as of June 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 8.7 years and 9.5 years as of June 30, 2020 and December 31, 2019, respectively)

Above-market leases, net of accumulated amortization of $829,000 and $609,000 as of June 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 9.2 years and 9.5 years as of June 30, 2020 and December 31, 2019, respectively)

Unamortized intangible assets:

Certificates of need

Amortization expense on identified intangible assets for the three months ended March 31, 2020 and 2019 was $4,756,000 and $9,142,000 , respectively, which included $110,000 and $47,000 , respectively, of amortization recorded against real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations.

The aggregate weighted average remaining life of the identified intangible assets was 8.5 years and 9.5 years as of March 31, 2020 and December 31, 2019, respectively.

As of March 31, 2020 , estimated amortization expense on the identified intangible assets for the nine months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter was as follows:

Amortization expense on identified intangible assets for the three months ended June 30, 2020 and 2019 was $4,877,000 and $3,480,000 , respectively, which included $110,000 and $68,000 , respectively, of amortization recorded against real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations.

Amortization expense on identified intangible assets for the six months ended June 30, 2020 and 2019 was $9,633,000 and $12,622,000 , respectively, which included $220,000 and $115,000 , respectively, of amortization recorded against real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations.

The aggregate weighted average remaining life of the identified intangible assets was 8.7 years and 9.5 years as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020 , estimated amortization expense on the identified intangible assets for the six months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter was as follows:

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

1 unchanged sentence

Other Assets, Net

Other assets, net consisted of the following as of March 31, 2020 and December 31, 2019 :

Other assets, net consisted of the following as of June 30, 2020 and December 31, 2019 :

Investment in unconsolidated entity

Deferred rent receivables

Deferred financing costs, net of accumulated amortization of $1,986,000 and $1,517,000 as of March 31, 2020 and December 31, 2019, respectively(1)

Prepaid expenses and deposits

Lease commissions, net of accumulated amortization of $219,000 and $174,000 as of March 31, 2020 and December 31, 2019, respectively

Deferred financing costs, net of accumulated amortization of $2,456,000 and $1,517,000 as of June 30, 2020 and December 31, 2019, respectively(1)

Lease commissions, net of accumulated amortization of $279,000 and $174,000 as of June 30, 2020 and December 31, 2019, respectively

Deferred financing costs only include costs related to our line of credit and term loans.

See Note 7, Line of Credit and Term Loans , for a further discussion.

Amortization expense on deferred financing costs of our line of credit and term loans for the three months ended March 31, 2020 and 2019 was $469,000 and $560,000 , respectively, which is recorded to interest expense in our accompanying condensed consolidated statements of operations.

Amortization expense on lease commissions for the three months ended March 31, 2020 and 2019 was $45,000 and $23,000 , respectively.

As of March 31, 2020 and December 31, 2019, the unamortized basis difference of our joint venture investment in an unconsolidated entity of $17,133,000 and $17,248,000 , respectively, is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the entity.

Amortization expense on deferred financing costs of our line of credit and term loans for the three months ended June 30, 2020 and 2019 was $470,000 and $562,000 , respectively, and for the six months ended June 30, 2020 and 2019 was $939,000 and $1,122,000 , respectively, which is recorded to interest expense in our accompanying condensed consolidated statements of operations.

Amortization expense on lease commissions for the three months ended June 30, 2020 and 2019 was $60,000 and $29,000 , respectively, and for the six months ended June 30, 2020 and 2019 was $105,000 and $52,000 , respectively.

As of June 30, 2020 and December 31, 2019, the unamortized basis difference of our joint venture investment in an unconsolidated entity of $17,019,000 and $17,248,000 , respectively, is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the entity.

This difference is being amortized over the remaining useful life of the related assets and included in income or loss from unconsolidated entity in our accompanying condensed consolidated statements of operations.

Mortgage Loans Payable, Net

As of March 31, 2020 and December 31, 2019 , mortgage loans payable were $19,229,000 ( $18,233,000 , net of discount/premium and deferred financing costs) and $27,099,000 ( $26,070,000 , net of discount/premium and deferred financing costs), respectively.

As of March 31, 2020 , we had three fixed-rate mortgage loans with interest rates ranging from 3.67% to 5.25% per annum, maturity dates ranging from April 1, 2025 to February 1, 2051 and a weighted average effective interest rate of 3.94% .

As of June 30, 2020 and December 31, 2019 , mortgage loans payable were $19,082,000 ( $18,104,000 , net of discount/premium and deferred financing costs) and $27,099,000 ( $26,070,000 , net of discount/premium and deferred financing costs), respectively.

As of June 30, 2020 , we had three fixed-rate mortgage loans with interest rates ranging from 3.67% to 5.25% per annum, maturity dates ranging from April 1, 2025 to February 1, 2051 and a weighted average effective interest rate of 3.94% .

As of December 31, 2019, we had four fixed-rate mortgage loans with interest rates ranging from 3.67% to 5.25% per annum, maturity dates ranging from April 1, 2020 to February 1, 2051 and a weighted average effective interest rate of 4.18% .

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

In January 2020, we paid off a mortgage loan payable with a principal balance of $7,738,000 , which had an original maturity date of April 1, 2020.

We did not incur any prepayment penalties or fees in connection with such payoff.

The following table reflects the changes in the carrying amount of mortgage loans payable, net for the three months ended March 31, 2020 and 2019:

Three Months Ended March 31,

The following table reflects the changes in the carrying amount of mortgage loans payable, net for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

Beginning balance

Assumption of mortgage loan payable, net

Amortization of deferred financing costs

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Scheduled principal payments on mortgage loans payable

Deferred financing costs

Ending balance

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

As of March 31, 2020 , the principal payments due on our mortgage loans payable for the nine months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter were as follows:

As of June 30, 2020 , the principal payments due on our mortgage loans payable for the six months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter were as follows:

Line of Credit and Term Loans

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The 2018 Credit Facility matures on November 19, 2021 and may be extended for one 12-month period during the term of the 2018 Credit Agreement, as amended, subject to satisfaction of certain conditions, including payment of an extension fee.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

At our option, the 2018 Credit Facility bears interest at per annum rates equal to (a)(i) the Eurodollar Rate, as defined in the 2018 Credit Agreement, as amended, plus (ii) a margin ranging from 1.70% to 2.20% based on our Consolidated Leverage Ratio, as defined in the 2018 Credit Agreement, as amended, or (b)(i) the greater of:

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We are required to pay a fee on the unused portion of the lenders’ commitments under the 2018 Credit Agreement, as amended, at a per annum rate equal to 0.20% if the average daily used amount is greater than 50.00% of the commitments and 0.25% if the average daily used amount is less than or equal to 50.00% of the commitments, which fee shall be measured and payable on a quarterly basis.

As of both March 31, 2020 and December 31, 2019, our aggregate borrowing capacity under the 2018 Credit Facility was $530,000,000 .

As of March 31, 2020 and December 31, 2019, borrowings outstanding totaled $473,100,000 and $396,800,000 , respectively, and the weighted average interest rate on such borrowings outstanding was 2.72% and 3.50% , respectively, per annum.

In April 2020, we borrowed all of the remaining availability on the 2018 Credit Facility as a precautionary measure to strengthen our liquidity and preserve financial flexibility in response to the coronavirus, or COVID-19, pandemic.

See Note 10, Commitments and Contingencies , for a further discussion of the impact of the COVID-19 pandemic on our financial performance and business operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

As of both June 30, 2020 and December 31, 2019, our aggregate borrowing capacity under the 2018 Credit Facility was $530,000,000 .

As of June 30, 2020 and December 31, 2019, borrowings outstanding totaled $479,500,000 and $396,800,000 , respectively, and the weighted average interest rate on such borrowings outstanding was 2.14% and 3.50% , respectively, per annum.

Derivative Financial Instruments

We record derivative financial instruments in our accompanying condensed consolidated balance sheets as either an asset or a liability measured at fair value.

The following table lists the derivative financial instruments held by us as of March 31, 2020 and December 31, 2019, which are included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets:

The following table lists the derivative financial instruments held by us as of June 30, 2020 and December 31, 2019, which are included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets:

Notional Amount

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one month LIBOR

As of both March 31, 2020 and December 31, 2019, none of our derivative financial instruments were designated as hedges.

For the three months ended March 31, 2020 and 2019, we recorded $4,605,000 and $1,978,000 , respectively, as an increase to interest expense in our accompanying condensed consolidated statements of operations related to the change in the fair value of our derivative financial instruments.

As of both June 30, 2020 and December 31, 2019, none of our derivative financial instruments were designated as hedges.

For the three months ended June 30, 2020 and 2019, we recorded $853,000 and $(3,021,000) , respectively, and for the six months ended June 30, 2020 and 2019, we recorded $(3,752,000) and $(4,999,000) , respectively, as a decrease (increase) to interest expense in our accompanying condensed consolidated statements of operations related to the change in the fair value of our derivative financial instruments.

See Note 14, Fair Value Measurements , for a further discussion of the fair value of our derivative financial instruments.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Identified Intangible Liabilities, Net

As of March 31, 2020 and December 31, 2019, identified intangible liabilities, net consisted of below-market leases of $1,509,000 and $1,601,000 , respectively, net of accumulated amortization of $473,000 and $702,000 , respectively.

Amortization expense on below-market leases for the three months ended March 31, 2020 and 2019 was $92,000 and $102,000 , respectively, which was recorded to real estate revenue in our accompanying condensed consolidated statements of operations.

The weighted average remaining life of below-market leases was 11.5 years and 11.3 years as of March 31, 2020 and December 31, 2019, respectively.

As of March 31, 2020 , estimated amortization expense on below-market leases for the nine months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter was as follows:

As of June 30, 2020 and December 31, 2019, identified intangible liabilities, net consisted of below-market leases of $1,440,000 and $1,601,000 , respectively, net of accumulated amortization of $541,000 and $702,000 , respectively.

Amortization expense on below-market leases for the three months ended June 30, 2020 and 2019 was $69,000 and $107,000 , respectively, and for the six months ended June 30, 2020 and 2019 was $161,000 and $209,000 , respectively, which was recorded to real estate revenue in our accompanying condensed consolidated statements of operations.

The weighted average remaining life of below-market leases was 11.5 years and 11.3 years as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020 , estimated amortization expense on below-market leases for the six months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter was as follows:

Commitments and Contingencies

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We follow a policy of monitoring our properties for the presence of hazardous or toxic substances.

While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

environmental liability with respect to our properties that would have a material effect on our consolidated financial position, results of operations or cash flows.

While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any environmental liability with respect to our properties that would have a material effect on our consolidated financial position, results of operations or cash flows.

Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.

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The COVID-19 pandemic is dramatically impacting the United States and has resulted in an aggressive worldwide effort to contain the spread of the virus.

These efforts have significantly and adversely disrupted economic markets and impacted commercial activity worldwide, including markets in which we own and/or operate properties, and the prolonged economic impact is uncertain.

Considerable uncertainty still surrounds the COVID-19 pandemic and its effects on the population, as well as the effectiveness of any responses taken on a national and local level by government authorities and businesses.

In addition, the rapidly evolving nature of the COVID-19 pandemic makes it difficult to ascertain the long-term impact it will have on real estate markets and our portfolio of investments.

In particular, government-imposed business closures and re-opening restrictions have dramatically impacted the operations of our real estate investments and our tenants across the country, such as creating declines in resident occupancy.

Further, our senior housing facilities are also experiencing dramatic increases in costs to care for residents, particularly increased labor costs to maintain staffing levels to care for the aged population during this crisis, costs of COVID-19 testing of employees and residents and costs to procure the volume of personal protective equipment and other supplies required.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

We have not received or recognized in our consolidated financial statements any stimulus funds from federal, state or local governments or from any healthcare-related regulators related to the COVID-19 pandemic.

However, we have taken actions to strengthen our balance sheet and preserve liquidity in response to the COVID-19 pandemic risks.

Since March 2020, we have postponed non-essential capital expenditures, reduced the stockholder distribution rate and partially suspended our share repurchase plan.

We are continuously monitoring the impact of the COVID-19 pandemic on our business, residents, tenants, operating partners, managers, portfolio of investments and on the United States and global economies.

While the results of our current analyses did not result in any material adjustments to our condensed consolidated financial statements as of and during the three months ended March 31, 2020, the prolonged duration and impact of the COVID-19 pandemic could materially disrupt our business operations and impact our financial performance.

While there were no material adjustments to our condensed consolidated financial statements as of and during the six months ended June 30, 2020 , the prolonged duration and impact of the COVID-19 pandemic could materially affect our financial performance.

See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Which May Influence Results of Operations, for a further discussion of the adverse impact the COVID-19 pandemic has had on our business operations.

Redeemable Noncontrolling Interests

As of both March 31, 2020 and December 31, 2019, our advisor owned all of the 208 limited partnership units outstanding in our operating partnership.

As of both March 31, 2020 and December 31, 2019, we owned greater than a 99.99% general partnership interest in our operating partnership, and our advisor owned less than a 0.01% limited partnership interest in our operating partnership.

As of both June 30, 2020 and December 31, 2019, our advisor owned all of the 208 limited partnership units outstanding in our operating partnership.

As of both June 30, 2020 and December 31, 2019, we owned greater than a 99.99% general partnership interest in our operating partnership, and our advisor owned less than a 0.01% limited partnership interest in our operating partnership.

Our advisor is entitled to special redemption rights of its limited partnership units.

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or (ii) the redemption value.

The changes in the carrying amount of redeemable noncontrolling interests consisted of the following for the three months ended March 31, 2020 and 2019:

The changes in the carrying amount of redeemable noncontrolling interests consisted of the following for the six months ended June 30, 2020 and 2019:

Beginning balance

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Ending balance

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Preferred Stock

Our charter authorizes us to issue 200,000,000 shares of our preferred stock, par value $0.01 per share.

As of both March 31, 2020 and December 31, 2019, no shares of our preferred stock were issued and outstanding.

As of both June 30, 2020 and December 31, 2019, no shares of our preferred stock were issued and outstanding.

Our charter authorizes us to issue 1,000,000,000 shares of our common stock, par value $0.01 per share, whereby 900,000,000 shares are classified as Class T common stock and 100,000,000 shares are classified as Class I common stock.

Each share of our common stock, regardless of class, will be entitled to one vote per share on matters presented to the common stockholders for approval;

provided, however, that stockholders of one share class shall have exclusive voting rights on any amendment to our charter that would alter only the contract rights of that share class, and no stockholders of another share class shall be entitled to vote thereon.

provided, however, that stockholders of one share class shall have exclusive voting rights on any

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

amendment to our charter that would alter only the contract rights of that share class, and no stockholders of another share class shall be entitled to vote thereon.

On February 6, 2015, our advisor acquired shares of our Class T common stock for total cash consideration of $200,000 and was admitted as our initial stockholder.

We used the proceeds from the sale of shares of our Class T common stock to our advisor to make an initial capital contribution to our operating partnership.

As of both March 31, 2020 and December 31 2019, our advisor owned 20,833 shares of our Class T common stock.

As of both June 30, 2020 and December 31, 2019, our advisor owned 20,833 shares of our Class T common stock.

On February 15, 2019, we terminated our initial offering.

1 unchanged sentence

See the “Distribution Reinvestment Plan” section below for a further discussion.

Through March 31, 2020 , we had issued 75,639,681 aggregate shares of our Class T and Class I common stock in connection with the primary portion of our initial offering and 6,188,455 aggregate shares of our Class T and Class I common stock pursuant to our DRIP Offerings.

We also granted an aggregate of 82,500 shares of our restricted Class T common stock to our independent directors and repurchased 1,356,839 shares of our common stock under our share repurchase plan through March 31, 2020 .

As of March 31, 2020 and December 31, 2019, we had 80,574,630 and 79,899,874 aggregate shares of our Class T and Class I common stock, respectively, issued and outstanding.

Through June 30, 2020 , we had issued 75,639,681 aggregate shares of our Class T and Class I common stock in connection with the primary portion of our initial offering and 6,712,191 aggregate shares of our Class T and Class I common stock pursuant to our DRIP Offerings.

We also granted an aggregate of 90,000 shares of our restricted Class T common stock to our independent directors and repurchased 1,863,399 shares of our common stock under our share repurchase plan through June 30, 2020 .

As of June 30, 2020 and December 31, 2019, we had 80,599,306 and 79,899,874 aggregate shares of our Class T and Class I common stock, respectively, issued and outstanding.

Distribution Reinvestment Plan

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Established Per

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

For the three months ended March 31, 2020 and 2019, $6,437,000 and $5,869,000 , respectively, in distributions were reinvested and 674,756 and 608,279 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings.

As of March 31, 2020 and December 31, 2019, a total of $59,067,000 and $52,630,000 , respectively, in distributions were reinvested that resulted in 6,188,455 and 5,513,699 shares of our common stock, respectively, being issued pursuant to our DRIP Offerings.

For the three months ended June 30, 2020 and 2019, $4,997,000 and $6,588,000 , respectively, in distributions were reinvested and 523,736 and 687,840 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings.

For the six months ended June 30, 2020 and 2019, $11,434,000 and $12,457,000 , respectively, in distributions were reinvested and 1,198,492 and 1,296,119 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings.

As of June 30, 2020 and December 31, 2019, a total of $64,064,000 and $52,630,000 , respectively, in distributions were reinvested that resulted in 6,712,191 and 5,513,699 shares of our common stock, respectively, being issued pursuant to our DRIP Offerings.

Share Repurchase Plan

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Further, all share repurchases are repurchased following a one -year holding period at a price between 92.5% to 100% of each stockholder’s repurchase amount depending on the period of time their shares have been held.

During our initial offering and with respect to shares repurchased for the quarter ending March 31, 2019, the repurchase amount for shares repurchased under our share repurchase plan was equal to the lesser of (i) the amount per share that a stockholder paid for their shares of our common stock, or (ii) the per share offering price in our initial offering.

During our initial offering and with respect to

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

shares repurchased for the quarter ending March 31, 2019, the repurchase amount for shares repurchased under our share repurchase plan was equal to the lesser of (i) the amount per share that a stockholder paid for their shares of our common stock, or (ii) the per share offering price in our initial offering.

Commencing with shares repurchased for the quarter ending June 30, 2019, the repurchase amount for shares repurchased under our share repurchase plan is the lesser of (i) the amount per share the stockholder paid for their shares of our common stock, or (ii) the most recent estimated value of one share of the applicable class of common stock as determined by our board.

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and, finally, pro rata as to other repurchase requests.

Due to the impact the COVID-19 pandemic has had on the United States and globally, and the uncertainty of the severity and duration of the COVID-19 pandemic and its effects, our board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects by partially suspending our share repurchase plan.

As a result, effective with respect to share repurchase requests submitted for repurchase during the second quarter 2020, on March 31, 2020, our board suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders.

Due to the impact the COVID-19 pandemic has had on the United States and globally, and the ongoing uncertainty of the severity and duration of the COVID-19 pandemic and its effects, our board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects.

As a result, on March 31, 2020 our board suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders, beginning with share repurchase requests submitted for repurchase during the second quarter of 2020.

Repurchase requests resulting from the death or qualifying disability of stockholders are not suspended, but shall remain subject to all terms and conditions of our share repurchase plan, including our board’s discretion to determine whether we have sufficient funds available to repurchase any shares.

Our board shall determine if and when it is in the best interest of our company and stockholders to reinstate our share repurchase plan for additional stockholders.

For the three months ended March 31, 2020, we did not repurchase any shares.

For the three months ended March 31, 2019, we repurchased 132,683 shares of our common stock, for an aggregate of $1,270,000 , at an average repurchase price of $9.58 per share.

As of both March 31, 2020 and December 31, 2019, we repurchased 1,356,839 shares of our common stock for an aggregate of $12,656,000 , at an average repurchase price of $9.33 per share.

In April 2020, we repurchased 506,560 shares of our common stock, under our share repurchase plan, for an aggregate of $4,643,000 , at an average repurchase price of $9.17 per share.

For the three months ended June 30, 2020 and 2019, we repurchased 506,560 and 227,126 shares of our common stock, respectively, for an aggregate of $4,643,000 and $2,099,000 , respectively, at an average repurchase price of $9.17 and $9.24 per share, respectively.

For the six months ended June 30, 2020 and 2019, we repurchased 506,560 and 359,809 shares of our common stock, respectively, for an aggregate of $4,643,000 and $3,369,000 , respectively, at an average repurchase price of $9.17 and $9.36 per share, respectively.

As of June 30, 2020 and December 31, 2019, we cumulatively repurchased 1,863,399 and 1,356,839 shares of our common stock, respectively, for an aggregate of $17,299,000 and $12,656,000 , respectively, at an average repurchase price of $9.28 and $9.33 per share, respectively.

In July 2020, we repurchased 71,551 shares of our common stock, for an aggregate of $706,000 , at an average repurchase price of $9.87 per share.

All shares were repurchased using the cumulative proceeds we received from the sale of shares of our common stock pursuant to our DRIP Offerings.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

2015 Incentive Plan

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The maximum number of shares of our common stock that may be issued pursuant to our incentive plan is 4,000,000 shares.

For the three months ended March 31, 2020 and 2019, we did not issue any shares of our restricted common stock pursuant to our incentive plan and none of the previously issued shares of our restricted common stock were vested.

For the three months ended March 31, 2020 and 2019, we recognized stock compensation expense of $43,000 and $39,000 respectively, which is included in general and administrative in our accompanying condensed consolidated statements of operations.

For both the six months ended June 30, 2020 and 2019, we granted an aggregate of 7,500 shares of our restricted Class T common stock at a weighted average grant date fair value of $9.54 per share to our independent directors in connection with their re-election to our board.

Such shares vested 20.0% immediately on the grant date and 20.0% will vest on each of the first four anniversaries of the grant date.

For the three months ended June 30, 2020 and 2019, we recognized stock compensation expense of $55,000 and $53,000 , respectively, and for the six months ended June 30, 2020 and 2019, we recognized stock compensation expense of $98,000 and $92,000 respectively, which is included in general and administrative in our accompanying condensed consolidated statements of operations.

Offering Costs

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Following the termination of our initial offering, we no longer incur additional selling commissions.

For the three months ended March 31, 2019, we incurred $2,242,000 in selling commissions to our dealer manager.

For the six months ended June 30, 2019, we incurred $2,241,000 in selling commissions to our dealer manager.

Such commissions were charged to stockholders’ equity as such amounts were paid to our dealer manager from the gross proceeds of our initial offering.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Dealer Manager Fee

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No dealer manager fee was payable on shares of our common stock sold pursuant to our DRIP Offerings.

Following the termination of our initial offering, we no longer incur additional dealer manager fees.

For the three months ended March 31, 2019, we incurred $759,000 in dealer manager fees to our dealer manager.

Following the termination of our initial offering on February 15, 2019, we no longer incur additional dealer manager fees.

For the six months ended June 30, 2019, we incurred $759,000 in dealer manager fees to our dealer manager.

Such fees were charged to stockholders’ equity as such amounts were paid to our dealer manager or its affiliates from the gross proceeds of our initial offering.

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By agreement with participating broker-dealers, such stockholder servicing fee may be reduced or limited.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Following the termination of our initial offering on February 15, 2019, we no longer incur additional stockholder servicing fees.

For the three months ended March 31, 2019, we incurred $2,717,000 in stockholder servicing fees to our dealer manager.

As of March 31, 2020 and December 31, 2019, we accrued $10,955,000 and $12,610,000 , respectively, in connection with the stockholder servicing fee payable, which is included in accounts payable and accrued liabilities with a corresponding offset to stockholders’ equity in our accompanying condensed consolidated balance sheets.

For the six months June 30, 2019, we incurred $2,602,000 in stockholder servicing fees to our dealer manager.

As of June 30, 2020 and December 31, 2019, we accrued $9,270,000 and $12,610,000 , respectively, in connection with the stockholder servicing fee payable, which is included in accounts payable and accrued liabilities with a corresponding offset to stockholders’ equity in our accompanying condensed consolidated balance sheets.

Noncontrolling Interest

In connection with our acquisition of Louisiana Senior Housing Portfolio, we consolidated and owned approximately 90.0% of our joint venture with SSMG as of March 31, 2020 .

As such, 10.0% of the net earnings of the joint venture were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations for the three months ended March 31, 2020, and the carrying amount of such noncontrolling interest is presented in total equity in our accompanying condensed consolidated balance sheets as of March 31, 2020.

We did not have any noncontrolling interest in total equity for the three months ended March 31, 2019.

In connection with our acquisition of Louisiana Senior Housing Portfolio in January 2020, we consolidated and owned approximately 90.0% of our joint venture with SSMG as of June 30, 2020 .

As such, 10.0% of the net earnings of the joint venture were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2020 , and the carrying amount of such noncontrolling interest is presented in total equity in our accompanying condensed consolidated balance sheets as of June 30, 2020 .

We did not have any noncontrolling interest in total equity for the six months ended June 30, 2019.

Related Party Transactions

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We entered into the Advisory Agreement, which entitles our advisor and its affiliates to specified compensation for certain services, as well as reimbursement of certain expenses.

Our board, including a majority of our independent directors, has reviewed the material transactions between our affiliates and us during the three months ended March 31, 2020 .

Our board, including a majority of our independent directors, has reviewed the material transactions between our affiliates and us during the six months ended June 30, 2020 .

Set forth below is a description of the transactions with affiliates.

We believe that we have executed all of the transactions set forth below on terms that are fair and reasonable to us and on terms no less favorable to us than those available from unaffiliated third parties.

For the three months ended March 31, 2020 and 2019, we incurred $4,284,000 and $4,417,000 , respectively, in fees and expenses to our affiliates as detailed below.

We believe that we have

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executed all of the transactions set forth below on terms that are fair and reasonable to us and on terms no less favorable to us than those available from unaffiliated third parties.

For the three months ended June 30, 2020 and 2019, we incurred $3,015,000 and $3,731,000 , respectively, and for the six months ended June 30, 2020 and 2019, we incurred $7,299,000 and $8,148,000 , respectively, in fees and expenses to our affiliates as detailed below.

Offering Stage

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Effective March 1, 2017 and through the termination of our initial offering on February 15, 2019, our dealer manager generally received a dealer manager fee up to an amount equal to 1.5% of the gross offering proceeds from the sale of Class I shares pursuant to the primary portion of our initial offering, all of which was funded by our advisor.

Our advisor recouped the portion of the dealer manager fee it funded through the receipt from us of the Contingent Advisor Payment, as defined below, through the payment of acquisition fees as described below.

No dealer manager fee was payable on shares of our common stock sold pursuant to our DRIP Offerings.

Our advisor recouped the portion of the dealer manager fee it funded through the receipt of the Contingent Advisor Payment from us, as described below, through the payment of acquisition fees.

Following the termination of our initial offering, we no longer incur additional dealer manager fees.

For the three months ended March 31, 2019, we incurred $1,687,000 payable to our advisor as part of the Contingent Advisor Payment in connection with the dealer manager fee that our advisor had incurred.

Following the termination of our initial offering on February 15, 2019, we no longer incur additional dealer manager fees.

For the six months ended June 30, 2019, we incurred $1,687,000 payable to our advisor as part of the Contingent Advisor Payment in connection with the dealer manager fee that our advisor had incurred.

Such fee was charged to stockholders’ equity as incurred with a corresponding offset to accounts payable due to affiliates in our accompanying condensed consolidated balance sheets.

1 unchanged sentence

Other Organizational and Offering Expenses

Through the termination of our initial offering on February 15, 2019, we incurred other organizational and offering expenses in connection with the primary portion of our initial offering (other than selling commissions, the dealer manager fee and the stockholder servicing fee) were funded by our advisor.

Our advisor recouped such expenses it funded through the

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receipt of the Contingent Advisor Payment from us, as described below, through the payment of acquisition fees.

Our advisor recouped such expenses it funded through the receipt of the Contingent Advisor Payment from us, as described below, through the payment of acquisition fees.

No other organizational and offering expenses were paid with respect to shares of our common stock sold pursuant to our DRIP Offerings.

Following the termination of our initial offering, we no longer incur additional other organizational and offering expenses.

For the three months ended March 31, 2019, we incurred $112,000 payable to our advisor as part of the Contingent Advisor Payment in connection with the other organizational and offering expenses that our advisor had incurred.

Following the termination of our initial offering on February 15, 2019, we no longer incur additional other organizational and offering expenses.

For the six months ended June 30, 2019, we incurred $112,000 payable to our advisor as part of the Contingent Advisor Payment in connection with the other organizational and offering expenses that our advisor had incurred.

Such expenses were charged to stockholders’ equity as incurred with a corresponding offset to accounts payable due to affiliates in our accompanying condensed consolidated balance sheets.

5 unchanged sentences

Therefore, the amount of the Contingent Advisor Payment paid upon the closing of an acquisition did not exceed the then outstanding amounts paid by our advisor for dealer manager fees and other organizational and offering expenses at the time of such closing.

For these purposes, the amounts paid by our advisor and considered as “outstanding” were reduced by the amount of the Contingent Advisor Payment previously paid.

For these purposes, the amounts paid by our advisor and considered as “outstanding” were reduced by the amount of the Contingent

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Advisor Payment previously paid.

Notwithstanding the foregoing, the initial $7,500,000 of amounts paid by our advisor to fund the dealer manager fee and other organizational and offering expenses, or the Contingent Advisor Payment Holdback, was retained by us until February 2019, the termination of our initial offering and the third anniversary of the commencement date of our initial offering, at which time such amount was paid to our advisor.

3 unchanged sentences

The base acquisition fee in connection with the acquisition of properties accounted for as asset acquisitions or the acquisition of real estate-related investments is capitalized as part of the associated investment in our accompanying condensed consolidated balance sheets.

For the three months ended March 31, 2020 and 2019, we paid base acquisition fees of $1,406,000 and $398,000 , respectively, to our advisor.

As of both March 31, 2020 and December 31, 2019, we have paid $20,982,000 in Contingent Advisor Payments to our advisor and do not have any amounts outstanding due to our advisor.

For the three months ended June 30, 2020 and 2019, we incurred base acquisition fees of $34,000 and $1,343,000 , respectively, and for the six months ended June 30, 2020 and 2019, we incurred base acquisition fees of $1,440,000 and $1,741,000 , respectively, to our advisor.

As of both June 30, 2020 and December 31, 2019, we have paid $20,982,000 in Contingent Advisor Payments to our advisor and do not have any amounts outstanding due to our advisor.

For a further discussion of amounts paid in connection with the Contingent Advisor Payment, see “Dealer Manager Fee” and “Other Organizational and Offering Expenses,” above.

2 unchanged sentences

however, we will not pay a development fee to our advisor or its affiliates if our advisor or its affiliates elect to receive an acquisition fee based on the cost of such development.

For the three months ended March 31, 2020 and 2019, we incurred development fees of $0 and $13,000 , respectively, to our advisor, which was expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

For the three months ended June 30, 2020 and 2019, we incurred development fees of $2,000 and $1,000 , respectively, and for the six months ended June 30, 2020 and 2019, we incurred development fees of $2,000 and $14,000 , respectively, to our advisor, which was expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations.

Reimbursement of Acquisition Expenses

1 unchanged sentence

The reimbursement of acquisition expenses, acquisition fees, total development costs and real estate commissions paid to unaffiliated third parties will not exceed, in the aggregate, 6.0% of the contract purchase price of the property or real estate-related investments, unless fees in excess of such limits are approved by a majority of our directors, including a majority of our independent directors, not otherwise interested in the transaction.

For the three months ended March 31, 2020 and 2019, such fees and expenses paid did not exceed 6.0% of the contract purchase price of our property acquisitions, except with respect to our acquisitions of Pinnacle Warrenton ALF, Glendale MOB, Missouri SNF Portfolio and Flemington MOB Portfolio, which excess fees and expenses were approved by our directors as set forth above.

For the six months ended June 30, 2020 and 2019, such fees and expenses paid did not exceed 6.0% of the contract purchase price of our property acquisitions, except with respect to our acquisitions of Pinnacle Warrenton ALF, Glendale MOB, Missouri SNF Portfolio, Flemington MOB Portfolio and West Des Moines SNF, which excess fees and expenses were approved by our directors as set forth above.

Reimbursements of acquisition expenses in connection with the acquisition of real estate investments accounted for as business combinations are expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations.

Reimbursements of acquisition expenses in connection with the acquisition of properties accounted for as asset acquisitions or the acquisition of real estate-related investments are capitalized as part of the associated investment in our accompanying condensed consolidated balance sheets.

For the three months ended March 31, 2020 and 2019, we incurred $1,000 and $0 , respectively, in acquisition expenses to our advisor or its affiliates.

For the three and six months ended June 30, 2020 , we incurred $0 and $1,000 , respectively, in acquisition expenses to our advisor or its affiliates.

For the three and six months ended June 30, 2019, we did not incur any acquisition expenses payable to our advisor or its affiliates.

Operational Stage

1 unchanged sentence

We pay our advisor or its affiliates a monthly fee for services rendered in connection with the management of our assets equal to one-twelfth of 0.80% of average invested assets.

For such purposes, average invested assets means the average of the aggregate book value of our assets invested in real estate investments and real estate-related investments, before deducting depreciation, amortization, bad debt and other similar non-cash reserves, computed by taking the average of such values at the end of each month during the period of calculation.

For the three months ended March 31, 2020 and 2019, we incurred $2,411,000 and $1,889,000 , respectively, in asset management fees to our advisor, which are included in general and administrative in our accompanying condensed consolidated statements of operations.

For such purposes, average invested assets means the average of the

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aggregate book value of our assets invested in real estate investments and real estate-related investments, before deducting depreciation, amortization, bad debt and other similar non-cash reserves, computed by taking the average of such values at the end of each month during the period of calculation.

For the three months ended June 30, 2020 and 2019, we incurred asset management fees of $2,435,000 and $2,003,000 , respectively, and for the six months ended June 30, 2020 and 2019, we incurred asset management fees of $4,846,000 and $3,892,000 , respectively, to our advisor, which are included in general and administrative in our accompanying condensed consolidated statements of operations.

Property Management Fee

5 unchanged sentences

Property management fees are included in property operating expenses and rental expenses in our accompanying condensed consolidated statements of operations.

For the three months ended March 31, 2020 and 2019, we incurred property management fees of $349,000 and $260,000 , respectively, to American Healthcare Investors.

For the three months ended June 30, 2020 and 2019, we incurred property management fees of $375,000 and $293,000 , respectively, and for the six months ended June 30, 2020 and 2019, we incurred property management fees of $724,000 and $553,000 , respectively, to American Healthcare Investors.

We pay our advisor or its affiliates a separate fee for any leasing activities in an amount not to exceed the fee customarily charged in arm’s-length transactions by others rendering similar services in the same geographic area for similar properties as determined by a survey of brokers and agents in such area.

Such fee is generally expected to range from 3.0% to 6.0% of the gross revenues generated during the initial term of the lease.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Lease fees are capitalized as lease commissions, which are included in other assets, net in our accompanying condensed consolidated balance sheets, and amortized over the term of the lease.

For the three months ended March 31, 2020 and 2019, we incurred lease fees of $51,000 and $10,000 , respectively.

For the three months ended June 30, 2020 and 2019, we incurred lease fees of $86,000 and $40,000 , respectively, and for the six months ended June 30, 2020 and 2019, we incurred lease fees of $137,000 and $50,000 , respectively.

Construction Management Fee

1 unchanged sentence

Construction management fees are capitalized as part of the associated asset and included in real estate investments, net in our accompanying condensed consolidated balance sheets or are expensed and included in our accompanying condensed consolidated statements of operations, as applicable.

For the three months ended March 31, 2020 and 2019, we incurred construction management fees of $23,000 and $7,000 , respectively.

For the three months ended June 30, 2020 and 2019, we incurred construction management fees of $41,000 and $19,000 , respectively, and for the six months ended June 30, 2020 and 2019, we incurred construction management fees of $64,000 and $26,000 , respectively.

Operating Expenses

2 unchanged sentences

(i) 2.0% of our average invested assets, as defined in the Advisory Agreement;

or (ii) 25.0% of our net income, as defined in the Advisory Agreement, unless our independent directors determined that such excess expenses were justified based on unusual and nonrecurring factors which they deem sufficient.

or (ii) 25.0% of our net income, as defined in the Advisory Agreement, unless our

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independent directors determined that such excess expenses were justified based on unusual and nonrecurring factors which they deem sufficient.

The following table reflects our operating expenses as a percentage of average invested assets and as a percentage of net income for the 12 month periods then ended:

12 months ended March 31,

12 months ended June 30,

Operating expenses as a percentage of average invested assets

Operating expenses as a percentage of net income

For the 12 months ended March 31, 2020 and 2019, our operating expenses did not exceed the aforementioned limitations as 2.0% of our average invested assets was greater than 25.0% of our net income.

For the three months ended March 31, 2020 and 2019, our advisor incurred operating expenses on our behalf of $43,000 and $41,000 , respectively.

For the 12 months ended June 30, 2020 and 2019, our operating expenses did not exceed the aforementioned limitations as 2.0% of our average invested assets was greater than 25.0% of our net income.

For the three months ended June 30, 2020 and 2019, our advisor incurred operating expenses on our behalf of $42,000 and $32,000 , respectively, and for the six months ended June 30, 2020 and 2019, our advisor incurred operating expenses on our behalf of $85,000 and $73,000 , respectively.

Operating expenses are generally included in general and administrative in our accompanying condensed consolidated statements of operations.

2 unchanged sentences

The rate of compensation for these services has to be approved by a majority of our board, including a majority of our independent directors, and cannot exceed an amount that would be paid to unaffiliated parties for similar services.

For the three months ended March 31, 2020 and 2019, our advisor and its affiliates were not compensated for any additional services.

For the three and six months ended June 30, 2020 and 2019, our advisor and its affiliates were not compensated for any additional services.

Liquidity Stage

2 unchanged sentences

The amount of disposition fees paid, when added to the real estate commissions paid to unaffiliated parties, will not exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price.

For the three months ended March 31, 2020 and 2019, we did not incur any disposition fees to our advisor or its affiliates.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

For the three and six months ended June 30, 2020 and 2019, we did not incur any disposition fees to our advisor or its affiliates.

Subordinated Participation Interest

5 unchanged sentences

Actual amounts to be received depend on the sale prices of properties upon liquidation.

For the three months ended March 31, 2020 and 2019, we did not pay any such distributions to our advisor.

For the three and six months ended June 30, 2020 and 2019, we did not pay any such distributions to our advisor.

Subordinated Distribution Upon Listing

1 unchanged sentence

(i) the market value of our outstanding common stock at listing plus distributions paid prior to listing exceeds (ii) the sum of the total amount of capital raised from stockholders (less amounts paid to repurchase shares of our common stock pursuant to our share repurchase plan) and the amount of cash equal to an annual 6.0% cumulative, non-compounded return on the gross proceeds from the sale of shares of our common stock through the date of listing.

Actual amounts to be received depend upon the market value of our outstanding stock at the time of listing, among other factors.

For the three months ended March 31, 2020 and 2019, we did not pay any such distributions to our advisor.

Actual amounts to be received depend upon the market value of our

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outstanding stock at the time of listing, among other factors.

For the three and six months ended June 30, 2020 and 2019, we did not pay any such distributions to our advisor.

Subordinated Distribution Upon Termination

2 unchanged sentences

In addition, our advisor may elect to defer its right to receive a subordinated distribution upon termination until either a listing or other liquidity event, including a liquidation, sale of substantially all of our assets or merger in which our stockholders receive in exchange for their shares of our common stock, shares of a company that are traded on a national securities exchange.

As of March 31, 2020 and December 31, 2019, we did not have any liability related to the subordinated distribution upon termination.

As of June 30, 2020 and December 31, 2019, we did not have any liability related to the subordinated distribution upon termination.

Stock Purchase Plans

7 unchanged sentences

The 2018 Stock Purchase Plans terminated on December 31, 2018.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Purchases of shares of our Class I common stock pursuant to the 2018 Stock Purchase Plans commenced beginning with the first regularly scheduled payroll payment on January 22, 2018, and concluded with the regularly scheduled payroll payment on January 7, 2019.

1 unchanged sentence

No selling commissions, dealer manager fees (including the portion of such dealer manager fees funded by our advisor) or stockholder servicing fees were paid with respect to such sales of our Class I common stock pursuant to the 2018 Stock Purchase Plans.

For the three months ended March 31, 2019, our officers invested the following amounts and we issued the following shares of our Class I common stock pursuant to the 2018 Stock Purchase Plans:

Three Months Ended March 31, 2019

For the six months ended June 30, 2019, our officers invested the following amounts and we issued the following shares of our Class I common stock pursuant to the 2018 Stock Purchase Plans:

Six Months Ended June 30, 2019

Officer’s Name

8 unchanged sentences

Vice President of Asset Management

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Accounts Payable Due to Affiliates

The following amounts were outstanding to our affiliates as of March 31, 2020 and December 31, 2019:

March 31, 2020

December 31, 2019

The following amounts were outstanding to our affiliates as of June 30, 2020 and December 31, 2019:

Asset management fees

Property management fees

Lease commissions

Construction management fees

Operating expenses

Lease commissions

Acquisition and development fees

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Fair Value Measurements

Assets and Liabilities Reported at Fair Value

The table below presents our assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 , aggregated by the level in the fair value hierarchy within which those measurements fall:

The table below presents our assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 , aggregated by the level in the fair value hierarchy within which those measurements fall:

Quoted Prices in

13 unchanged sentences

Derivative financial instruments

There were no transfers into or out of fair value measurement levels during the three months ended March 31, 2020 and 2019.

There were no transfers into or out of fair value measurement levels during the six months ended June 30, 2020 and 2019.

Derivative Financial Instruments

6 unchanged sentences

In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Although we have determined that the majority of the inputs used to value our derivative financial instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparty.

However, as of March 31, 2020 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

However, as of June 30, 2020 , we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

3 unchanged sentences

We consider the carrying values of cash and cash equivalents, accounts and other receivables, restricted cash, real estate deposits and accounts payable and accrued liabilities to approximate the fair values for these financial instruments based upon the short period of time between origination of the instruments and their expected realization.

The fair value of accounts

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payable due to affiliates is not determinable due to the related party nature of the accounts payable.

The fair value of accounts payable due to affiliates is not determinable due to the related party nature of the accounts payable.

These financial assets and liabilities are measured at fair value on a recurring basis based on quoted prices in active markets for identical assets and liabilities, and therefore are classified as Level 1 in the fair value hierarchy.

1 unchanged sentence

We have determined that our mortgage loans payable and the 2018 Credit Facility are classified in Level 2 within the fair value hierarchy as reliance is placed on inputs other than quoted prices that are observable, such as interest rates and yield curves.

The carrying amounts and estimated fair values of such financial instruments as of March 31, 2020 and December 31, 2019 were as follows:

March 31, 2020

The carrying amounts and estimated fair values of such financial instruments as of June 30, 2020 and December 31, 2019 were as follows:

June 30, 2020

December 31, 2019

4 unchanged sentences

As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders.

We have elected to treat certain of our consolidated subsidiaries as wholly owned taxable REIT subsidiaries, or TRS, pursuant to the Code.

We have elected to treat certain of our consolidated subsidiaries as TRS, pursuant to the Code.

TRS may participate in services that would otherwise be considered impermissible for REITs and are subject to federal and state income tax at regular corporate tax rates.

The components of income tax expense for the three months ended March 31, 2020 and 2019 were as follows:

Three Months Ended March 31,

On December 22, 2017, the United States government enacted comprehensive tax legislation pursuant to the Tax Cuts and Jobs Act of 2017, or the Tax Act.

The Tax Act makes broad and complex changes to the United States tax code, including, but not limited to, reducing the United States federal corporate tax rate from 35.0% to 21.0%, eliminating the corporate alternative minimum tax and changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

The Tax Act is still unclear in some respects and could be subject to potential amendments and technical corrections.

The federal income tax rules dealing with United States federal income taxation and REITs are constantly under review by persons involved in the legislative process, the IRS and the United States Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations.

As a result, the long-term impact of the Tax Act on the overall economy, government revenues, our tenants, us and the real estate industry cannot be reliably predicted at this time.

We continue to work with our tax advisors to determine the full impact that the tax legislation as a whole will have on us.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, was passed into law by the federal government that contains economic stimulus provisions, including the temporary removal of limitations on the deductibility of net operating losses, or NOL, modifications to the carryback periods of NOL, modifications to the business

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interest deduction limitations and technical corrections to the tax depreciation recovery period for qualified improvement property.

Accordingly, tax law changes within the CARES Act may impact income taxes accrued, deferred tax assets or liabilities and the associated valuation allowances included in our condensed consolidated financial statements, if any.

We do not anticipate that tax law changes in the CARES Act will materially impact the computation of our taxable income, including our TRS.

We also do not expect that we will realize a material tax benefit as a result of the changes to the provisions of the Code made by the CARES Act.

We will continue to evaluate the tax impact of the CARES Act and any guidance provided by the United States Treasury Department, the IRS and other state and local regulatory authorities to our condensed consolidated financial statements.

The components of income tax expense for the three and six months ended June 30, 2020 and 2019 were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Federal deferred

State deferred

Federal current

State current

7 unchanged sentences

If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing authority.

As of both March 31, 2020 and December 31, 2019, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.

As of both June 30, 2020 and December 31, 2019, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.

A valuation allowance is established if we believe it is more likely than not that all or a portion of the deferred tax assets are not realizable.

As of both March 31, 2020 and December 31, 2019, our valuation allowance fully reserves the net deferred tax asset due to inherent uncertainty of future income.

We will continue to monitor

As of both June 30, 2020 and December 31, 2019, our valuation allowance fully reserves the net deferred tax asset due to inherent uncertainty of future income.

We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance in the future.

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industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance in the future.

We have operating leases with tenants that expire at various dates through 2040.

For the three months ended March 31, 2020 and 2019, we recognized $21,463,000 and $15,147,000 of real estate revenue, respectively, related to operating lease payments, of which $4,455,000 and $3,025,000 , respectively, was for variable lease payments.

As of March 31, 2020, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the nine months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter for the properties that we wholly own:

For the three months ended June 30, 2020 and 2019, we recognized $21,842,000 and $18,880,000 of real estate revenue, respectively, related to operating lease payments, of which $4,814,000 and $3,683,000 , respectively, was for variable lease payments.

For the six months ended June 30, 2020 and 2019, we recognized $43,305,000 and $34,027,000 of real estate revenue, respectively, related to operating lease payments, of which $9,269,000 and $6,708,000 , respectively, was for variable lease payments.

As of June 30, 2020 , the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the six months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter for the properties that we wholly own:

We have ground lease obligations that generally require fixed annual rental payments and may also include escalation clauses and renewal options.

These leases expire at various dates through 2107, excluding extension options.

Certain of our lease agreements include rental payments that are adjusted periodically based on Consumer Price Index, and may include other variable lease costs (i.e., common area maintenance, property taxes and insurance).

Certain of our lease agreements include rental payments that are adjusted periodically based on the United States Bureau of Labor Statistics’ Consumer Price Index, and may include other variable lease costs (i.e., common area maintenance, property taxes and insurance).

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

For the three months ended March 31, 2020 and 2019, operating lease costs were $209,000 and $127,000 , respectively, which are included in rental expenses in our accompanying condensed consolidated statements of operations.

Such costs include short-term leases and variable lease costs, which are immaterial.

For the three months ended June 30, 2020 and 2019, operating lease costs were $228,000 and $174,000 , respectively, and for the six months ended June 30, 2020 and 2019, operating lease costs were $437,000 and $301,000 , respectively, which are included in rental expenses in our accompanying condensed consolidated statements of operations.

Such costs also include short-term leases and variable lease costs, which are immaterial.

Additional information related to our operating leases for the periods presented below was as follows:

Right-of-use assets obtained in exchange for new operating lease liabilities

Weighted average remaining lease term (in years)

Weighted average discount rate

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid for amounts included in the measurement of operating lease liabilities:

Operating cash outflows related to operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

As of March 31, 2020 , the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the nine months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated balance sheet:

As of June 30, 2020 , the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the six months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated balance sheet:

Total operating lease payments

1 unchanged sentence

Segment Reporting

As of March 31, 2020 , we evaluated our business and made resource allocations based on four reportable business segments — medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities.

As of June 30, 2020 , we evaluated our business and made resource allocations based on four reportable business segments — medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities.

Our medical office buildings are typically leased to multiple tenants under separate leases, thus requiring active management and responsibility for many of the associated operating expenses (much of which are, or can effectively be, passed through to the tenants).

Our senior housing facilities and skilled nursing facilities are primarily single-tenant properties for which we lease the facilities to unaffiliated tenants under triple-net and generally master leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant.

Our senior housing and skilled nursing facilities are primarily single-tenant properties for which we lease the facilities to unaffiliated tenants under triple-net and generally master leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant.

Our senior housing — RIDEA properties include senior housing facilities that are owned and operated utilizing a RIDEA structure.

4 unchanged sentences

Interest expense, depreciation and amortization and other expenses not attributable to individual properties are not allocated to individual segments for purposes of assessing segment performance.

Non-segment assets primarily consist of corporate assets including our investment in unconsolidated entity, cash and cash equivalents, other receivables, real estate deposits and other assets not attributable to individual properties.

Non-segment assets primarily consist of corporate assets including our joint venture investment in an unconsolidated entity, cash and cash equivalents, other receivables, real estate deposits and other assets not attributable to individual properties.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Summary information for the reportable segments during the three months ended March 31, 2020 and 2019 was as follows:

March 31, 2020

Summary information for the reportable segments during the three and six months ended June 30, 2020 and 2019 was as follows:

June 30, 2020

Real estate revenue

10 unchanged sentences

Interest expense (including amortization of deferred financing costs and debt discount/premium)

Loss in fair value derivative financial instruments

Gain in fair value of derivative financial instruments

Income from unconsolidated entity

Loss before income taxes

Income tax expense

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

March 31, 2019

June 30, 2019

Real estate revenue

10 unchanged sentences

Interest expense (including amortization of deferred financing costs and debt discount/premium)

Loss in fair value derivative financial instruments

Loss in fair value of derivative financial instruments

Income from unconsolidated entity

1 unchanged sentence

Income tax expense

Assets by reportable segment as of March 31, 2020 and December 31, 2019 were as follows:

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June 30, 2020

Real estate revenue

Resident fees and services

Total revenues

Rental expenses

Property operating expenses

Segment net operating income

General and administrative

Acquisition related expenses

Depreciation and amortization

Other income (expense):

Interest expense:

Interest expense (including amortization of deferred financing costs and debt discount/premium)

Loss in fair value of derivative financial instruments

Income from unconsolidated entity

Loss before income taxes

Income tax expense

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June 30, 2019

Real estate revenue

Resident fees and services

Total revenues

Rental expenses

Property operating expenses

Segment net operating income

General and administrative

Acquisition related expenses

Depreciation and amortization

Other income (expense):

Interest expense:

Interest expense (including amortization of deferred financing costs and debt discount/premium)

Loss in fair value of derivative financial instruments

Income from unconsolidated entity

Loss before income taxes

Income tax expense

Assets by reportable segment as of June 30, 2020 and December 31, 2019 were as follows:

Medical office buildings

10 unchanged sentences

We have cash and cash equivalents in financial institutions that are insured by the Federal Deposit Insurance Corporation, or FDIC.

As of March 31, 2020 and December 31, 2019, we had cash and cash equivalents in excess of FDIC insured limits.

As of June 30, 2020 and December 31, 2019, we had cash and cash equivalents in excess of FDIC insured limits.

We believe this risk is not significant.

1 unchanged sentence

In general, we perform credit evaluations of prospective tenants and security deposits are obtained at the time of property acquisition and upon lease execution.

Based on leases in effect as of March 31, 2020 , one state in the United States accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized net operating income.

Based on leases in effect as of June 30, 2020 , one state in the United States accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized net operating income.

Our properties located in Missouri accounted for approximately 11.2% of our total property portfolio’s annualized base rent or annualized net operating income.

Accordingly, there is a geographic concentration of risk subject to fluctuations in such state’s economy.

Based on leases in effect as of March 31, 2020 , our four reportable business segments, medical office buildings, senior housing — RIDEA, skilled nursing facilities and senior housing accounted for 62.6% , 14.0% , 13.7% and 9.7% , respectively, of our total property portfolio’s annualized base rent or annualized net operating income.

As of March 31, 2020 , we had one tenant that accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized net operating income, as follows:

Based on leases in effect as of June 30, 2020 , our four reportable business segments, medical office buildings, senior housing — RIDEA, skilled nursing facilities and senior housing accounted for 61.1% , 16.0% , 13.3% and 9.6% , respectively, of our total property portfolio’s annualized base rent or annualized net operating income.

As of June 30, 2020 , we had one tenant that accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized net operating income, as follows:

Percentage of

3 unchanged sentences

Skilled Nursing

Annualized base rent is based on contractual base rent from leases in effect as of March 31, 2020 , inclusive of our senior housing — RIDEA facilities.

Annualized base rent is based on contractual base rent from leases in effect as of June 30, 2020 , inclusive of our senior housing — RIDEA facilities.

The loss of this tenant or its inability to pay rent could have a material adverse effect on our business and results of operations.

1 unchanged sentence

Basic earnings (loss) per share for all periods presented are computed by dividing net income (loss) applicable to common stock by the weighted average number of shares of our common stock outstanding during the period.

Net income (loss) applicable to common stock is calculated as net income (loss) attributable to controlling interest less distributions allocated to participating securities of $7,000 and $6,000 for the three months ended March 31, 2020 and 2019, respectively.

Net income (loss) applicable to common stock is calculated as net income (loss) attributable to controlling interest less distributions allocated to participating securities of $4,000 and $5,000 , respectively, for the three months ended June 30, 2020 and 2019 and $11,000 for both the six months ended June 30, 2020 and 2019.

Diluted earnings (loss) per share are computed based on the weighted average number of shares of our common stock and all potentially dilutive securities, if any.

Nonvested shares of our restricted common stock and redeemable limited partnership units of our operating partnership are participating securities and give rise to potentially dilutive shares of our common stock.

As of March 31, 2020 and 2019 , there were 43,500 and 37,500 nonvested shares, respectively, of our restricted common stock outstanding, but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during these periods.

As of March 31, 2020 and 2019, there were 208 redeemable limited partnership units of our operating partnership outstanding, but such units were excluded from the computation of diluted earnings per share because such units were anti-dilutive during these periods.

As of June 30, 2020 and 2019 , there were 42,000 and 37,500 nonvested shares, respectively, of our restricted common stock outstanding, but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during these periods.

As of June 30, 2020 and 2019, there were 208 redeemable limited partnership units of our operating partnership outstanding, but such units were excluded from the computation of diluted earnings per share because such units were anti-dilutive during these periods.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements