American Healthcare REIT, Inc. 10-Q

Item 1. Financial Statements. GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2021 and December 31, 2020 (Unaudited) June 30, 2021 December 31, 2020 ASSETS Real estate investments, net $ 912,467,000 $ 921,580,000 Cash and cash equivalents 21,336,000 17,411,000 Restricted cash 1,176,000 714,000 Accounts and other receivables, net 1,768,000 2,635,000 Identified intangible assets, net 57,251,000 64,101,000 Operating lease right-of-use assets, net 14,073,000 14,133,000 Other assets, net 67,710,000 72,199,000 Total assets $ 1,075,781,000 $ 1,092,773,000 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Liabilities: Mortgage loans payable, net(1) $ 17,572,000 $ 17,827,000 Line of credit and term loans(1) 482,900,000 476,900,000 Accounts payable and accrued liabilities(1) 22,929,000 23,057,000 Accounts payable due to affiliates(1) 1,029,000 1,046,000 Identified intangible liabilities, net 1,174,000 1,295,000 Operating lease liabilities(1) 9,971,000 9,904,000 Security deposits, prepaid rent and other liabilities(1) 8,151,000 10,387,000 Total liabilities 543,726,000 540,416,000 Commitments and contingencies (Note 10) Redeemable noncontrolling interests (Note 11) 2,593,000 2,618,000 Equity: Stockholders’ equity: Preferred stock, $ 0.01 par value per share; 200,000,000 shares authorized; no ne issued and outstanding — — Class T common stock, $ 0.01 par value per share; 900,000,000 shares authorized; 76,069,129 and 75,690,838 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 760,000 756,000 Class I common stock, $ 0.01 par value per share; 100,000,000 shares authorized; 5,662,132 and 5,648,499 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 57,000 57,000 Additional paid-in capital 736,827,000 733,192,000 Accumulated deficit ( 208,759,000 ) ( 185,047,000 ) Total stockholders’ equity 528,885,000 548,958,000 Noncontrolling interest (Note 12) 577,000 781,000 Total equity 529,462,000 549,739,000 Total liabilities, redeemable noncontrolling interests and equity $ 1,075,781,000 $ 1,092,773,000 3 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued) As of June 30, 2021 and December 31, 2020 (Unaudited) ___________ (1) Such liabilities of Griffin-American Healthcare REIT IV, Inc. as of June 30, 2021 and December 31, 2020 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 $ 482,900,000 and $ 476,900,000 as of June 30, 2021 and December 31, 2020, respectively, which is guaranteed by Griffin-American Healthcare REIT IV, Inc. The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Revenues: Real estate revenue $ 21,988,000 $ 21,842,000 $ 43,934,000 $ 43,305,000 Resident fees and services 15,194,000 16,834,000 31,089,000 32,915,000 Total revenues 37,182,000 38,676,000 75,023,000 76,220,000 Expenses: Rental expenses 6,129,000 5,996,000 12,153,000 11,818,000 Property operating expenses 14,445,000 14,442,000 29,639,000 27,459,000 General and administrative 3,659,000 3,840,000 7,406,000 8,288,000 Business acquisition expenses 2,438,000 8,000 2,752,000 17,000 Depreciation and amortization 10,597,000 12,720,000 22,999,000 25,250,000 Total expenses 37,268,000 37,006,000 74,949,000 72,832,000 Other income (expense): Interest expense: Interest expense (including amortization of deferred financing costs and debt discount/premium) ( 4,869,000 ) ( 4,974,000 ) ( 9,595,000 ) ( 10,284,000 ) Gain (loss) in fair value of derivative financial instruments 1,462,000 853,000 2,917,000 ( 3,752,000 ) Loss on disposition of real estate investments ( 199,000 ) — ( 199,000 ) — (Loss) income from unconsolidated entity ( 193,000 ) 1,074,000 ( 1,097,000 ) 1,329,000 Other income 9,000 261,000 16,000 270,000 Total net other expense ( 3,790,000 ) ( 2,786,000 ) ( 7,958,000 ) ( 12,437,000 ) Loss before income taxes ( 3,876,000 ) ( 1,116,000 ) ( 7,884,000 ) ( 9,049,000 ) Income tax expense — ( 39,000 ) — ( 39,000 ) Net loss ( 3,876,000 ) ( 1,155,000 ) ( 7,884,000 ) ( 9,088,000 ) Less: net loss attributable to noncontrolling interests 104,000 209,000 368,000 376,000 Net loss attributable to controlling interest $ ( 3,772,000 ) $ ( 946,000 ) $ ( 7,516,000 ) $ ( 8,712,000 ) Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted $ ( 0.05 ) $ ( 0.01 ) $ ( 0.09 ) $ ( 0.11 ) Weighted average number of Class T and Class I common shares outstanding — basic and diluted 81,687,564 80,402,887 81,599,875 80,352,269 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY For the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited) Three Months Ended June 30, 2021 Stockholders’ Equity Class T and Class I Common Stock Number of Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interest Total Equity BALANCE — March 31, 2021 81,697,347 $ 817,000 $ 736,486,000 $ ( 196,835,000 ) $ 540,468,000 $ 633,000 $ 541,101,000 Offering costs — common stock — — 2,000 — 2,000 — 2,000 Issuance of common stock under the DRIP 151,142 1,000 1,392,000 — 1,393,000 — 1,393,000 Amortization of nonvested common stock compensation — — 41,000 — 41,000 — 41,000 Repurchase of common stock ( 117,228 ) ( 1,000 ) ( 1,159,000 ) — ( 1,160,000 ) — ( 1,160,000 ) Distributions to noncontrolling interest — — — — — ( 31,000 ) ( 31,000 ) Adjustment to value of redeemable noncontrolling interests — — 65,000 — 65,000 — 65,000 Distributions declared ($ 0.10 per share) — — — ( 8,152,000 ) ( 8,152,000 ) — ( 8,152,000 ) Net loss — — — ( 3,772,000 ) ( 3,772,000 ) ( 25,000 ) ( 3,797,000 ) (1) BALANCE — June 30, 2021 81,731,261 $ 817,000 $ 736,827,000 $ ( 208,759,000 ) $ 528,885,000 $ 577,000 $ 529,462,000 Three Months Ended June 30, 2020 Stockholders’ Equity Class T and Class I Common Stock Number of Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interest Total Equity BALANCE — March 31, 2020 80,574,630 $ 805,000 $ 726,258,000 $ ( 150,398,000 ) $ 576,665,000 $ 1,166,000 $ 577,831,000 Offering costs — common stock — — 63,000 — 63,000 — 63,000 Issuance of common stock under the DRIP 523,736 5,000 4,992,000 — 4,997,000 — 4,997,000 Issuance of vested and nonvested restricted common stock 7,500 — 14,000 — 14,000 — 14,000 Amortization of nonvested common stock compensation — — 41,000 — 41,000 — 41,000 Repurchase of common stock ( 506,560 ) ( 5,000 ) ( 4,638,000 ) — ( 4,643,000 ) — ( 4,643,000 ) Distributions to noncontrolling interest — — — — — ( 32,000 ) ( 32,000 ) Adjustment to value of redeemable noncontrolling interests — — ( 214,000 ) — ( 214,000 ) — ( 214,000 ) Distributions declared ($ 0.10 per share) — — — ( 8,022,000 ) ( 8,022,000 ) — ( 8,022,000 ) Net loss — — — ( 946,000 ) ( 946,000 ) ( 87,000 ) ( 1,033,000 ) (1) BALANCE — June 30, 2020 80,599,306 $ 805,000 $ 726,516,000 $ ( 159,366,000 ) $ 567,955,000 $ 1,047,000 $ 569,002,000 6 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued) For the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited) Six Months Ended June 30, 2021 Stockholders’ Equity Class T and Class I Common Stock Number of Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interest Total Equity BALANCE — December 31, 2020 81,339,337 $ 813,000 $ 733,192,000 $ ( 185,047,000 ) $ 548,958,000 $ 781,000 $ 549,739,000 Offering costs — common stock — — 5,000 — 5,000 — 5,000 Issuance of common stock under the DRIP 581,491 6,000 5,493,000 — 5,499,000 — 5,499,000 Amortization of nonvested common stock compensation — — 84,000 — 84,000 — 84,000 Repurchase of common stock ( 189,567 ) ( 2,000 ) ( 1,872,000 ) — ( 1,874,000 ) — ( 1,874,000 ) Distributions to noncontrolling interest — — — — — ( 55,000 ) ( 55,000 ) Adjustment to value of redeemable noncontrolling interests — — ( 75,000 ) — ( 75,000 ) — ( 75,000 ) Distributions declared ($ 0.20 per share) — — — ( 16,196,000 ) ( 16,196,000 ) — ( 16,196,000 ) Net loss — — — ( 7,516,000 ) ( 7,516,000 ) ( 149,000 ) ( 7,665,000 ) (1) BALANCE — June 30, 2021 81,731,261 $ 817,000 $ 736,827,000 $ ( 208,759,000 ) $ 528,885,000 $ 577,000 $ 529,462,000 Six Months Ended June 30, 2020 Stockholders’ Equity Class T and Class I Common Stock Number of Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interest Total Equity BALANCE — December 31, 2019 79,899,874 $ 798,000 $ 719,894,000 $ ( 130,613,000 ) $ 590,079,000 $ — $ 590,079,000 Offering costs — common stock — — 62,000 — 62,000 — 62,000 Issuance of common stock under the DRIP 1,198,492 12,000 11,422,000 — 11,434,000 — 11,434,000 Issuance of vested and nonvested restricted common stock 7,500 — 14,000 — 14,000 — 14,000 Amortization of nonvested common stock compensation — — 84,000 — 84,000 — 84,000 Repurchase of common stock ( 506,560 ) ( 5,000 ) ( 4,638,000 ) — ( 4,643,000 ) — ( 4,643,000 ) Contribution from noncontrolling interest — — — — — 1,250,000 1,250,000 Distributions to noncontrolling interest — — — — — ( 32,000 ) ( 32,000 ) Adjustment to value of redeemable noncontrolling interests — — ( 322,000 ) — ( 322,000 ) — ( 322,000 ) Distributions declared ($ 0.25 per share) — — — ( 20,041,000 ) ( 20,041,000 ) — ( 20,041,000 ) Net loss — — — ( 8,712,000 ) ( 8,712,000 ) ( 171,000 ) ( 8,883,000 ) (1) BALANCE — June 30, 2020 80,599,306 $ 805,000 $ 726,516,000 $ ( 159,366,000 ) $ 567,955,000 $ 1,047,000 $ 569,002,000 ___________ (1) Amount excludes $ 79,000 and $ 122,000 for the three months ended June 30, 2021 and 2020, respectively, and $ 219,000 and $ 205,000 for the six months ended June 30, 2021 and 2020, respectively, of net loss attributable to redeemable noncontrolling interests. See Note 11, Redeemable Noncontrolling Interests, for a further discussion. The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2021 and 2020 (Unaudited) Six Months Ended June 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 7,884,000 ) $ ( 9,088,000 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 22,999,000 25,250,000 Other amortization 1,399,000 1,392,000 Deferred rent ( 2,104,000 ) ( 2,351,000 ) Stock based compensation 84,000 98,000 Loss on disposition of real estate investments 199,000 — Loss (income) from unconsolidated entity 1,097,000 ( 1,329,000 ) Change in fair value of derivative financial instruments ( 2,917,000 ) 3,752,000 Changes in operating assets and liabilities: Accounts and other receivables 851,000 1,286,000 Other assets ( 1,677,000 ) ( 1,419,000 ) Accounts payable and accrued liabilities 1,660,000 2,078,000 Accounts payable due to affiliates ( 47,000 ) 41,000 Operating lease liabilities ( 217,000 ) ( 215,000 ) Security deposits, prepaid rent and other liabilities 443,000 ( 448,000 ) Net cash provided by operating activities 13,886,000 19,047,000 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of real estate investments ( 3,375,000 ) ( 67,932,000 ) Proceeds from disposition of real estate investments 6,184,000 — Capital expenditures ( 2,334,000 ) ( 4,616,000 ) Net cash provided by (used in) investing activities 475,000 ( 72,548,000 ) CASH FLOWS FROM FINANCING ACTIVITIES Payments on mortgage loans payable ( 293,000 ) ( 8,017,000 ) Borrowings under the line of credit and term loans 11,000,000 137,800,000 Payments on the line of credit and term loans ( 5,000,000 ) ( 55,100,000 ) Deferred financing costs ( 382,000 ) ( 43,000 ) Payment of offering costs ( 2,705,000 ) ( 3,278,000 ) Distributions paid to common stockholders ( 10,772,000 ) ( 10,042,000 ) Repurchase of common stock ( 1,874,000 ) ( 4,643,000 ) Contribution from noncontrolling interest — 1,250,000 Distributions to noncontrolling interest ( 55,000 ) ( 32,000 ) Contributions from redeemable noncontrolling interest 126,000 1,118,000 Distributions to redeemable noncontrolling interests ( 7,000 ) ( 72,000 ) Security deposits ( 12,000 ) 6,000 Net cash (used in) provided by financing activities ( 9,974,000 ) 58,947,000 NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 4,387,000 5,446,000 CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period 18,125,000 15,846,000 CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period $ 22,512,000 $ 21,292,000 8 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued) For the Six Months Ended June 30, 2021 and 2020 (Unaudited) Six Months Ended June 30, 2021 2020 RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH Beginning of period: Cash and cash equivalents $ 17,411,000 $ 15,290,000 Restricted cash 714,000 556,000 Cash, cash equivalents and restricted cash $ 18,125,000 $ 15,846,000 End of period: Cash and cash equivalents $ 21,336,000 $ 20,585,000 Restricted cash 1,176,000 707,000 Cash, cash equivalents and restricted cash $ 22,512,000 $ 21,292,000 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for: Interest $ 8,556,000 $ 9,428,000 Income taxes $ 44,000 $ 18,000 SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES Investing Activities: Accrued capital expenditures $ 3,016,000 $ 2,309,000 Tenant improvement overage $ 240,000 $ 625,000 The following represents the increase (decrease) in certain assets and liabilities in connection with our acquisitions and disposition of real estate investments: Other assets $ ( 16,000 ) $ 196,000 Accounts payable and accrued liabilities $ ( 48,000 ) $ 201,000 Prepaid rent $ 10,000 $ 11,000 Financing Activities: Issuance of common stock under the DRIP $ 5,499,000 $ 11,434,000 Distributions declared but not paid to common stockholders $ 2,689,000 $ 2,651,000 Accrued stockholder servicing fee $ 3,392,000 $ 9,270,000 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Three and Six Months Ended June 30, 2021 and 2020 The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT IV, Inc. and its subsidiaries, including Griffin-American Healthcare REIT IV Holdings, LP, except where otherwise noted. 1. Organization and Description of Business Griffin-American Healthcare REIT IV, Inc., a Maryland corporation, invests in a diversified portfolio of healthcare real estate properties, focusing primarily on medical office buildings, skilled nursing facilities and senior housing facilities that produce current income. We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). We qualified to be taxed as a real estate investment trust, or 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. We raised $ 754,118,000 through a best efforts initial public offering, or our initial offering, that commenced on February 16, 2016, and issued 75,639,681 aggregate shares of our Class T and Class I common stock. In addition, during our initial offering, we issued 3,253,535 aggregate shares of our Class T and Class I common stock pursuant to our distribution reinvestment plan, as amended, or the DRIP, for a total of $ 31,021,000 in distributions reinvested. Following the termination of our initial offering on February 15, 2019, we continued issuing shares of our common stock pursuant to the DRIP through a subsequent offering, or the 2019 DRIP Offering, which commenced on March 1, 2019. On March 18, 2021, our board of directors, or our board, authorized the suspension of the DRIP, effective as of April 1, 2021. As of June 30, 2021, a total of $ 46,970,000 in distributions were reinvested that resulted in 4,923,550 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. See Note 12, Equity — Distribution Reinvestment Plan, for a further discussion. We conduct substantially all of our operations through Griffin-American Healthcare REIT IV Holdings, LP, or our operating partnership. We are externally advised by Griffin-American Healthcare REIT IV Advisor, LLC, or our advisor, pursuant to an advisory agreement, as amended, or the Advisory Agreement, between us, our operating partnership and our advisor. The Advisory Agreement was effective as of February 16, 2016 and had a one-year initial term, subject to successive one-year renewals upon the mutual consent of the parties. The Advisory Agreement was last renewed pursuant to the mutual consent of the parties on February 11, 2021 and expires on February 16, 2022. Our advisor uses its best efforts, subject to the oversight and review of our board, to, among other things, provide asset management, property management, acquisition, disposition and other advisory services on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary. Our advisor is 75.0 % owned and managed by wholly owned subsidiaries of American Healthcare Investors, LLC, or American Healthcare Investors, and 25.0 % owned by a wholly owned subsidiary of Griffin Capital Company, LLC, or Griffin Capital, or collectively, our co-sponsors. American Healthcare Investors is 47.1 % owned by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1 % indirectly owned by Digital Bridge Group, Inc. (NYSE: DBRG) (formerly known as Colony Capital, Inc.), or Digital Bridge, and 7.8 % owned by James F. Flaherty III, a former partner of Colony Capital, Inc. We are not affiliated with Griffin Capital, Griffin Capital Securities, LLC, or our dealer manager, Digital Bridge or Mr. Flaherty; however, we are affiliated with our advisor, American Healthcare Investors and AHI Group Holdings. We currently operate through four reportable business segments: medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities. As of June 30, 2021, we owned 87 properties, comprising 92 buildings, or approximately 4,799,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $ 1,080,381,000 . As of June 30, 2021, we also owned a 6.0 % interest in a joint venture which owns a portfolio of integrated senior health campuses and ancillary businesses. Due to the ongoing coronavirus, or COVID-19, pandemic in the United States and globally, since March 2020, our residents, tenants, operating partners and managers have been materially impacted, and the prolonged economic impact remains uncertain. As the COVID-19 pandemic is still impacting the healthcare system to a degree, it continues to present challenges for us as an owner and operator of healthcare facilities. Since its outset, the impacts of the COVID-19 pandemic have been significant, rapidly and continuously evolving and may continue into the future, making it difficult to ascertain the long-term impact it will have on real estate markets in which we own and/or operate properties and our portfolio of investments. We have evaluated the impacts of the COVID-19 pandemic on our business thus far and incorporated information concerning the impact of COVID-19 into our assessments of liquidity, impairment and collectability from tenants and residents as of June 30, 2021. We will continue to monitor such impacts and will adjust our estimates and assumptions based on the best available information. 10 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Proposed Merger with Griffin-American Healthcare REIT III, Inc. In October 2020, our board established a special committee of our board, or our special committee, which consists of all of our independent directors, to investigate and analyze strategic alternatives, including but not limited to, the sale of our assets, a listing of our shares on a national securities exchange, or a merger with another entity, including a merger with another unlisted entity that we expect would enhance our value. On June 23, 2021, we, our operating partnership, our wholly owned subsidiary, Continental Merger Sub, LLC, or merger sub, and Griffin-American Healthcare REIT III, Inc., or GAHR III, and its subsidiary Griffin-American Healthcare REIT III Holdings, LP, or GAHR III operating partnership, entered into an Agreement and Plan of Merger, or the Merger Agreement. Subject to the terms and conditions of the Merger Agreement, (i) GAHR III will be merged with and into merger sub, with merger sub being the surviving company, or the REIT Merger, and (ii) our operating partnership will be merged with and into GAHR III operating partnership, with GAHR III operating partnership being the surviving partnership and being renamed “American Healthcare REIT Holdings, LP”, or the Partnership Merger, and, together with the REIT Merger, the Merger. At the effective time of the REIT Merger, each issued and outstanding share of GAHR III’s common stock, $ 0.01 par value per share, will be converted into the right to receive 0.9266 of a share of our Class I common stock, $ 0.01 par value per share. Further, at the effective time of the Partnership Merger, (i) each unit of limited partnership interest in GAHR III operating partnership outstanding as of immediately prior to the effective time of the Partnership Merger will be converted automatically into the right to receive 0.9266 of a Partnership Class I Unit, as defined in the agreement of limited partnership of the surviving partnership and (ii) each unit of limited partnership interest in our operating partnership outstanding as of immediately prior to the effective time of the Partnership Merger will be converted automatically into the right to receive one unit of limited partnership interest of the surviving partnership of like class. Following the Merger, we (as combined with GAHR III, or the Combined Company) will be named “American Healthcare REIT, Inc.” The REIT Merger is intended to qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Internal Revenue Code of 1986, as amended. The Merger Agreement may be terminated by either us or GAHR III under certain circumstances, including but not limited to (in each case, with the prior approval of the special committee of the respective board of directors) (i) if the REIT Merger has not been consummated on or before 11:59 p.m. New York time on March 23, 2022; (ii) if the approval of the Merger by our stockholders or the stockholders of GAHR III is not obtained; or (iii) upon a material uncured breach of the respective obligations, covenants or agreements by the other party that would cause the closing conditions in the Merger Agreement not to be satisfied. The consummation of the Merger and the AHI Acquisition (as defined below) is subject to substantial conditions to closing and is not expected to close until the fourth quarter of 2021; therefore, our accompanying condensed consolidated financial statements do not include the Merger or the AHI Acquisition. If the Merger Agreement is terminated in connection with GAHR III’s acceptance of a Superior Proposal, as defined in the Merger Agreement, or due to GAHR III making a GAHR III Adverse Recommendation Change, as defined in the Merger Agreement, then GAHR III must pay us a termination fee of $ 50,654,000 and reimburse up to $ 4,000,000 of documented expenses incurred by us in connection with the Merger. If the Merger Agreement is terminated in connection with our acceptance of a Superior Proposal or due to us making a GAHR IV Adverse Recommendation Change, as defined in the Merger Agreement, then we must pay to GAHR III a termination fee of $ 23,028,000 and reimburse up to $ 4,000,000 of documented expenses incurred by GAHR III in connection with the Merger. The parties to the Merger Agreement have agreed to certain limits on the conduct of their businesses between the signing of the Merger Agreement and the closing of the Merger. Generally, transactions that are not in the ordinary course of business require the consent of the other party. Also on June 23, 2021, GAHR III, GAHR III operating partnership, our co-sponsors, Platform Healthcare Investor T-II, LLC, Flaherty Trust, Jeffrey T. Hanson, our Chief Executive Officer and Chairman of the Board of Directors, Danny Prosky, our President and Chief Operating Officer, and Mathieu B. Streiff, our Executive Vice President, General Counsel, entered into a contribution and exchange agreement, or the Contribution Agreement, pursuant to which, among other things, GAHR III has agreed to acquire a newly formed entity, or the AHI Acquisition, that will own substantially all of the business and operations of one of our co-sponsors, American Healthcare Investors, as well as all of the equity interests in (i) Griffin-American Healthcare REIT III Advisor, LLC, a subsidiary of American Healthcare Investors that serves as the external advisor of GAHR III, and (ii) our advisor, such that GAHR III will become self-managed and (if the Merger does not occur) we will become indirectly managed by GAHR III. The AHI Acquisition is expected to close immediately prior to the consummation of the Merger. Following the consummation of the Merger, assuming the AHI Acquisition is consummated, the Combined Company will be an entirely self-managed company. The Merger is not subject to the consummation of the AHI Acquisition, such that the Merger may occur even if the AHI Acquisition does not. The parties to the Contribution Agreement also may elect to proceed with the AHI Acquisition even if the Merger is not consummated. 11 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) In addition, on June 23, 2021, in connection with the Merger, we amended the Advisory Agreement with our advisor, such that our advisor agreed to waive any acquisition fee due in connection with the REIT Merger. Except as set forth in such amendment to the Advisory Agreement, the terms of the Advisory Agreement shall continue in full force and effect. 2. Summary of Significant Accounting Policies The summary of significant accounting policies presented below is designed to assist in understanding our accompanying condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes thereto are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing our accompanying condensed consolidated financial statements. Basis of Presentation Our accompanying condensed consolidated financial statements include our accounts and those of our operating partnership, the wholly owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries in which we have control, as well as any VIEs in which we are the primary beneficiary. The portion of equity in any subsidiary that is not wholly-owned by us is presented in our accompanying condensed consolidated financial statements as noncontrolling interest. We evaluate our ability to control an entity, and whether the entity is a VIE and we are the primary beneficiary, by considering substantive terms of the arrangement and identifying which enterprise has the power to direct the activities of the entity that most significantly impacts the entity’s economic performance. 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 both June 30, 2021 and December 31, 2020, we owned greater than a 99.99 % general partnership interest therein. Our advisor is a limited partner, and as of both June 30, 2021 and December 31, 2020, 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. All intercompany accounts and transactions are eliminated in consolidation. Interim Unaudited Financial Data Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the United States Securities and Exchange Commission, or the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to the SEC’s rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results that may be expected for the full year; such full year results may be less favorable. In preparing our accompanying condensed consolidated financial statements, management has evaluated subsequent events through the financial statement issuance date. We believe that although the disclosures contained herein are adequate to prevent the information presented from being misleading, our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 2020 Annual Report on Form 10-K, as filed with the SEC on March 26, 2021. Use of Estimates 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 property acquisitions, revenues, allowance for credit losses, impairment of long-lived and intangible assets and contingencies. 12 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 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. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions. Revenue Recognition — Resident Fees and Services Revenue Disaggregation of Resident Fees and Services Revenue 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, 2021 2020 Point in Time Over Time Total Point in Time Over Time Total Senior housing — RIDEA $ 131,000 $ 15,063,000 $ 15,194,000 $ 150,000 $ 16,684,000 $ 16,834,000 Six Months Ended June 30, 2021 2020 Point in Time Over Time Total Point in Time Over Time Total Senior housing — RIDEA $ 323,000 $ 30,766,000 $ 31,089,000 $ 572,000 $ 32,343,000 $ 32,915,000 The following tables disaggregate our resident fees and services revenue by payor class: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Private and other payors $ 13,611,000 $ 15,093,000 $ 27,770,000 $ 29,466,000 Medicaid 1,583,000 1,741,000 3,319,000 3,449,000 Total resident fees and services $ 15,194,000 $ 16,834,000 $ 31,089,000 $ 32,915,000 Accounts Receivable, Net — Resident Fees and Services The beginning and ending balances of accounts receivable, net — resident fees and services are as follows: Medicaid Private and Other Payors Total Beginning balance — January 1, 2021 $ 1,123,000 $ 358,000 $ 1,481,000 Ending balance — June 30, 2021 701,000 334,000 1,035,000 Decrease $ ( 422,000 ) $ ( 24,000 ) $ ( 446,000 ) Tenant and Resident Receivables and Allowances Resident receivables, which are related to resident fees and services, are carried net of an allowance for credit losses. An allowance is maintained for estimated losses resulting from the inability of residents and payors to meet the contractual obligations under their lease or service agreements. Substantially all of such allowances are recorded as direct reductions of resident fees and services revenue as contractual adjustments provided to third-party payors or implicit price concessions in our accompanying condensed consolidated statements of operations. 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, which are related to real estate revenue, 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. As of June 30, 2021 and December 31, 2020, we had $ 2,238,000 and $ 2,086,000 , respectively, in allowances, which were determined necessary to reduce receivables by our expected future credit losses. For the six months ended June 30, 2021 and 2020, we increased allowances by $ 563,000 and $ 541,000 , respectively, and reduced allowances for collections or 13 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) adjustments by $ 55,000 and $ 74,000 , respectively. For the six months ended June 30, 2021 and 2020, $ 356,000 and $ 39,000 , respectively, of our receivables were written off against the related allowances. 3. Real Estate Investments, Net Our real estate investments, net consisted of the following as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Building and improvements $ 890,610,000 $ 884,816,000 Land 109,771,000 109,444,000 Furniture, fixtures and equipment 9,040,000 8,599,000 1,009,421,000 1,002,859,000 Less: accumulated depreciation ( 96,954,000 ) ( 81,279,000 ) Total $ 912,467,000 $ 921,580,000 Depreciation expense for the three months ended June 30, 2021 and 2020 was $ 7,930,000 and $ 7,893,000 , respectively, and for the six months ended June 30, 2021 and 2020 was $ 15,844,000 and $ 15,732,000 , respectively. In addition to the property acquisition transaction discussed below, for the three and six months ended June 30, 2021, we incurred capital expenditures of $ 2,140,000 and $ 2,916,000 , respectively, for our medical office buildings and $ 743,000 and $ 1,058,000 , respectively, for our senior housing — RIDEA facilities. We did no t incur any capital expenditures for our skilled nursing and senior housing facilities during the three and six months ended June 30, 2021. On February 12, 2021, we acquired a previously unowned unit within one of our buildings at our existing Athens MOB Portfolio, originally purchased in May 2017, for a contract purchase price of $ 2,950,000 . Our advisor was paid, as compensation for services rendered in connection with the investigation, selection and acquisition of such unit, a base acquisition fee of 2.25 % of the contract purchase price paid by us, or $ 66,000 . We acquired such unit using cash on hand and borrowed $ 2,000,000 under the 2018 Credit Facility, as defined in Note 7, Line of Credit and Term Loans, at the time of acquisition. We accounted for our acquisition completed during the six months ended June 30, 2021 as an asset acquisition. We incurred and capitalized the base acquisition fee and direct acquisition related expenses of $ 94,000 . The following table summarizes the purchase price of the assets acquired at the time of acquisition based on their relative fair values: 2021 Acquisition Building and improvements $ 2,429,000 Land 327,000 In-place lease 288,000 Total assets acquired $ 3,044,000 On April 1, 2021, we disposed of two senior housing facilities located in Fairfield and Sacramento, California for a contract sales price of $ 6,800,000 . Such facilities were part of our existing Northern California Senior Housing Portfolio and were included within our senior housing – RIDEA reporting segment. We recognized a total net loss on such disposition of $ 199,000 . Our advisor agreed to waive the $ 136,000 disposition fee and any expense reimbursements for such disposition that may otherwise have been due to our advisor pursuant to the Advisory Agreement. Our advisor did not receive any additional securities, shares of our stock or any other form of consideration or any repayment as a result of the waiver of such disposition fee and expense reimbursements. 14 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 4. Identified Intangible Assets, Net Identified intangible assets, net consisted of the following as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Amortized intangible assets: In-place leases, net of accumulated amortization of $ 28,793,000 and $ 32,134,000 as of June 30, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 8.9 years and 8.8 years as of June 30, 2021 and December 31, 2020, respectively) $ 54,515,000 $ 61,166,000 Above-market leases, net of accumulated amortization of $ 1,156,000 and $ 1,009,000 as of June 30, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 8.7 years and 9.1 years as of June 30, 2021 and December 31, 2020, respectively) 2,388,000 2,587,000 Unamortized intangible assets: Certificates of need 348,000 348,000 Total $ 57,251,000 $ 64,101,000 Amortization expense on identified intangible assets for the three months ended June 30, 2021 and 2020 was $ 2,654,000 and $ 4,877,000 , respectively, which included $ 98,000 and $ 110,000 , respectively, of amortization recorded as a decrease to 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, 2021 and 2020 was $ 7,137,000 and $ 9,633,000 , respectively, which included $ 199,000 and $ 220,000 , respectively, of amortization recorded as a decrease to 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 8.9 years and 8.8 years as of June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021, estimated amortization expense on the identified intangible assets for the six months ending December 31, 2021 and for each of the next four years ending December 31 and thereafter was as follows: Year Amount 2021 $ 4,896,000 2022 8,647,000 2023 7,390,000 2024 6,195,000 2025 5,017,000 Thereafter 24,758,000 Total $ 56,903,000 15 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 5. Other Assets, Net Other assets, net consisted of the following as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Investment in unconsolidated entity $ 45,556,000 $ 46,653,000 Deferred rent receivables 14,499,000 12,395,000 Prepaid expenses, deposits and other assets 3,562,000 9,028,000 Lease commissions, net of accumulated amortization of $ 585,000 and $ 426,000 as of June 30, 2021 and December 31, 2020, respectively 3,310,000 2,399,000 Deferred financing costs, net of accumulated amortization of $ 4,338,000 and $ 3,397,000 as of June 30, 2021 and December 31, 2020, respectively(1) 783,000 1,724,000 Total $ 67,710,000 $ 72,199,000 ___________ (1) Deferred financing costs only include costs related to our line of credit and term loans. Amortization expense on deferred financing costs of our line of credit and term loans for the three months ended June 30, 2021 and 2020 was $ 471,000 and $ 470,000 , respectively, and for the six months ended June 30, 2021 and 2020 was $ 941,000 and $ 939,000 , respectively, which is recorded to interest expense in our accompanying condensed consolidated statements of operations. See Note 7, Line of Credit and Term Loans, for a further discussion. Investment in unconsolidated entity represents our interest in Trilogy REIT Holdings, LLC, or Trilogy, pursuant to an amended joint venture agreement with an indirect, wholly-owned subsidiary of NorthStar Healthcare Income, Inc. and a wholly-owned subsidiary of GAHR III operating partnership. Trilogy owns a portfolio of integrated senior health campuses and ancillary businesses. As of June 30, 2021 and December 31, 2020, we owned a 6.0 % interest in such joint venture and the unamortized basis difference of our investment in Trilogy of $ 16,562,000 and $ 16,791,000 , respectively, is primarily attributable to the difference between the amount for which we purchased our interest in such joint venture, including transaction costs, and the historical carrying value of the net assets of such joint venture. 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. The following is summarized financial information of Trilogy: June 30, 2021 December 31, 2020 Balance Sheet Data: Total assets $ 1,862,179,000 $ 1,882,584,000 Total liabilities $ 1,325,497,000 $ 1,329,832,000 Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Statements of Operations Data: Revenues $ 255,815,000 $ 232,831,000 $ 489,042,000 $ 500,626,000 Grant income 898,000 29,990,000 9,127,000 29,990,000 Expenses 258,065,000 242,311,000 513,159,000 503,748,000 Net (loss) income $ ( 1,352,000 ) $ 20,510,000 $ ( 14,990,000 ) $ 26,868,000 Proportional net (loss) income $ ( 79,000 ) $ 1,188,000 $ ( 869,000 ) $ 1,557,000 Amortization of basis difference ( 114,000 ) ( 114,000 ) ( 228,000 ) ( 228,000 ) (Loss) income from unconsolidated entity $ ( 193,000 ) $ 1,074,000 $ ( 1,097,000 ) $ 1,329,000 16 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 6. Mortgage Loans Payable, Net As of June 30, 2021 and December 31, 2020, mortgage loans payable were $ 18,474,000 ($ 17,572,000 , net of discount/premium and deferred financing costs) and $ 18,766,000 ($ 17,827,000 , net of discount/premium and deferred financing costs), respectively. As of June 30, 2021, 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 3.92 %. As of December 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 3.93 %. 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 six months ended June 30, 2021 and 2020: Six Months Ended June 30, 2021 2020 Beginning balance $ 17,827,000 $ 26,070,000 Additions: Amortization of deferred financing costs 13,000 26,000 Amortization of discount/premium on mortgage loans payable 25,000 25,000 Deductions: Scheduled principal payments on mortgage loans payable ( 293,000 ) ( 8,017,000 ) Ending balance $ 17,572,000 $ 18,104,000 As of June 30, 2021, the principal payments due on our mortgage loans payable for the six months ending December 31, 2021 and for each of the next four years ending December 31 and thereafter were as follows: Year Amount 2021 $ 315,000 2022 651,000 2023 680,000 2024 711,000 2025 5,878,000 Thereafter 10,239,000 Total $ 18,474,000 7. Line of Credit and Term Loans We, through our operating partnership, as borrower, entered into a credit agreement, or the 2018 Credit Agreement, as amended, with Bank of America, N.A.; KeyBank, National Association; Citizens Bank, National Association; Merrill Lynch, Pierce, Fenner & Smith Incorporated; KeyBanc Capital Markets; and the lenders named therein, to obtain a credit facility with an aggregate maximum principal amount of $ 530,000,000 , or the 2018 Credit Facility. The 2018 Credit Facility consists of a senior unsecured revolving credit facility in the amount of $ 235,000,000 and senior unsecured term loan facilities in the aggregate amount of $ 295,000,000 . The maximum principal amount of the 2018 Credit Facility may be increased by up to $ 120,000,000 , for a total principal amount of $ 650,000,000 , subject to certain conditions. The 2018 Credit Facility matures on November 19, 2021 and may be extended for one 12 -month period during the term of the related credit agreement, as amended, subject to satisfaction of certain conditions, including payment of an extension fee. 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: (1) the prime rate publicly announced by Bank of America, N.A., (2) the Federal Funds Rate, as defined in the 2018 Credit Agreement, as amended, plus 0.50 %, (3) the one-month Eurodollar Rate plus 1.00 %, and (4) 0.00 %, plus (ii) a margin ranging from 0.70 % to 1.20 % based on our Consolidated Leverage Ratio. 17 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) As of both June 30, 2021 and December 31, 2020, our aggregate borrowing capacity under the 2018 Credit Facility was $ 530,000,000 . As of June 30, 2021 and December 31, 2020, borrowings outstanding totaled $ 482,900,000 and $ 476,900,000 , respectively, and the weighted average interest rate on such borrowings outstanding was 2.25 % and 2.12 %, respectively, per annum. 8. Derivative Financial Instruments We use derivative financial instruments to manage interest rate risk associated with our variable-rate term loans and we record such 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 June 30, 2021 and December 31, 2020, which are included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets: Fair Value Instrument Notional Amount Index Interest Rate Maturity Date June 30, 2021 December 31, 2020 Swap $ 139,500,000 one month LIBOR 2.49 % 11/19/21 $ ( 1,295,000 ) $ ( 2,915,000 ) Swap 58,800,000 one month LIBOR 2.49 % 11/19/21 ( 546,000 ) ( 1,229,000 ) Swap 45,000,000 one month LIBOR 0.20 % 11/19/21 ( 16,000 ) ( 27,000 ) Swap 36,700,000 one month LIBOR 2.49 % 11/19/21 ( 340,000 ) ( 766,000 ) Swap 15,000,000 one month LIBOR 2.53 % 11/19/21 ( 141,000 ) ( 318,000 ) $ 295,000,000 $ ( 2,338,000 ) $ ( 5,255,000 ) As of both June 30, 2021 and December 31, 2020, none of our derivative financial instruments were designated as hedges. For the three months ended June 30, 2021 and 2020, we recorded $ 1,462,000 and $ 853,000 , respectively, and for the six months ended June 30, 2021 and 2020, we recorded $ 2,917,000 and $( 3,752,000 ), 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. 9. Identified Intangible Liabilities, Net As of June 30, 2021 and December 31, 2020, identified intangible liabilities, net consisted of below-market leases of $ 1,174,000 and $ 1,295,000 , respectively, net of accumulated amortization of $ 730,000 and $ 608,000 , respectively. Amortization expense on below-market leases for the three months ended June 30, 2021 and 2020 was $ 61,000 and $ 69,000 , respectively, and for the six months ended June 30, 2021 and 2020 was $ 122,000 and $ 161,000 , respectively, which was recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations. The weighted average remaining life of below-market leases was 11.9 years and 11.6 years as of June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021, estimated amortization expense on below-market leases for the six months ending December 31, 2021 and for each of the next four years ending December 31 and thereafter was as follows: Year Amount 2021 $ 115,000 2022 217,000 2023 207,000 2024 161,000 2025 123,000 Thereafter 351,000 Total $ 1,174,000 18 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 10. Commitments and Contingencies Litigation We are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which if determined unfavorably to us, would have a material adverse effect on our consolidated financial position, results of operations or cash flows. Environmental Matters 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 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. Other Our other commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business, which include calls/puts to sell/acquire properties. In our view, these matters are not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. 11. Redeemable Noncontrolling Interests As of both June 30, 2021 and December 31, 2020, our advisor owned all of the 208 limited partnership units outstanding in our operating partnership. As of both June 30, 2021 and December 31, 2020, 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. The noncontrolling interest of our advisor in our operating partnership, which has redemption features outside of our control, is accounted for as a redeemable noncontrolling interest and is presented outside of permanent equity in our accompanying condensed consolidated balance sheets. In connection with our acquisitions of Central Florida Senior Housing Portfolio, Pinnacle Beaumont ALF and Pinnacle Warrenton ALF, we own approximately 98.0 % of the joint ventures with an affiliate of Meridian Senior Living, LLC, or Meridian. In connection with our acquisitions of Catalina West Haven ALF and Catalina Madera ALF, we own approximately 90.0 % of the joint venture with Avalon Health Care, Inc., or Avalon. The noncontrolling interests held by Meridian and Avalon have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets. We record the carrying amount of redeemable noncontrolling interests at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of net income or loss and distributions; or (ii) the redemption value. The changes in the carrying amount of redeemable noncontrolling interests consisted of the following for the six months ended June 30, 2021 and 2020: Six Months Ended June 30, 2021 2020 Beginning balance $ 2,618,000 $ 1,462,000 Additions 126,000 1,118,000 Distributions ( 7,000 ) ( 72,000 ) Adjustment to redemption value 75,000 322,000 Net loss attributable to redeemable noncontrolling interests ( 219,000 ) ( 205,000 ) Ending balance $ 2,593,000 $ 2,625,000 19 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 12. Equity Preferred Stock Pursuant to our Third Articles of Amendment and Restatement, as supplemented, or our charter, we are authorized to issue 200,000,000 shares of our preferred stock, par value $ 0.01 per share. As of both June 30, 2021 and December 31, 2020, no shares of our preferred stock were issued and outstanding. Common Stock 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. As of both June 30, 2021 and December 31, 2020, our advisor owned 20,833 shares of our Class T common stock. On February 15, 2019, we terminated our initial offering and we continued to offer shares of our common stock pursuant to the 2019 DRIP Offering. See the “Distribution Reinvestment Plan” section below for a further discussion. Through June 30, 2021, 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 8,177,085 aggregate shares of our Class T and Class I common stock pursuant to our DRIP Offerings. We also granted an aggregate of 105,000 shares of our restricted Class T common stock to our independent directors and repurchased 2,211,338 shares of our common stock under our share repurchase plan through June 30, 2021. As of June 30, 2021 and December 31, 2020, we had 81,731,261 and 81,339,337 aggregate shares of our Class T and Class I common stock, respectively, issued and outstanding. Distribution Reinvestment Plan We had registered and reserved $ 150,000,000 in shares of our common stock for sale pursuant to the DRIP in our initial offering. The DRIP allowed stockholders to purchase additional Class T shares and Class I shares of our common stock through the reinvestment of distributions during our initial offering. Pursuant to the DRIP, distributions with respect to Class T shares were reinvested in Class T shares and distributions with respect to Class I shares were reinvested in Class I shares. On February 15, 2019, we terminated our initial offering and continued to offer up to $ 100,000,000 in shares of our common stock pursuant to the 2019 DRIP Offering. In connection with our special committee’s strategic alternative review process and in order to facilitate a strategic transaction, on March 18, 2021, our board authorized the suspension of the DRIP, effective as of April 1, 2021, unless and until our board reinstates the DRIP. As a consequence of the suspension of the DRIP, beginning with the April 2021 distributions, which were paid in May 2021, there were no further issuances of shares pursuant to the DRIP, and stockholders who are participants in the DRIP received or will receive cash distributions instead. Since April 6, 2018, our board has approved and established an estimated per share net asset value, or NAV, on at least an annual basis. Commencing with the distribution payment to stockholders paid in the month following such board approval, shares of our common stock issued pursuant the DRIP were or will be issued at the current estimated per share NAV until such time as our board determines an updated estimated per share NAV. For the three months ended June 30, 2021 and 2020, $ 1,393,000 and $ 4,997,000 , respectively, in distributions were reinvested, and 151,142 and 523,736 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings. For the six months ended June 30, 2021 and 2020, $ 5,499,000 and $ 11,434,000 , respectively, in distributions were reinvested, and 581,491 and 1,198,492 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings. As of June 30, 2021 and December 31, 2020, a total of $ 77,991,000 and $ 72,492,000 , respectively, in distributions were cumulatively reinvested that resulted in 8,177,085 and 7,595,594 shares of our common stock, respectively, being issued pursuant to our DRIP Offerings. 20 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Share Repurchase Plan 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, beginning in March 2020, 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 were not suspended, but remained 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. In connection with our special committee’s strategic alternative review process and in order to facilitate a strategic transaction, on March 18, 2021, our board approved the suspension of our share repurchase plan with respect to all repurchase requests received by us after February 28, 2021, including repurchases resulting from the death or qualifying disability of stockholders, until such time, if any, as our board determines to reinstate our share repurchase plan. Prior to its suspension, our share repurchase plan allowed for repurchases of shares of our common stock by us when certain criteria were met. Share repurchases were made at the sole discretion of our board. Subject to the availability of the funds for share repurchases, we generally limited the number of shares of our common stock repurchased during any calendar year to 5.0 % of the weighted average number of shares of our common stock outstanding during the prior calendar year; provided, however, that shares subject to a repurchase requested upon the death of a stockholder were not subject to this cap. Funds for the repurchase of shares of our common stock came exclusively from the cumulative proceeds we received from the sale of shares of our common stock pursuant to our DRIP Offerings. During our initial offering and with respect to shares repurchased for the quarter ended 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 ended June 30, 2019, and through the suspension of the share repurchase plan as described above, the repurchase amount for shares repurchased under our share repurchase plan was 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. However, if shares of our common stock were repurchased in connection with a stockholder’s death or qualifying disability, the repurchase price was no less than 100 % of the price paid to acquire the shares of our common stock from us. For the three months ended June 30, 2021 and 2020, we repurchased 117,228 and 506,560 shares of our common stock, respectively, for an aggregate of $ 1,160,000 and $ 4,643,000 , respectively, at an average repurchase price of $ 9.89 and $ 9.17 per share, respectively. For the six months ended June 30, 2021 and 2020, we repurchased 189,567 and 506,560 shares of our common stock, respectively, for an aggregate of $ 1,874,000 and $ 4,643,000 , respectively, at an average repurchase price of $ 9.88 and $ 9.17 per share, respectively. As of June 30, 2021 and December 31, 2020, we cumulatively repurchased 2,211,338 and 2,021,771 shares of our common stock, respectively, for an aggregate of $ 20,744,000 and $ 18,870,000 , respectively, at an average repurchase price of $ 9.38 and $ 9.33 per share, respectively. All shares were repurchased using the cumulative proceeds we received from the sale of shares of our common stock pursuant to our DRIP Offerings. Noncontrolling Interest In connection with our acquisition of Louisiana Senior Housing Portfolio on January 3, 2020, as of both June 30, 2021 and December 31, 2020, we owned an approximate 90.0 % interest in our consolidated joint venture that owns such properties. 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, 2021 and for the period from January 3, 2020 through 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, 2021 and December 31, 2020. 13. Related Party Transactions Fees and Expenses Paid to Affiliates All of our executive officers and one of our non-independent directors are also executive officers and employees and/or holders of a direct or indirect interest in our advisor, one of our co-sponsors or other affiliated entities. We are affiliated with our advisor, American Healthcare Investors and AHI Group Holdings; however, we are not affiliated with Griffin Capital, our dealer manager, Digital Bridge or Mr. Flaherty. We entered into the Advisory Agreement, as amended, which entitles our 21 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 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 six months ended June 30, 2021. 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. Fees and expenses to our affiliates incurred for the three and six months ended June 30, 2021 and 2020 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Asset management fees(1) $ 2,451,000 $ 2,435,000 $ 4,905,000 $ 4,846,000 Lease fees(2) 380,000 86,000 421,000 137,000 Property management fees(3) 376,000 375,000 741,000 724,000 Construction management fees(4) 39,000 41,000 62,000 64,000 Operating expenses(5) 34,000 42,000 79,000 85,000 Development fees(6) 31,000 2,000 55,000 2,000 Base acquisition fees and reimbursement of acquisition expenses(7) 1,000 34,000 182,000 1,441,000 Total $ 3,312,000 $ 3,015,000 $ 6,445,000 $ 7,299,000 __________ (1) Asset management fees are included in general and administrative in our accompanying condensed consolidated statements of operations. (2) Lease fees are capitalized as costs of entering into new leases and included in other assets, net in our accompanying condensed consolidated balance sheets, and amortized over the term of the lease. (3) Property management fees are included in rental expenses or general and administrative expenses in our accompanying condensed consolidated statements of operations, depending on the property type from which the fee was incurred. (4) 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. (5) We reimburse our advisor or its affiliates for operating expenses incurred in rendering services to us, subject to certain limitations. For the 12 months ended June 30, 2021 and 2020, our operating expenses did not exceed such limitations. Operating expenses are generally included in general and administrative in our accompanying condensed consolidated statements of operations. (6) Development fees are expensed as incurred and included in business acquisition expenses in our accompanying condensed consolidated statements of operations. (7) Such amounts 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 as incurred and included in business acquisition expenses in our accompanying condensed consolidated statements of operations, as applicable. 22 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Accounts Payable Due to Affiliates The following amounts were outstanding to our affiliates as of June 30, 2021 and December 31, 2020: Fee June 30, 2021 December 31, 2020 Asset management fees $ 816,000 $ 814,000 Property management fees 123,000 117,000 Construction management fees 58,000 33,000 Lease commissions 13,000 8,000 Development fees 11,000 64,000 Operating expenses 8,000 10,000 Total $ 1,029,000 $ 1,046,000 14. 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 June 30, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall: Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Derivative financial instruments $ — $ 2,338,000 $ — $ 2,338,000 The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall: Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities: Derivative financial instruments $ — $ 5,255,000 $ — $ 5,255,000 There were no transfers into or out of fair value measurement levels during the six months ended June 30, 2021 and 2020. We use interest rate swaps to manage interest rate risk associated with variable-rate debt. The valuation of these instruments is determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, as well as option volatility. The fair values of interest rate swaps are determined by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observable market interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. 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. 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, 23 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparty. However, as of June 30, 2021, 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. Financial Instruments Disclosed at Fair Value Our accompanying condensed consolidated balance sheets include the following financial instruments: cash and cash equivalents, accounts and other receivables, restricted cash, accounts payable and accrued liabilities, accounts payable due to affiliates, mortgage loans payable and borrowings under the 2018 Credit Facility. We consider the carrying values of cash and cash equivalents, accounts and other receivables, restricted cash 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 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. The fair values of our mortgage loans payable and the 2018 Credit Facility are estimated using discounted cash flow analyses using borrowing rates available to us for debt instruments with similar terms and maturities. 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 June 30, 2021 and December 31, 2020 were as follows: June 30, 2021 December 31, 2020 Carrying Amount(1) Fair Value Carrying Amount(1) Fair Value Financial Liabilities: Mortgage loans payable $ 17,572,000 $ 20,970,000 $ 17,827,000 $ 22,052,000 Line of credit and term loans $ 482,117,000 $ 482,931,000 $ 475,176,000 $ 477,651,000 ___________ (1) Carrying amount is net of any discount/premium and deferred financing costs. 15. Income Taxes 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 taxable REIT subsidiaries, or 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 benefit or expense for the three and six months ended June 30, 2021 and 2020 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Federal deferred $ ( 679,000 ) $ ( 1,000,000 ) $ ( 1,803,000 ) $ ( 1,271,000 ) State deferred ( 193,000 ) ( 301,000 ) ( 559,000 ) ( 394,000 ) Federal current — 37,000 — 37,000 State current — 2,000 — 2,000 Valuation allowance 872,000 1,301,000 2,362,000 1,665,000 Total income tax expense $ — $ 39,000 $ — $ 39,000 Current Income Tax Federal and state income taxes are generally a function of the level of income recognized by our TRS. 24 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Deferred Taxes Deferred income tax is generally a function of the period’s temporary differences (primarily basis differences between tax and financial reporting for real estate assets and equity investments) and generation of tax net operating losses that may be realized in future periods depending on sufficient taxable income. We recognize the financial statement effects of an uncertain tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. 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 June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020, 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. 16. Leases Lessor We have operating leases with tenants that expire at various dates through 2040. For the three months ended June 30, 2021 and 2020, we recognized $ 21,988,000 and $ 21,842,000 of real estate revenue, respectively, related to operating lease payments, of which $ 4,860,000 and $ 4,814,000 , respectively, was for variable lease payments. For the six months ended June 30, 2021 and 2020, we recognized $ 43,934,000 and $ 43,305,000 of real estate revenue, respectively, related to operating lease payments, of which $ 9,804,000 and $ 9,269,000 , respectively, was for variable lease payments. As of June 30, 2021, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the six months ending December 31, 2021 and for each of the next four years ending December 31 and thereafter for the properties that we wholly own: Year Amount 2021 $ 32,752,000 2022 62,663,000 2023 58,696,000 2024 53,151,000 2025 47,761,000 Thereafter 278,887,000 Total $ 533,910,000 Lessee 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 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. 25 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) For the three months ended June 30, 2021 and 2020, operating lease costs were $ 210,000 and $ 228,000 , respectively, and for the six months ended June 30, 2021 and 2020, operating lease costs were $ 418,000 and $ 437,000 , respectively, which are included in rental expenses in our accompanying condensed consolidated statements of operations. Such costs also include variable lease costs, which are immaterial. Additional information related to our operating leases for the periods presented below was as follows: June 30, 2021 December 31, 2020 Weighted average remaining lease term (in years) 79.0 79.5 Weighted average discount rate 5.74 % 5.74 % As of June 30, 2021, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the six months ending December 31, 2021 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: Year Amount 2021 $ 306,000 2022 526,000 2023 530,000 2024 534,000 2025 538,000 Thereafter 46,565,000 Total undiscounted operating lease payments 48,999,000 Less: interest 39,028,000 Present value of operating lease liabilities $ 9,971,000 17. Segment Reporting As of June 30, 2021, 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 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. While we believe that net income (loss), as defined by GAAP, is the most appropriate earnings measurement, we evaluate our segments’ performance based upon segment net operating income, or NOI. We define segment NOI as total revenues, less rental expenses and property operating expenses, which excludes depreciation and amortization, general and administrative expenses, business acquisition expenses, interest expense, gain or loss on disposition of real estate investments, income or loss from unconsolidated entity, other income and income tax expense for each segment. We believe that segment NOI serves as an appropriate supplemental performance measure to net income (loss) because it allows investors and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis. 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 joint venture investment in an unconsolidated entity, cash and cash equivalents, other receivables and other assets not attributable to individual properties. 26 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Summary information for the reportable segments during the three and six months ended June 30, 2021 and 2020 was as follows: Medical Office Buildings Senior Housing — RIDEA Skilled Nursing Facilities Senior Housing Three Months Ended June 30, 2021 Revenues: Real estate revenue $ 16,805,000 $ — $ 2,991,000 $ 2,192,000 $ 21,988,000 Resident fees and services — 15,194,000 — — 15,194,000 Total revenues 16,805,000 15,194,000 2,991,000 2,192,000 37,182,000 Expenses: Rental expenses 5,726,000 — 180,000 223,000 6,129,000 Property operating expenses — 14,445,000 — — 14,445,000 Segment net operating income $ 11,079,000 $ 749,000 $ 2,811,000 $ 1,969,000 $ 16,608,000 Expenses: General and administrative $ 3,659,000 Business acquisition expenses 2,438,000 Depreciation and amortization 10,597,000 Other income (expense): Interest expense: Interest expense (including amortization of deferred financing costs and debt discount/premium) ( 4,869,000 ) Gain in fair value of derivative financial instruments 1,462,000 Loss on disposition of real estate investments ( 199,000 ) Loss from unconsolidated entity ( 193,000 ) Other income 9,000 Total net other expense ( 3,790,000 ) Net loss $ ( 3,876,000 ) 27 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Medical Office Buildings Senior Housing — RIDEA Skilled Nursing Facilities Senior Housing Three Months Ended June 30, 2020 Revenues: Real estate revenue $ 16,575,000 $ — $ 2,993,000 $ 2,274,000 $ 21,842,000 Resident fees and services — 16,834,000 — — 16,834,000 Total revenues 16,575,000 16,834,000 2,993,000 2,274,000 38,676,000 Expenses: Rental expenses 5,619,000 — 182,000 195,000 5,996,000 Property operating expenses — 14,442,000 — — 14,442,000 Segment net operating income $ 10,956,000 $ 2,392,000 $ 2,811,000 $ 2,079,000 $ 18,238,000 Expenses: General and administrative $ 3,840,000 Business acquisition expenses 8,000 Depreciation and amortization 12,720,000 Other income (expense): Interest expense: Interest expense (including amortization of deferred financing costs and debt discount/premium) ( 4,974,000 ) Gain in fair value of derivative financial instruments 853,000 Income from unconsolidated entity 1,074,000 Other income 261,000 Total net other expense ( 2,786,000 ) Loss before income taxes ( 1,116,000 ) Income tax expense ( 39,000 ) Net loss $ ( 1,155,000 ) 28 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Medical Office Buildings Senior Housing — RIDEA Skilled Nursing Facilities Senior Housing Six Months Ended June 30, 2021 Revenues: Real estate revenue $ 33,557,000 $ — $ 5,991,000 $ 4,386,000 $ 43,934,000 Resident fees and services — 31,089,000 — — 31,089,000 Total revenues 33,557,000 31,089,000 5,991,000 4,386,000 75,023,000 Expenses: Rental expenses 11,431,000 — 325,000 397,000 12,153,000 Property operating expenses — 29,639,000 — — 29,639,000 Segment net operating income $ 22,126,000 $ 1,450,000 $ 5,666,000 $ 3,989,000 $ 33,231,000 Expenses: General and administrative $ 7,406,000 Business acquisition expenses 2,752,000 Depreciation and amortization 22,999,000 Other income (expense): Interest expense: Interest expense (including amortization of deferred financing costs and debt discount/premium) ( 9,595,000 ) Gain in fair value of derivative financial instruments 2,917,000 Loss on disposition of real estate investments ( 199,000 ) Loss from unconsolidated entity ( 1,097,000 ) Other income 16,000 Total net other expense ( 7,958,000 ) Net loss $ ( 7,884,000 ) 29 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Medical Office Buildings Senior Housing — RIDEA Skilled Nursing Facilities Senior Housing Six Months Ended June 30, 2020 Revenues: Real estate revenue $ 32,846,000 $ — $ 6,005,000 $ 4,454,000 $ 43,305,000 Resident fees and services — 32,915,000 — — 32,915,000 Total revenues 32,846,000 32,915,000 6,005,000 4,454,000 76,220,000 Expenses: Rental expenses 11,009,000 — 334,000 475,000 11,818,000 Property operating expenses — 27,459,000 — — 27,459,000 Segment net operating income $ 21,837,000 $ 5,456,000 $ 5,671,000 $ 3,979,000 $ 36,943,000 Expenses: General and administrative $ 8,288,000 Business acquisition expenses 17,000 Depreciation and amortization 25,250,000 Other income (expense): Interest expense: Interest expense (including amortization of deferred financing costs and debt discount/premium) ( 10,284,000 ) Loss in fair value of derivative financial instruments ( 3,752,000 ) Income from unconsolidated entity 1,329,000 Other income 270,000 Total net other expense ( 12,437,000 ) Loss before income taxes ( 9,049,000 ) Income tax expense ( 39,000 ) Net loss $ ( 9,088,000 ) Assets by reportable segment as of June 30, 2021 and December 31, 2020 were as follows: June 30, 2021 December 31, 2020 Medical office buildings $ 577,845,000 $ 583,131,000 Senior housing — RIDEA 232,223,000 238,910,000 Skilled nursing facilities 117,801,000 119,247,000 Senior housing 98,505,000 100,370,000 Other 49,407,000 51,115,000 Total assets $ 1,075,781,000 $ 1,092,773,000 30 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) 18. Concentration of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk are primarily cash and cash equivalents, accounts and other receivables and restricted cash. Cash and cash equivalents are generally invested in investment-grade, short-term instruments with a maturity of three months or less when purchased. We have cash and cash equivalents in financial institutions that are insured by the Federal Deposit Insurance Corporation, or FDIC. As of June 30, 2021 and December 31, 2020, we had cash and cash equivalents in excess of FDIC insured limits. We believe this risk is not significant. Concentration of credit risk with respect to accounts receivable from tenants is limited. 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 June 30, 2021, two states in the United States accounted for 10.0 % or more of our total property portfolio’s annualized base rent or annualized NOI. Our properties located in Missouri and Michigan accounted for approximately 12.2 % and 10.4 %, respectively, of our total property portfolio’s annualized base rent or annualized NOI. Accordingly, there is a geographic concentration of risk subject to fluctuations in each state’s economy. Based on leases in effect as of June 30, 2021, our four reportable business segments, medical office buildings, skilled nursing facilities, senior housing and senior housing — RIDEA, accounted for 67.2 %, 14.6 %, 10.4 % and 7.8 %, respectively, of our total property portfolio’s annualized base rent or annualized NOI. As of June 30, 2021, we had one tenant that accounted for 10.0 % or more of our total property portfolio’s annualized base rent or annualized NOI, as follows: Tenant Annualized Base Rent/ NOI(1) Percentage of Annualized Base Rent/NOI Real Estate Investment Reportable Segment GLA (Sq Ft) Lease Expiration Date RC Tier Properties, LLC $ 7,937,000 11.1 % Missouri SNF Portfolio Skilled Nursing 385,000 09/30/33 ___________ (1) Amount is based on contractual base rent from leases in effect as of June 30, 2021 for our non–RIDEA properties and annualized NOI for 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. 19. Per Share Data 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 $ 5,000 and $ 4,000 , respectively, for the three months ended June 30, 2021 and 2020 and $ 9,000 and $ 11,000 , respectively, for the six months ended June 30, 2021 and 2020. 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 June 30, 2021 and 2020, there were 39,000 and 42,000 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 both June 30, 2021 and 2020, 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. 20. Subsequent Events Registration Statement on Form S-4 In connection with the Merger, on July 16, 2021, we filed with the SEC a registration statement on Form S-4 (File No. 333-257974), or the Form S-4, that contains a joint proxy statement/prospectus for purposes of the Securities Act of 1933, as amended, with respect to the approval of the Merger and other ancillary agreements in connection therewith by our stockholders and the GAHR III stockholders, as well as the issuance of up to 179,658,356 shares of our Class I common stock to GAHR III stockholders in exchange for shares of GAHR III common stock pursuant to the Merger Agreement. The Form S-4 was declared effective by the SEC on July 30, 2021. 31 Table of Contents GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) Distributions Declared Our board authorized a daily distribution to our Class T and Class I stockholders of record as of the close of business on each day of the period commencing on July 1, 2021 and ending on August 31, 2 021. The daily distributions will be calculated based on 365 days in the calendar year and will be equal to $ 0.001095890 per share of our common stock, which is equal to an annualized distribution of $ 0.40 per share. The distributions will be aggregated and paid in cash on a monthly basis, in August and September 20 21, only from legally available funds. 32 Table of Contents