What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-14 compared with 2020-11-16 · 792 added, 1270 removed, 1348 unchanged (60% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

2021 December 31, 2020

3 unchanged sentences

Buildings, fixtures and improvements 2,136,660 2,133,057

Construction in progress 473 —

Acquired intangible assets 276,715 276,015

8 unchanged sentences

Operating lease right-of-use assets 13,896 13,912

Prepaid expenses and other assets (including $ 1,443 and $ 394 due from related parties as of September 30, 2020 and December 31, 2019, respectively)

Prepaid expenses and other assets (including $ 852 and $ 1,278 due from related parties as of March 31, 2021 and December 31, 2020, respectively)

32,594 34,932

6 unchanged sentences

Derivative liabilities, at fair value 22,754 38,389

Accounts payable and accrued expenses 49,418 43,094

Accounts payable and accrued expenses (including $ 166 and $ 299 due to related parties as of March 31, 2021 and December 31, 2020)

41,454 42,271

Operating lease liabilities 9,159 9,155

2 unchanged sentences

Total liabilities 1,310,388 1,325,523

7.375 % Series A cumulative redeemable perpetual preferred stock, $ 0.01 par value, 2,210,000 and 1,610,000 authorized as of September 30, 2020 and December 31, 2019, respectively;

1,610,000 issued and outstanding as of September 30, 2020 and December 31, 2019

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 93,775,745 (1) and 93,602,555 (1) shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

Stockholders’ Equity

7.375 % Series A cumulative redeemable perpetual preferred stock, $ 0.01 par value, 2,210,000 and 1,610,000 authorized as of March 31, 2021 and December 31, 2020, respectively;

1,610,000 issued and outstanding as of March 31, 2021 and December 31, 2020

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 96,434,078 shares (including 1,393,295 shares paid as a stock dividend on April 15, 2021) and 95,040,783 shares (including 1,265,037 shares paid as a stock dividend on January 15, 2021) issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 2,124,510 2,104,261

5 unchanged sentences

Total liabilities and equity $ 2,275,752 $ 2,286,895

(1) Retroactively adjusted for the effects of the Stock Dividend (see Note 1 ).

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

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Revenue from tenants $ 83,436 $ 100,235

9 unchanged sentences

Operating income (loss) before gain on sale of real estate investments 1,034 ( 12,827 )

Gain on sale of real estate investments — 2,715 2,306 8,793

(Loss) gain on sale of real estate investments ( 172 ) 2,306

Operating income (loss) 862 ( 10,521 )

2 unchanged sentences

Interest and other income

Loss on non-designated derivatives ( 69 ) ( 2 ) ( 45 ) ( 50 )

Gain on non-designated derivatives 14 16

Total other expenses

1 unchanged sentence

Loss before income taxes ( 11,394 ) ( 23,757 )

Income tax (expense) benefit ( 78 ) 271 ( 78 ) ( 364 )

Income tax expense ( 48 ) ( 332 )

Net loss ( 11,442 ) ( 24,089 )

Net (income) loss attributable to non-controlling interests ( 46 ) 87

Preferred stock dividends ( 732 ) — ( 2,224 ) —

Allocation for preferred stock ( 742 ) ( 742 )

Net loss attributable to common stockholders ( 12,230 ) ( 24,744 )

Other comprehensive loss:

Other comprehensive income (loss):

Unrealized gain (loss) on designated derivatives 15,846 ( 37,265 )

Comprehensive loss attributable to common stockholders

$ ( 7,655 ) $ ( 31,469 ) $ ( 94,830 ) $ ( 53,469 )

Basic and diluted weighted-average shares outstanding (1)

Comprehensive income (loss) attributable to common stockholders $ 3,616 $ ( 62,009 )

Weighted-average shares outstanding — Basic and Diluted (1)

96,212,583 95,843,552

Basic and diluted net loss per share (1)

Net loss per common share attributable to common stockholders — Basic and Diluted (1)

$ ( 0.13 ) $ ( 0.26 )

5 unchanged sentences

(In thousands, except share data)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Preferred Stock Common Stock Accumulated Other Comprehensive Income

Shares Par Value Number of

Par Value (1)

Par Value Number of

Shares Par Value Additional

Capital Distributions in excess of accumulated earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, December 31, 2020 1,610,000 16 93,775,746 $ 938 $ 2,104,261 $ ( 39,673 ) $ ( 1,108,557 ) $ 956,985 $ 4,387 $ 961,372

Issuance of Preferred Stock, net

— — — — ( 191 ) — — ( 191 ) — ( 191 )

Common stock issued through distribution reinvestment plan

— — 887,803 10 14,594 — — 14,604 — 14,604

Common stock repurchases — — ( 714,613 ) ( 7 ) ( 10,539 ) — — ( 10,546 ) — ( 10,546 )

Share-based compensation, net

— — — — 332 — — 332 — 332

Distributions declared on common stock, $ 0.42 per share (1)

— — — — — — ( 39,269 ) ( 39,269 ) — ( 39,269 )

Distributions declared on preferred stock, $ 1.38 per share

— — — — — — ( 2,224 ) ( 2,224 ) — ( 2,224 )

Distributions to non-controlling interest holders

— — — — — — — — ( 201 ) ( 201 )

Unrealized loss on designated derivative

— — — — — ( 37,336 ) — ( 37,336 ) — ( 37,336 )

— — — — — — ( 55,831 ) ( 55,831 ) 223 ( 55,608 )

Rebalancing of ownership percentage

— — — — 321 561 — 882 ( 882 ) —

Balance, September 30, 2020 1,610,000 $ 16 93,775,745 $ 938 $ 2,083,812 $ ( 43,818 ) $ ( 1,068,514 ) $ 972,434 $ 4,550 $ 976,984

Three Months Ended September 30, 2020

Preferred Stock Common Stock Accumulated Other Comprehensive Income

Par Value Number of

Par Value (1)

Capital Distributions in excess of accumulated earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, June 30, 2020 1,610,000 16 93,644,641 $ 936 $ 2,081,062 $ ( 46,489 ) $ ( 1,058,014 ) $ 977,511 $ 4,795 $ 982,306

Issuance of Preferred Stock, net

— — — — 175 — — 175 — 175

Common stock issued through distribution reinvestment plan

— — 131,104 2 2,013 — — 2,015 — 2,015

Common stock repurchases

— — — — — — — — — —

Share-based compensation, net

Distributions declared in common stock, $ 0.21 per share (1)

— — 1,265,036 12 19,914 — ( 19,926 ) — — —

1 unchanged sentence

— — — — — — ( 742 ) ( 742 ) — ( 742 )

Distributions to non-controlling interest holders

— — — — — — — — ( 28 ) ( 28 )

Unrealized gain on designated derivative — — — — — 15,844 — 15,844 — 15,844

2 unchanged sentences

— — — — 3 2 — 5 ( 5 ) —

Balance, September 30, 2020 1,610,000 $ 16 93,775,745 $ 938 $ 2,083,812 $ ( 43,818 ) $ ( 1,068,514 ) $ 972,434 $ 4,550 $ 976,984

(1) Retroactively adjusted for the effects of the Stock Dividend (see Note 1 ).

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Nine Months Ended September 30, 2019

Common Stock Accumulated Other Comprehensive Income

Par Value (1)

Balance, March 31, 2021 1,610,000 $ 16 95,040,782 $ 950 $ 2,124,510 $ ( 23,827 ) $ ( 1,140,713 ) $ 960,936 $ 4,428 $ 965,364

Three Months Ended March 31, 2020

Preferred Stock Common Stock Accumulated Other Comprehensive Income

Shares Par Value Number of

Shares Par Value Additional

Capital Distributions in Excess of Accumulated Earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, December 31, 2019 1,610,000 $ 16 92,356,664 $ 923 $ 2,078,628 $ ( 7,043 ) $ ( 971,190 ) $ 1,101,334 $ 5,410 $ 1,106,744

Impact of adoption of ASC 842 — — — — ( 87 ) ( 87 ) — ( 87 )

Common stock repurchases

( 665,288 ) ( 7 ) ( 13,286 ) — — ( 13,293 ) — ( 13,293 )

Share-based compensation, net

15,202 — 978 — — 978 — 978

Distributions declared on common stock, $ 0.63 per share (1)

— — — — ( 58,711 ) ( 58,711 ) — ( 58,711 )

Common stock issued through distribution reinvestment plan

— — 361,053 4 6,318 — — 6,322 — 6,322

Distributions to non-controlling interest holders

Common stock repurchases

— — ( 705,101 ) ( 7 ) ( 10,539 ) — ( 10,546 ) — ( 10,546 )

Unrealized loss on designated derivatives — — — ( 13,515 ) — ( 13,515 ) — ( 13,515 )

Net loss — — — — ( 39,954 ) ( 39,954 ) ( 52 ) ( 40,006 )

Rebalancing of ownership percentage — — 1,648 — — 1,648 ( 1,648 ) —

Balance, September 30, 2019 93,677,886 $ 936 $ 2,041,981 $ ( 8,933 ) $ ( 903,083 ) $ 1,130,901 $ 5,836 $ 1,136,737

Three Months Ended September 30, 2019

Common Stock Accumulated Other Comprehensive Income

Par Value (1)

Capital Distributions in Excess of Accumulated Earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, June 30, 2019 93,271,833 $ 932 $ 2,034,905 $ ( 6,253 ) $ ( 854,660 ) $ 1,174,924 $ 5,935 $ 1,180,859

Share-based compensation, net

— — — — 338 — — 338 — 338

Distributions declared on common stock, $ 0.21 per share (1)

Distributions declared in cash on common stock, $ 0.21 per share (1)

— — — — — — ( 19,504 ) ( 19,504 ) — ( 19,504 )

Common stock issued through distribution reinvestment plan

Distributions declared on preferred stock, $ 0.11 per share

— — — — — — ( 742 ) ( 742 ) — ( 742 )

3 unchanged sentences

Net loss — — — — — — ( 24,002 ) ( 24,002 ) ( 87 ) ( 24,089 )

Rebalancing of ownership percentage — — — — — — — —

Balance, September 30, 2019 93,677,886 $ 936 $ 2,041,981 $ ( 8,933 ) $ ( 903,083 ) $ 1,130,901 $ 5,836 $ 1,136,737

Balance, March 31, 2020 1,610,000 $ 16 92,012,616 $ 920 $ 2,074,745 $ ( 44,308 ) $ ( 1,015,438 ) $ 1,015,935 $ 5,237 $ 1,021,172

(1) Retroactively adjusted for the effects of the Stock Dividend (see Note 1 ).

4 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

3 unchanged sentences

Amortization of deferred financing costs 1,071 1,135

Amortization of terminated swap payment 633 —

Amortization of terminated swap 211 211

Amortization of mortgage premiums and discounts, net 14 15

Amortization (accretion) amortization of market lease and other intangibles, net

( 111 ) ( 25 )

Bad debt expense 198 792

Equity-based compensation 332 338

Gain on sale of real estate investments, net ( 2,306 ) ( 8,793 )

Loss on non-designated derivatives 45 50

Loss/(gain) on sale of real estate investments, net 172 ( 2,306 )

Gain on non-designated derivative instruments ( 14 ) ( 16 )

Impairment charges 878 18,038

7 unchanged sentences

Property acquisitions and development costs ( 6,694 ) ( 90,985 )

Capital expenditures ( 17,629 ) ( 10,910 )

Leasing commission ( 1,480 ) —

Capital expenditures and other assets acquired ( 4,029 ) ( 11,097 )

Deposits for real estate investments ( 146 ) —

Proceeds from sales of real estate investments — 8,294

1 unchanged sentence

Cash flows from financing activities:

Payments on credit facilities — ( 243,300 )

Proceeds from credit facilities — 95,000

Proceeds from term loan — 150,000

Proceeds from mortgage notes payable — —

Payments on mortgage notes payable ( 300 ) ( 211 )

6 unchanged sentences

Distributions to non-controlling interest holders — ( 86 )

Net cash, provided by (used in) financing activities 47,716 ( 19,128 )

Net cash, (used in) provided by financing activities ( 1,334 ) 69,807

Net change in cash, cash equivalents and restricted cash 1,756 ( 5,029 )

5 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash, cash equivalents, end of period $ 74,068 $ 90,534

5 unchanged sentences

Non-cash investing and financing activities:

Common stock issued through stock dividends $ 19,926 $ —

Common stock issued through distribution reinvestment plan

$ 14,604 $ 20,698

Mortgage assumed in acquisition

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Note 1 — Organization

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(including, as required by context, Healthcare Trust Operating Partnership, L.P.

(the “OP”) and its subsidiaries, the “Company”), incorporated on October 15, 2012, is a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) for U.S.

federal income tax purposes beginning with its taxable year ended December 31, 2013.

Substantially all of the Company’s business is conducted through the OP.

The Company invests in healthcare real estate, focusing on seniors housing properties and medical office buildings (“MOB”) located in the United States.

Healthcare Trust Advisors, LLC (the “Advisor”) has been retained by the Company to manage the Company’s affairs on a day-to-day basis.

The Company has retained Healthcare Trust Properties, LLC (the “Property Manager”) to serve as the Company’s property manager.

The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), and these related parties receive compensation, fees and expense reimbursements from the Company for services related to managing its business and investments.

(the “OP”) and its subsidiaries, the “Company”), is an externally managed real estate investment trust for U.S.

federal income tax purposes (“REIT”) that focuses on acquiring and managing a diversified portfolio of healthcare-related real estate, focused on medical office buildings (“MOBs”), healthcare properties leased on a triple-net basis (“NNN properties”) and senior housing operating properties (“SHOPs”).

As of March 31, 2021, the Company owned 190 properties located in 31 states and comprised of 9.3 million rentable square feet.

Substantially all of the Company’s business is conducted through the OP and its wholly owned subsidiaries.

The Company’s advisor, Healthcare Trust Advisors, LLC (the “Advisor”) manages our day-to-day business with the assistance of our property manager, Healthcare Trust Properties, LLC (the “Property Manager”).

The Company’s Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”), and these related parties receive compensation and fees for providing services to us.

The Company also reimburses these entities for certain expenses they incur in providing these services to the Company.

Healthcare Trust Special Limited Partnership, LLC (the “Special Limited Partner”), which is also under common control with AR Global, also has an interest in the Company through ownership of interests in the OP.

As of September 30, 2020, the Company owned 200 properties (all references to number of properties and square footage are unaudited) located in 31 states and comprised of 9.7 million rentable square feet.

On October 1, 2020, the Company announced the declaration of a quarterly stock dividend of 0.01349 shares of the Company’s common stock on each share of the Company’s outstanding common stock (the “Stock Dividend”).

The Stock Dividend was paid on October 15, 2020 to holders of record of the Company’s common stock at the close of business on October 8, 2020.

Since the Stock Dividend is treated similar to a stock split for accounting purposes, the result of the Stock Dividend was an increase of 0.01349 shares for every one share of common stock.

All references made to shares or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Stock Dividend.

The Company’s initial public offering of its common stock, which is not listed on a national securities exchange, closed in November 2014, and, in December 2019, the Company’s initial public offering of its 7.375 % Series A Cumulative Redeemable Perpetual Preferred Stock, $ 0.01 par value per share (“Series A Preferred Stock”) closed, and the Company listed shares of its Series A Preferred Stock on The Nasdaq Global Market under the symbol “HTIA.”

On April 1, 2020 the board of directors of the Company (the “Board”) approved an updated estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2019.

As of March 31, 2021, the Company owned 55 seniors housing properties under the REIT Investment Diversification and Empowerment Act (“RIDEA”) structure in its SHOP segment.

Under RIDEA, a REIT may lease qualified healthcare properties on an arm’s length basis to a taxable REIT subsidiary (“TRS”) if the property is operated on behalf of such subsidiary by a person who qualifies as an eligible independent contractor.

The Company declared and paid quarterly dividends entirely in shares of its common stock (the “Stock Dividends”).

Stock Dividends paid in October 2020 and January 2021 were equal to 0.01349 shares of common stock on each share of outstanding common stock.

The Stock Dividend paid in April 2021 was equal to 0.014655 shares of common stock on each share of outstanding common stock.

Dividends payable entirely in shares of common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods.

The aggregate impact of all three Stock Dividends on was an increase of 1,392,822 shares.

No additional shares, except for the Stock Dividends, were issued during the three months ended March 31, 2021.

References made to weighted-average shares and per-share amounts in the accompanying consolidated statements of operations and comprehensive income have been retroactively adjusted to reflect the increase of 0.04222 shares for every share outstanding due to the Stock Dividends, and are noted as such throughout the accompanying financial statements and notes.

On April 1, 2021, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2020.

The Company’s previous Estimated Per-Share NAV was as of December 31, 2019.

The Estimated Per-Share NAV published on April 1, 2021 reflects the October 2020 Stock Dividend the Company paid and took into consideration the January 2021 Stock Dividend the Company paid but has not been adjusted to reflect the April 2021 Stock Dividends the Company paid and will not be adjusted for any Stock Dividends the Company pays in the future until the board of directors (the “Board”) determines a new Estimated Per-Share NAV.

Paying dividends in additional shares of common stock will, all things equal, cause the value of each share to decline because the number of shares outstanding will increase when Stock Dividends are paid;

however, because each stockholder will receive the same number of new shares, the total value of our common stockholders’ investment, all things equal, will not change assuming no sales or other transfers.

The Company intends to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually.

3 unchanged sentences

The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods.

The results of operations for the three and nine months ended September 30, 2020 and 2019 respectively, are not necessarily indicative of the results for the entire year or any subsequent interim period.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2020.

Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2020.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results for the entire year or any subsequent interim period.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2021.

Principles of Consolidation and Basis of Presentation

4 unchanged sentences

Substantially all of the Company’s assets and liabilities are held by the OP.

Out-of-Period Adjustments

During the year ended December 31, 2019, the Company identified certain historical errors in its tax provision and its net deferred taxes asset as well as its statements of operations and comprehensive income (loss), consolidated statements of changes in equity, and statements of cash flows since 2014, which impacted the quarterly financial statements and annual periods previously issued.

Specifically, the Company had overstated intercompany rent on certain leases with the TRS and reflected a portion of depreciation on REIT assets in the TRS’s tax provision, thereby overstating previously recorded tax benefits, deferred tax assets and net incom e by $ 0.8 million, $ 0.3 million and $ 0.2 million for the years ended December 31, 2018, 2017 and for Pre-2017 periods, respectively.

The intercompany rent and allocation of depreciation only affected the tax provision and did not affect the pre-tax consolidated financial results.

These out of period adjustments were recorded in the fourth quarter of 2019.

During the year ended December 31, 2019, the Company did no t record quarterly interest expense related to borrowings under the Revolving Credit Facility (as defined below) that were borrowed and repaid during the fourth quarter of 2019.

The amount of interest expense and related payable that should have been recorded was $ 0.3 million .

As of September 30, 2020, the Company identified that the cumulative interest payable balance was understated, and as a result a true up entry was recorded to record the payable and related expense, resulting in an out of period adjustment .

Use of Estimates

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

Actual results could differ from those estimates.

Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, impairments, fair value measurements and income taxes, as applicable.

Impacts of the COVID-19 Pandemic

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

During the first quarter of 2020, there was a global outbreak of COVID-19, which became a global pandemic that has spread around the world and to every state in the United States.

During the first quarter of 2020, the global COVID-19 pandemic that has spread around the world and to every state in the United States commenced.

The pandemic has had and could continue to have an adverse impact on economic and market conditions, including a global economic slowdown and recession that may continue for some time.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions.

The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2020, however uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of September 30, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19.

The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2021, however uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of March 31, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19.

Actual results may ultimately differ from those estimates.

Starting in March 2020, the COVID-19 pandemic and measures to prevent its spread began to affect the Company in a number of ways.

In the Company’s Seniors Housing — Operating Property (“SHOP”) portfolio, occupancy has trended lower since the second half of March as government policies and implementation of infection control best practices have materially limited or closed communities to new resident move-ins which affects the Company’s ability to fill vacancies.

The Company has also continued to experience lower inquiry volumes and reduced in-person tours during the pandemic.

In the Company’s SHOP portfolio, occupancy has trended lower since the second half of March as government policies and implementation of infection control best practices materially limited or closed communities to new resident move-ins which affects the Company’s ability to fill vacancies.

The Company has also experienced lower inquiry volumes and reduced in-person tours during the pandemic.

In addition, starting in mid-March 2020, operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies, as the Company’s operators took appropriate actions to protect residents and caregivers.

At the SHOP facilities, the Company bears these cost increases.

These trends accelerated during the second quarter and have continued during the third quarter of 2020, and may continue to impact the Company in the future and have a material adverse effect on its revenues and income in the fourth quarter and other quarters thereafter.

These trends accelerated during the second, third, and fourth quarters of 2020 and into the beginning of the first quarter of 2021 as the surge of new COVID-19 cases that started in late 2020 crested, and have continued through the end of the first quarter of 2021 and into the second quarter of 2021 and may continue to impact the Company in the future and have a material adverse effect on the Company’s revenues and income in the other quarters thereafter.

The financial stability and overall health of the Company’s tenants is critical to its business.

The negative effects that the global pandemic has had on the economy includes the closure or reduction in activity of some of the Company’s MOBs and other healthcare-related facilities as well as restrictions on activity and access for many of the Company’s seniors housing properties.

The negative effects that the global pandemic has had on the economy includes the closure or reduction in occupancy activity at some of the Company’s MOBs and other healthcare-related facilities as well as restrictions on activity and access for many of the Company’s seniors housing properties.

The economic impact of the pandemic has impacted the ability of some of the Company’s tenants to pay their monthly rent either temporarily or in the long term.

The Company experienced delays in rent collections in the second and third quarters of 2020 that have continued in some cases into the fourth quarter.

The Company has taken a proactive approach to

The Company experienced delays in rent collections in the second, third and fourth quarters of 2020 and the first quarter of 2021 although collections have been approximately 100 % of original cash rent.

The Company has taken a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, during the year ended December 31, 2020, the Company executed lease amendments providing for deferral of rent.

For accounting purposes, in accordance with ASC 842:

Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

achieve mutually agreeable solutions with its tenants and in some cases, in the second and third quarters of 2020, the Company executed lease amendments providing for deferral of rent.

For accounting purposes, in accordance with ASC 842:

Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which doesn’t apply to leases subsequently modified).

March 31, 2021

would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which doesn’t apply to leases subsequently modified).

However, in light of the COVID-19 pandemic in which many leases are being modified, the FASB and SEC have provided relief that allows companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification.

1 unchanged sentence

For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief, (1) as if the changes were originally contemplated in the lease contract or (2) as if the deferred payments are variable lease payments contained in the lease contract.

For all other lease changes that did not qualify for FASB relief, the Company would be required to apply modification accounting including assessing classification under ASC 842.

For all other lease changes that did not qualify for FASB relief, the Company is required to apply modification accounting including assessing classification under ASC 842.

Some, but not all of the Company’s lease modifications qualify for the FASB relief.

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In August 2020, the Company amended the Credit Facility as part of its efforts to continue addressing the adverse impacts of the COVID-19 pandemic.

For additional information on the Credit Facility amendment see Note 5 — Credit Facilities.

For additional information on the Credit Facility, see Note 5 — Credit Facilities.

Revenue Recognition

The Company’s revenues, which are derived primarily from lease contracts, include rent received from tenants in MOBs and triple-net leased healthcare facilities.

As of September 30, 2020, these leases had a weighted average remaining lease term of 5.2 years.

As of March 31, 2021, these leases had a weighted average remaining lease term of 5.2 years.

Rent from tenants in the Company’s MOB and triple-net leased healthcare facilities operating segments is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease.

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Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under the Company reflects them on a net basis.

The Company’s revenues also include resident services and fee income primarily related to rent derived from lease contracts with residents in the Company’s SHOPs held using a structure permitted by the REIT rules and to fees for ancillary services performed for SHOP residents, which are generally variable in nature.

The Company’s revenues also include resident services and fee income primarily related to rent derived from lease contracts with residents in the Company’s SHOPs held using a structure permitted under the REIT Investment and Diversification and Empowerment Act of 2007 and to fees for ancillary services performed for SHOP residents, which are generally variable in nature.

Rental income from residents in the Company’s SHOP segment is recognized as earned.

1 unchanged sentence

The terms of the rent are short term in nature, primarily month-to-month.

Also included in revenue from tenants is fees for ancillary revenue from non-residents of $ 10.0 million, for the nine months ended September 30, 2020.

Also included in revenue from tenants is fees for ancillary revenue from non-residents of $ 1.8 million and $ 3.8 million, for the three months ended March 31, 2021 and 2020, respectively.

Fees for ancillary services are recorded in the period in which the services are performed.

The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates.

Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses related to non-SHOP assets (recorded in revenue from tenants), in addition to paying base rent,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties.

The following table presents future base rent payments on a cash basis due to the Company over the periods indicated over the next five years and thereafter.

1 unchanged sentence

These amounts also exclude SHOP leases which are short term in nature.

As of September 30, 2020:

As of March 31, 2021:

(In thousands) Future

9 unchanged sentences

Cost recoveries from tenants are included in operating revenue from tenants in accordance with new accounting rules, on the accompanying consolidated statements of operations and comprehensive income (loss) in the period the related costs are incurred, as applicable.

During the three and nine month periods ended September 30, 2020 the Company recorded reductions of revenue of $ 1.0 million and $ 2.4 million, respectively, for uncollectible amounts.

During the three and nine months ended September 30, 2019, the Company recorded reductions of revenue of $ 1.2 million and $ 4.8 million, respectively, for uncollectible amounts.

During the three months ended March 31, 2021 the Company recorded a reduction of revenue of $ 0.2 million for uncollectible amounts.

During the three months ended March 31, 2020, the Company recorded a reduction of revenue of $ 0.8 million for uncollectible amounts.

Investments in Real Estate

7 unchanged sentences

Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company's operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations.

No properties were presented as discontinued operations during the quarters ended September 30, 2020 and 2019.

No properties were presented as discontinued operations during the quarters ended March 31, 2021 and 2020.

Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year.

The Company evaluates probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits.

Properties are no longer depreciated when they are classified as held for sale.

There were $ 10.1 million and $ 70.8 million of

The Company evaluates probability of sale based on specific

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

real estate investments held for sale as of September 30, 2020 and December 31, 2019, respectively (see Note 3 — Real Estate Investments, Net for additional information).

March 31, 2021

facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits.

Properties are no longer depreciated when they are classified as held for sale.

There were no real estate investments held for sale as of March 31, 2021.

There were $ 0.1 million real estate investments held for sale as of December 31, 2020.

(see Note 3 — Real Estate Investments, Net for additional information).

In accordance with the lease accounting standard, all of the Company’s leases as lessor prior to adoption were accounted for as operating leases.

The Company will evaluate new leases originated after the adoption date (by the Company or by a predecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant.

The Company evaluates new leases originated after the adoption date (by the Company or by a predecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant.

This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than major part of remaining economic useful life of the asset (e.g., equal to or greater than 75%), if the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or if the asset so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term.

Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor.

For the three-year period ended December 31, 2019, the Company has no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.

For the three months ended March 31, 2021 and the three-year period ended December 31, 2020, the Company has no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.

The Company is also the lessee under certain land leases which will continue to be classified as operating leases under transition elections unless subsequently modified.

These leases are reflected on the balance sheet and the rent expense is reflected on a straight-line basis over the lease term.

These leases are reflected on the balance sheet as of March 31, 2021 and December 31, 2020, and the rent expense is reflected on a straight-line basis over the lease term in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and 2020.

The Company generally determines the value of construction in progress based upon the replacement cost.

3 unchanged sentences

Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as if vacant basis.

Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable assets (e.g., certificates of need in certain jurisdictions) or liabilities based on lease or property specific characteristics.

In addition, any assumed mortgages receivable or payable and any assumed or issued noncontrolling interests (in a business combination) are recorded at their estimated fair values.

Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable assets or liabilities based on lease or property specific characteristics.

In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values.

In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above or below-market interest rates.

1 unchanged sentence

In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets.

All acquisitions during the three and nine months ended September 30, 2020, and 2019 were asset acquisitions.

For acquired properties with leases classified as operating leases, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired (including those acquired in the Merger) and liabilities assumed, based on their respective fair values.

All acquisitions during the three months ended March 31, 2021 and 2020 were asset acquisitions.

For acquired properties with leases classified as operating leases, the Company allocates the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values.

In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data.

2 unchanged sentences

The Company utilizes various estimates, processes and information to determine the as-if vacant property value.

Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods.

Fair value estimates are also made using significant assumptions such as capitalization rates, discount rates, fair market lease rates and land values per square foot.

Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases as applicable.

The Company estimates the fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods.

Fair value estimates are also made using significant assumptions such as capitalization rates, fair market lease rates, discount rates and land values per square foot.

Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases.

Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases.

In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months.

The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and

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1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months.

The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.

The aggregate value of intangible assets related to customer relationships, as applicable, is measured based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the tenant.

Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors.

The Company did not record any intangible asset amounts related to customer relationships during the year ended December 31, 2019.

The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the tenant.

The Company did not record any intangible asset amounts related to customer relationships during the quarter ended March 31, 2020 or 2019.

The Company did not record any intangible asset amounts related to customer relationships during the quarters ended March 31, 2021 or 2020.

Impairment of Long-Lived Assets

7 unchanged sentences

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, 7 to 10 years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

Construction in progress, including capitalized interest, insurance and real estate taxes, is not depreciated until the development has reached substantial completion.

The value of certain other intangibles such as certificates of need in certain jurisdictions are amortized over the expected period of benefit (generally the life of the related building).

The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.

2 unchanged sentences

Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.

The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), as amended, commencing with the taxable year ended December 31, 2013.

If the Company continues to qualify for taxation as a REIT, it generally will not be subject to U.S.

federal corporate income tax to the extent it distributes all of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP) to its stockholders.

REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders.

If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S.

federal, state and local income taxes at regular corporate rates beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years.

The Company distributed to its stockholders 100% of its REIT taxable income for each of the years ended December 31, 2020, 2019 and 2018.

Accordingly, no provision for U.S.

federal or state income taxes related to such REIT taxable income was recorded in the Company’s financial statements.

Even if the Company continues to qualify as a

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March 31, 2021

REIT, it may be subject to certain state and local taxes on its income and property, and U.S.

federal income and excise taxes on its undistributed income.

Certain limitations are imposed on REITs with respect to the ownership and operation of seniors housing properties.

Generally, to qualify as a REIT, the Company cannot directly or indirectly operate seniors housing properties.

Instead, such facilities may be either leased to a third-party operator or leased to a TRS and operated by a third party on behalf of the TRS.

Accordingly, the Company has formed a TRS that is wholly-owned by the OP to lease its SHOPs and the TRS has entered into management contracts with unaffiliated third-party operators to operate the facilities on its behalf.

As of March 31, 2021, the Company, owned 55 seniors housing properties which are leased and operated through its TRS.

The TRS is a wholly-owned subsidiary of the OP.

A TRS is subject to U.S.

federal, state and local income taxes.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized.

In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies (including modifying intercompany leases with the TRS) and recent financial operations.

In the event the Company determines that it would not be able to realize the deferred income tax assets in the future in excess of the net recorded amount, the Company establishes a valuation allowance which offsets the previously recognized income tax asset.

Deferred income taxes result from temporary differences between the carrying amounts of the TRS’s assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss carryforwards.

Because of the TRS's recent operating history of losses and the on-going impacts of the COVID-19 pandemic on the results of operations of the Company’s SHOP assets, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets;

thus the Company has provided a 100% valuation allowance of $ 4.3 million as of March 31, 2021.

If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive income (loss).

As of December 31, 2020, the Company had a deferred tax asset of $ 4.6 million with a full valuation allowance.

Accounting for Leases

4 unchanged sentences

Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.

At transition to the new accounting rules on January 1, 2019, after assessing its reserve balances at December 31, 2018 under the guidance, the Company wrote off accounts receivable of $ 0.1 million and straight-line rents receivable of $ 0.1 million as an adjustment to the opening balance of accumulated deficit, and accordingly rent for these tenants is currently recorded on a cash basis.

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September 30, 2020

Lessee Accounting

5 unchanged sentences

CARES Act Grants

On March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic.

On March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic.

Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19.

The Company received $ 0.5 million and $ 3.6 million in these funds during the three and nine months ended September 30, 2020, related to four of its SHOP properties and considered the funds to be a grant contribution from the government.

The full amounts received were recognized as a reduction of property operating expenses in our consolidated statement of operations for the three and nine months ended September 30, 2020 to offset the incurred COVID-19 expenses.

There can be no assurance that the program will be extended or any further amounts received.

During the three months ended March 31, 2021, the Company received an additional $ 5.1 million in funding from CARES Act grants.

Previously, the Company received $ 3.6 million in grants during the year ended December 31, 2020.

The CARES Act grants are considered to be a grant contribution from the government.

The full amounts received were recognized as a reduction of property operating expenses in the Company’s consolidated statement of operations to offset the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

negative impacts of COVID-19.

There can be no assurance that the program will be extended or if any additional amounts will be received.

Recently Issued Accounting Pronouncements

14 unchanged sentences

The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

ASU 2020-04 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

During the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate (“LIBOR”) indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Not yet Adopted as of September 30, 2020

Not yet Adopted as of March 31, 2021

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815).

The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

exception for contracts in an entity's own equity.

The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity.

The standard also amends and makes targeted improvements to the related earnings per share guidance.

3 unchanged sentences

The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in Topic 848 is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur.

During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves the presentation of our derivatives, which will be consistent with our past presentation.

The Company will continue to evaluate the impact of the guidance and may apply other elections, as applicable, as additional changes in the market occur.

Note 3 — Real Estate Investments, Net

Property Acquisitions and Development Costs

Property Acquisitions

The Company invests in MOBs, seniors housing properties and other healthcare-related facilities primarily to expand and diversify its portfolio and revenue base.

The Company owned 200 properties as of September 30, 2020.

During the nine months ended September 30, 2020, the Company, through wholly owned subsidiaries of the OP, completed its acquisitions of one multi-tenant MOB, three single tenant MOBs and four SHOPs for an aggregate contract purchase price of $ 103.9 million.

The following table presents the allocation of real estate assets acquired and liabilities assumed, as well as capitalized construction in progress, during the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

The Company owned 190 properties as of March 31, 2021.

During the three months ended March 31, 2021, the Company, through wholly owned subsidiaries of the OP, completed the acquisition of one multi-tenant MOB for an aggregate contract purchase price of $ 6.6 million.

All acquisitions in the three months ended March 31, 2021 and 2020 were considered asset acquisitions for accounting purposes.

The following table presents the allocation of real estate assets acquired and liabilities assumed, as well as capitalized construction in progress, during the three months ended March 31, 2021 and 2020:

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March 31, 2021

Three Months Ended March 31,

(In thousands) 2021 2020

2 unchanged sentences

Buildings, fixtures and improvements 4,120 86,687

Development costs — 5,362

Total tangible assets 5,642 93,587

9 unchanged sentences

Number of properties purchased 1 8

(1) Weighted-average remaining amortization periods for in-place leases, above-market leases and below-market leases acquired were 2.3 years and 9.9 years, 8.7 years and 9.8 years, and 8.4 years as of September 30, 2020 and 2019, respectively.

There were no below market leases acquired in the nine months ended September 30, 2019

Development Project

In August 2015, the Company entered into an asset purchase agreement and development agreement to acquire land and construction in progress, and subsequently fund the remaining construction, of a development property in Jupiter, Florida for $ 82.0 million.

As of December 31, 2019, the Company had funded $ 97.8 million, including $ 10.0 million for the land and $ 87.8 million for construction in progress.

The Company had been working for some time to obtain a certificate of occupancy for the facility (“CO”), which was ultimately obtained in December 2019.

Historically, all construction costs, including capitalized interest, insurance and real estate taxes were capitalized and classified in construction is progress on the Company’s consolidated balance sheet.

In December 2019, the development reached substantial completion and the Company reclassified the entire amount in construction in progress.

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September 30, 2020

During the nine months ended September 30, 2019, the Company incurred $ 2.8 million in capitalized costs, including capitalized interest, related to the development project in Jupiter, Florida.

All acquisitions in 2020 and 2019 were considered asset acquisitions for accounting purposes.

Obtaining the CO was a necessary condition to leasing the property to any tenant other than a tenant associated with the developer of the property, which had been, and remains in, default under its agreements with the Company.

The Company entered into a lease for 10% of the rentable square feet at the property, but the tenant is not required to pay the Company cash rent until May 2021.

There can be no assurance as to the timing or terms of any additional leases or as to if and when the property may generate positive cash flow allowing the Company to earn a return on its investment in this property.

During the fourth quarter of 2019, in connection with the substantial completion of the development property, the Company began to evaluate it for a potential sale.

As a result of this potential change in plans, the Company concluded this held for use asset was impaired and recognized an impairment charge to its respective operating real estate components in 2019.

In August 2020, the Company entered into definitive purchase and sale agreements (“PSA”) to sell the Company's recently completed development property in Jupiter, Florida for $ 65.0 million and the Company’s two skilled nursing facilities in Lutz, Florida and Wellington, Florida for $ 20.0 million and $ 33.0 million, respectively.

The buyer has paid the Company $ 2.9 million in non-refundable deposits, but these dispositions remain subject to conditions, and there can be no guarantee that any or all of the dispositions will be completed on the contemplated terms, or at all.

(1) Weighted-average remaining amortization periods for in-place leases, above-market leases and below-market leases acquired during the three months ended March 31, 2021 were 3.0 years, 2.6 years and 4.0 years, respectively, as of each property’s acquisition date.

Significant Tenants

As of September 30, 2020 and 2019, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis.

The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of September 30, 2020 and 2019:

September 30,

As of March 31, 2021 and 2020, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis.

State 2021 2020

20.5 % 25.6 %

10.4 % 11.0 %

Iowa 10.2 % *

Pennsylvania 10.6 % *

* State’s annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the date specified.

(1) In August 2020, the Company entered into a PSA to sell three assets in Florida including the Company’s recently completed development project in Jupiter, Florida and the Company’s two skilled nursing facilities in Lutz, Florida and Wellington, Florida.

These dispositions are subject to conditions, and there can be no guarantee that the dispositions will be completed on the contemplated terms, or at all.

(2) As of September 30, 2020, the Company had 11 SHOP assets located in Michigan that are under contract to be sold pursuant to a PSA.

See “Assets Held for Sale and Related Impairments” in this note for more information.

In November 2020, the Company received payment of the full sales price for all 11 of the Michigan SHOPs (as defined below) and transferred seven of the properties to the buyer, with the remainder of the properties scheduled to be transferred to the buyer in January 2021.

See Note 17 — Subsequent Events for m ore information.

(1) In August 2020 the Company entered into an agreement to sell our skilled nursing facility in Wellington, Florida, and our development property in Jupiter, Florida.

The property in Jupiter, Florida and the property in Wellington, Florida are expected to be sold in the second quarter of 2021, however, there can be no assurance that these dispositions will be completed on their contemplated terms, or at all.

(2) During the year ended December 31, 2020, the Company sold 11 SHOPs located in Michigan, seven of which were transferred to the buyer during the fourth quarter of 2020 and the remaining four of which were transferred to the buyer during the first quarter of 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Intangible Assets and Liabilities

The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangible assets, amortization and accretion of above-and below-market lease assets and liabilities, net and the amortization and accretion of above-and below-market ground leases, for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2021 2020

4 unchanged sentences

Amortization of above-and below-market ground leases, net (3)

$ 40 $ 74 $ 119 $ 117

(1) Reflected within depreciation and amortization expense.

10 unchanged sentences

$ 272 $ 648 $ 876 $ 769 $ 695

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September 30, 2020

The Company did no t dispose of any properties during the three months ended September 30, 2020.

During the nine months ended September 30, 2020 the Company sold one MOB property which resulted in a gain on sale of $ 2.3 million.

On November 2, 2020 the initial closing under the PSA pursuant to which the Company had agreed to sell 11 SHOP assets located in Michigan (the “Michigan SHOPs”) occurred.

The contract purchase price for the 11 Michigan SHOPs was $ 11.8 million.

At the initial closing, the Company received payment of the full $ 11.8 million sales price for all 11 of the Michigan SHOPs, less $ 0.8 million held in escrow, and transferred seven of the properties to the buyer.

The remaining four properties were transferred to the buyer at a second closing in the first quarter of 2021 when the $ 0.8 million held in escrow was released to the buyer.

As a result, the Company recorded a loss on sale of $ 0.2 million during the three months ended March 31, 2021.

During the three months ended March 31, 2020 the Company sold one MOB property which resulted in a gain on sale of $ 2.3 million.

This property sold for a contract price of $ 8.6 million.

This gain is included on the Consolidated Statement of Operations for the three and nine months ended September 30, 2020.

On February 6, 2019, the Company sold five MOB properties in New York for a contract sales price of $ 45.0 million, resulting in a gain on sale of real estate investments of $ 6.1 million.

On July 28, 2019 the Company sold an additional MOB for a contract purchase price of $ 13.6 million, generating a gain on sale of $ 2.9 million.

On August 1, 2019, the Company sold a SHOP property for a contract purchase price of $ 3.5 million, resulting in a loss on sale of $ 0.2 million.

These gains and losses are included on the Consolidated Statement of Operations for the three and nine months ended September 30, 2019 .

The following table presents impairments recorded during the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, Nine Months Ended September 30,

This gain is included on the Consolidated Statement of Operations for the three months ended March 31, 2020.

The following table presents impairments recorded during the three months ended March 31, 2021 and 2020.

Three Months Ended March 31,

(In thousands) 2021 2020

2 unchanged sentences

Total $ 878 $ 18,038

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March 31, 2021

For additional information on impairments related to assets held for sale and assets held for use, see the “Assets Held for Sale and Related Impairments” and “Assets Held for Use and Related Impairments” sections below.

3 unchanged sentences

For held-for-sale properties, the Company predominately uses the contract sale price as fair market value.

Michigan SHOPs

In January 2020, the Company entered into a PSA for the sale of a portfolio of 14 SHOPs located in Michigan (the “Michigan SHOPs”) as a single portfolio for $ 71.8 million.

During April, 2020, the PSA was amended so that only 11 of the Michigan SHOPs will be sold pursuant to this PSA for $ 11.8 million.

As a result of the amended PSA from April 2020, the three remaining Michigan SHOPs no longer qualify as held for sale and were reclassified to assets held for use at their original carrying values as of March 31, 2020 and an additional $ 0.7 million in catch-up depreciation was recorded in the nine months ended September 30, 2020.

In addition, the original deposit made by the buyer was reduced from $ 1.0 million to $ 0.3 million.

In October 2020, the PSA was amended to provide that the full $ 11.8 million sales price for all 11 Michigan SHOPs would be paid at an initial closing when seven of the properties would be transferred to the buyer with the remaining four properties scheduled to be transferred to the buyer at a second closing in January 2021.

This amendment to the PSA also provided that $ 0.8 million of the sales price would be held in escrow and returned to the buyer at the second closing;

provided that, if the PSA is terminated before the second closing due to a material default by the buyer, the Company will receive the escrowed amount.

The Company determined that the 11 Michigan SHOPs should be classified as held for sale as of September 30, 2020 and the 14 Michigan SHOPs were previously classified as held for sale as of December 31, 2019.

An impairment charge of $ 22.6 million had previously been taken with respect to the 14 Michigan SHOPs during the three and nine months ended September 30, 2019.

As a result of the change in the asset group and sales price, the Company recognized an incremental impairment charge of $ 19.0 million in the nine months ended September 30, 2020, inclusive of $ 1.0 million of impairment charges recorded in the three months ended September 30, 2020, bringing the cumulative impairment on the now 11 Michigan SHOPs to $ 41.7 million, representing the amount by which the carrying amount of the 11 Michigan SHOPs exceeded the Company’s estimate of the net sales price for those 11 properties.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

As of September 30, 2020, for the 11 Michigan SHOPs that are classified as held for sale, seven Michigan SHOPs were part of the borrowing base of the Credit Facility, one was mortgaged under the Fannie Mae Master Credit Facilities (as defined below) and three were unencumbered.

In November 2020, the initial closing under the PSA occurred and the Company received payment of the full $ 11.8 million sales price for all 11 of the Michigan SHOPs less $ 0.8 million held in escrow and transferred seven of the properties to the buyer.

The remaining four properties are scheduled to be transferred to the buyer at a second closing in January 2021when the $ 0.8 million held in escrow will be released to the buyer (for additional information, see N ote 17 — Subsequent Events) .

Balance Sheet Details - Assets Held for Sale

The following table details the major classes of assets associated with the properties that are classified as held for sale as of September 30, 2020 and December 31, 2019:

(In thousands) September 30, 2020 December 31, 2019

Land $ 797 $ 4,051

The following table details the major classes of assets associated with the properties that are classified as held for sale as of December 31, 2020.

There were no assets classified as held for sale as of March 31, 2021.

(In thousands) December 31, 2020

Buildings, fixtures and improvements ( 55 )

Assets held for sale $ 90

During the year ended December 31, 2020, the Company sold 11 SHOPs located in Michigan, seven of which were transferred to the buyer during the fourth quarter of 2020 and the remaining four of which were transferred to the buyer in the first quarter of 2021.

Held for Sale Impairments - 2020

The impairment related to assets held for sale in the three months ended March 31, 2020 related to an amendment to the purchase and sale agreement for the Company’s properties in Michigan which changed the properties being sold and the sales price.

Assets Held for Use and Related Impairments

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As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses for impairment may be realized in the future.

As of December 31, 2019, the Company was actively considering plans to sell three assets in Florida including the recently completed development project in Jupiter, Florida and the Company’s two skilled nursing facilities in Lutz, Florida and Wellington, Florida.

The Company began marketing the properties in 2020.

During the three months ended June 30, 2020, the Company received multiple bids and accepted a non-binding letter of intent from a prospective buyer to purchase the recently completed development project in Jupiter, Florida for $ 65.0 million and the Company’s two skilled nursing facilities in Lutz, Florida and Wellington, Florida for $ 20.0 million and $ 33.0 million, respectively.

During August 2020, the Company entered into PSAs with the buyer on the terms generally set forth in the letter of intent.

These dispositions are subject to conditions, and there can be no guarantee that any or all the dispositions will be completed on the contemplated terms or at all.

During the nine months ended September 30, 2020, the Company recorded an additional impairment charge on its recently completed development project in Jupiter, Florida representing the amount by which the carrying amount of the property exceeds the Company’s estimate of the net sales price set forth in the PSA described above.

The Company did no t record

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

impairment charges for held for use assets during the three months ended September 30, 2020 and recorded impairment charges for held for use assets of $ 13.8 million during nine months ended September 30, 2020.

The Company did no t record any impairments for held for use assets during the three months ended September 30, 2019 and recorded an impairment charge of $ 19,000 during the nine months ended September 30, 2019.

March 31, 2021

Wellington, Florida.

The Company began marketing the properties in 2020, and in August 2020, the Company entered into definitive purchase and sale agreements (“PSAs”) to sell the completed development project in Jupiter, Florida for $ 65.0 million and the Company’s two skilled nursing facilities in Lutz, Florida and Wellington, Florida for $ 20.0 million and $ 33.0 million, respectively.

The property in Lutz, Florida was sold in December 2020.

On April 30, 2021, the Company amended the PSA which reduced the sales price of the skilled nursing facility in Wellington, Florida to $ 30.7 million.

In connection with this amendment to the PSA, the Company determined that the fair value had declined as of March 31, 2021 and the Company recognized an impairment charge of $ 0.9 million during the first quarter of 2021, which is included on the consolidated statement of operations and comprehensive loss.

The LaSalle Properties

On July 1, 2020, the Company transitioned four triple-net leased properties in Texas (collectively, the “LaSalle Properties”) from the triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties are now leased to one of the Company’s TRSs and operated and managed on the Company’s behalf by a third-party operator.

In January 2018, the Company entered into an agreement with the prior tenants at the LaSalle Properties (collectively, the “LaSalle Tenant”) in which the Company agreed to forbear from exercising legal remedies, including staying a lawsuit against the LaSalle Tenant, as long as the LaSalle Tenant paid the amounts due for rent and property taxes on an updated payment schedule pursuant to a forbearance agreement.

As of September 30, 2020, the LaSalle Tenant remains in default of the forbearance agreement and owes the Company $ 12.7 million of rent, property taxes, late fees, and interest receivable thereunder and $ 7.7 million plus interest of unpaid monetary damages awarded to us by the court on our claims against the tenant.

The Company has the entire receivable balance, including the monetary damages, and related income from the LaSalle Tenant fully reserved as of September 30, 2020.

The Company incurred $ 0.3 million of bad debt expense, including straight-line rent write-offs, related to the LaSalle Tenant during the nine months ended September 30, 2020, which is included in reduction in revenue from tenants on the consolidated statement of operations and comprehensive loss.

The Company incurred $ 3.1 million of bad debt expense, including straight-line rent write-offs, related to the LaSalle Tenant during the nine months ended September 30, 2019.

On February 15, 2019, the Company filed an amended petition in Texas state court seeking the appointment of a receiver to manage the operations at these properties and for recovery of damages for the various breaches by the LaSalle Tenant.

Subsequently The LaSalle Group Inc., a guarantor of certain of the LaSalle Tenant’s lease obligations (the “LaSalle Guarantor”), filed for voluntarily relief under chapter 11 of the United States Bankruptcy Code.

The Company severed its claims against the LaSalle Guarantor from the action against the LaSalle Tenant.

On August 27, 2019, the court awarded the Company monetary damages on its claims against the LaSalle Tenant in an amount equal to $ 7.7 million plus interest.

There can be no assurance the Company will receive any amounts with respect to these claims against the LaSalle Tenant.

On October 30, 2019, the court entered into an order appointing a receiver.

This receiver was empowered to replace the LaSalle Tenant with a new tenant and operator at the properties, and, on February 15, 2020, the receiver took operational control of the properties.

As noted above, the Company worked with the receiver and the Company’s designated third-party operator to transition the LaSalle Properties to its SHOP operating segment on July 1, 2020.

Now that the transition is complete, the Company has gained more control over the operations of the LaSalle Properties, and the Company believes this will allow the Company to improve performance and the cash flows generated by the properties.

There can be no assurance, however, that completing this transition will result in the Company achieving its operational objectives.

The NuVista Tenant

The Company had tenants at two of its Florida properties located in Lutz and Wellington Florida (collectively, the “NuVista Tenant”) that were in default under their leases beginning from July 2017.

On January 1, 2018 the property was transitioned to the SHOP segment when the Company replaced the NuVista Tenant as tenant at the Lutz, Florida property with a taxable REIT subsidiary (“TRS”) and engaged a third-party operator to operate the property.

As a result, the property was transitioned to the SHOP segment as of January 1, 2018.

This structure is permitted by the REIT rules, under which a REIT may lease qualified healthcare properties on an arm’s length basis to a TRS if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor.

At the property located in Wellington, Florida, the Company and the tenant entered into an operations transfer agreement (the “OTA”) pursuant to which the Company and the tenant agreed to cooperate in transitioning operations at the property to a third party operator selected by the Company.

On February 19, 2019, in response to litigation commenced by the Company against the NuVista Tenant to enforce the OTA, the United States District Court for the Southern District of Florida entered into an agreed order (the “Order”) pursuant to which it found that the NuVista Tenant was in default under the lease for the property and that the OTA was valid, binding and in full force and effect, as modified by the Order.

Subsequent to the entry into the Order, the Company, its designated third-party operator and the NuVista Tenant transitioned operations at the property to the Company’s designated third-party operator.

The Company’s designated third-party operator received its license to operate the facility on April 1, 2019 and is in operational control of the property.

On May 20, 2019, the court entered into a final order from

On July 1, 2020, the Company transitioned four triple-net leased properties in Texas (collectively, the “LaSalle Properties”) from the triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties are now leased to the Company’s TRS and operated and managed on the Company’s behalf by a third-party operator.

During 2019, The LaSalle Group Inc., a guarantor of certain of the lease obligations of prior tenants (collectively, the “LaSalle Tenant”), filed for voluntarily relief under chapter 11 of the United States Bankruptcy Code.

The Company has filed proofs of claims related to amounts previously awarded to it from the bankruptcy proceeding, however, the Company has no amounts due from the LaSalle Tenant in its consolidated balance sheets as of March 31, 2021 and December 2020 as the Company does not believe recovery is likely against the LaSalle Tenant.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

the court terminating the existing lease with the NuVista Tenant.

Following entry into the order, the property in Wellington, Florida transitioned to the SHOP segment as of April 1, 2019.

In connection with this transition, the Company replaced the NuVista Tenant as a tenant with a TRS, and engaged a third-party operator to operate the property.

During the year end December 31, 2019 the company received $ 1.6 million under the OTA for periods prior to the lease termination, which amounts had previously been fully reserved.

This payment under the OTA is included in revenue from tenants in consolidated statements of operations and comprehensive loss.

In August 2020, the Company entered into a PSA to sell the properties located in Lutz and Wellington Florida.

March 31, 2021

Note 4 — Mortgage Notes Payable, Net

The following table reflects the Company’s mortgage notes payable as of September 30, 2020 and December 31, 2019:

The following table reflects the Company’s mortgage notes payable as of March 31, 2021 and December 31, 2020:

Outstanding Loan Amount as of Effective Interest Rate as of

Portfolio Encumbered Properties (1)

September 30,

2020 December 31, 2019 September 30,

2021 December 31, 2020 March 31,

2021 December 31, 2020 Interest Rate Maturity

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The equity interests and related rights in the Company’s wholly owned subsidiaries that directly own or lease the real estate assets comprising the borrowing base have been pledged for the benefit of the lenders thereunder (see Note 5 — Credit Facilities for additional details).

(2) Calculated on a weighted average basis for all mortgages outstanding as of September 30, 2020 and December 31, 2019.

(2) Calculated on a weighted average basis for all mortgages outstanding as of March 31, 2021 and December 31, 2020.

For the LIBOR based loans, LIBOR in effect at the balance sheet date was utilized.

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In connection with the amendment to this loan in December 2019 (see additional details below), the Company terminated the previous interest rate swap agreements and entered into new interest rate swap agreements ( see Note 7 — Derivatives and Hedging Activities for additional details).

(4) The Company assumed this fixed rate mortgage when it acquired a property during the nine months ended September 30, 2020.

(4) Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing.

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Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

As of September 30, 2020, the Company had pledged $ 0.9 billion in total real estate investments, at cost, as collateral for its $ 0.6 billion of gross mortgage notes payable.

As of March 31, 2021, the Company had pledged $ 0.9 billion in total real estate investments, at cost, as collateral for its $ 0.6 billion of gross mortgage notes payable.

This real estate is not available to satisfy other debts and obligations unless first satisfying the mortgage notes payable secured by these properties.

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Some of the Company’s mortgage note agreements require compliance with certain property-level financial covenants, including debt service coverage ratios.

As of September 30, 2020, the Company was in compliance with these financial covenants.

As of March 31, 2021, the Company was in compliance with these financial covenants.

See Note 5 — Credit Facilities - Future Principal Payment and LIBOR Transition for schedule of principal payment requirements of the Company’s Mortgage Notes and Credit Facilities and discussion of the expected cessation of LIBOR publication.

Fox Ridge Refinancing

On January 29, 2021, the Company entered into interest rate reduction modifications (the “Fox Ridge Modifications”) for two of its mortgages secured by the Fox Ridge Chenal and Fox Ridge North Little Rock properties which reduced the interest rate on both mortgages.

Prior to the Fox Ridge Modifications, the mortgages bore interest at an effective rate of 3.98 % per annum which was reduced to an effective rate of 2.95 % per annum.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Note 5 — Credit Facilities

The Company had the following credit facilities outstanding as of September 30, 2020 and December 31, 2019:

The Company had the following credit facilities outstanding as of March 31, 2021 and December 31, 2020:

Outstanding Facility

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Credit Facility Encumbered Properties (1)

September 30,

2020 December 31, 2019 September 30,

2021 December 31, 2020 March 31,

2021 December 31, 2020 Interest Rate Maturity

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_______________

(1) Encumbered properties are as of September 30, 2020.

(1) Encumbered properties are as of March 31, 2021.

(2) The equity interests and related rights in the Company’s wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Credit Facility (as defined below) have been pledged for the benefit of the lenders thereunder.

In November 2020, seven Michigan SHOPs, were sold and released from the borrowing base under the Credit Facility (see Note 17 — Subsequent Events , for additional information).

(3) Secured by first-priority mortgages on 12 of the Company’s seniors housing properties located in Florida, Georgia, Iowa and Michigan as of September 30, 2020 with a carrying value of $ 347 million.

In November 2020, one Michigan SHOP property was sold and released from the Capital One Facility (see Note 17 — Subsequent Events , for additional information).

(4) Secured by first-priority mortgages on ten of the Company’s seniors housing properties located in Michigan, Missouri, Kansas, California, Florida, Georgia and Iowa as of September 30, 2020 with a carrying value of $ 253 million.

(5) Calculated on a weighted average basis for all credit facilities outstanding as of September 30, 2020 and December 31, 2019.

(3) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties located in Florida, Georgia, Iowa and Michigan as of March 31, 2021 with a carrying value of $ 347 million.

(4) Secured by first-priority mortgages on ten of the Company’s seniors housing properties located in Michigan, Missouri, Kansas, California, Florida, Georgia and Iowa as of March 31, 2021 with a carrying value of $ 253 million.

(5) Calculated on a weighted average basis for all credit facilities outstanding as of March 31, 2021 and December 31, 2020.

(6) Variable rate loan, based on LIBOR, all of which was fixed as a result of entering into “pay-fixed” interest rate swap agreements ( see Note 7 — Derivatives and Hedging Activities for additional details).

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(8) Variable rate loan with $ 50 million of principal amount fixed at a rate of 4.09 % by an interest rate swap agreement.

(9) The company has the option to extend maturity one year to March 2024.

(9) The company has the option to extend maturity one year to March 2024 subject to certain conditions.

(10) Effective interest rate below for variable rate debt gives effect to any “Pay-fixed” swap entered into by the Company.

If not hedged, the effective interest rate below represents the variable rate (or contractual floor if appropriate) and the applicable margin in effect as of the September 30, 2020.

If not hedged, the effective interest rate below represents the variable rate (or contractual floor if appropriate) and the applicable margin in effect as of the March 31, 2020.

Interest rate caps are not considered unless the cap is currently in effect.

As of September 30, 2020, the carrying value of our real estate investments, at cost was $ 2.6 billion, with $ 0.9 billion of this asset value pledged as collateral for mortgage notes payable, $ 0.6 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities and $ 1.4 billion of this asset value comprising the borrowing base of the Credit Facility.

As of March 31, 2021, the carrying value of our real estate investments, at cost was $ 2.6 billion, with $ 0.9 billion of this asset value pledged as collateral for mortgage notes payable, $ 0.6 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities and $ 0.9 billion of this asset value comprising the borrowing base of the Credit Facility.

These real estate assets are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, unless, as applicable, the existing indebtedness associated with the property is satisfied or the property is removed from the borrowing base of the Credit Facility, which would impact availability thereunder

Unencumbered real estate investments, at cost as of March 31, 2021 was $ 0.2 billion, although there can be no assurance as to the amount of liquidity the Company would be able to generate from using these unencumbered assets as collateral for mortgage loans or adding them to the borrowing base of the Company’s Credit Facility.

Credit Facility

On March 13, 2019, the Company entered into an amended and restated senior secured credit facility (the “Credit Facility”), which consists of two components, a revolving credit facility (the “Revolving Credit Facility”) and a term loan (the

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

Unencumbered real estate investments, at cost as of September 30, 2020 was $ 285.6 million, although there can be no assurance as to the amount of liquidity we would be able to generate from using these unencumbered assets as collateral for mortgage loans or adding them to the borrowing base of our Credit Facility.

Credit Facility

March 31, 2021

“Term Loan”).

In both March and August 2020, the Credit Facility was further amended, and the terms of the Credit Facility giving effect to those amendments are generally described below.

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The equity interests and related rights in the Company’s wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility have been pledged for the benefit of the lenders thereunder.

As of September 30, 2020, $ 150.0 million was outstanding under the Term Loan, and $ 195.6 million was outstanding under the Revolving Credit Facility.

As of March 31, 2021, $ 150.0 million was outstanding under the Term Loan, and $ 173.7 million was outstanding under the Revolving Credit Facility.

The unused borrowing availability under the Revolving Credit Facility was $ 42.8 million.

The Company is required to maintain a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $ 50.0 million.

Pursuant to the amendment in August 2020, certain other restrictions and conditions described below will no longer apply starting in a quarter in which the Company makes an election and, as of the day prior to the commencement of the applicable quarter, the Company has a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $ 100.0 million, giving effect to the aggregate amount of distributions projected to be paid by the Company during the applicable quarter, and the Company’s ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5 % (the “Commencement Quarter”).

Pursuant to the terms of the Company’s amended Credit Facility certain other restrictions and conditions described below will no longer apply starting in a quarter in which the Company makes an election and, as of the day prior to the commencement of the applicable quarter, the Company has a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $ 100.0 million, giving effect to the aggregate amount of distributions projected to be paid by the Company during the applicable quarter, and the Company’s ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5 % (the “Commencement Quarter”).

The Commencement Quarter may be no earlier than the fiscal quarter ending June 30, 2021.

The Company did not, however, satisfy the conditions to make the quarter ending June 30, 2021 the Commencement Quarter.

During the period from August 10, 2020 until the first day of the Commencement Quarter, the Company must use all the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility.

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or (b) the Base Rate, plus an applicable margin that ranges, depending on the Company’s leverage, from 0.35 % to 1.10 %.

As of March 31, 2021 the Company had elected to use the LIBOR option for all of our borrowings under the Credit Facility.

Further, commencing on August 10, 2020 and until the Commencement Quarter, the Company has the option to have amounts outstanding under the Term Loan bear interest at an annual rate equal to either:

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or (b) the Base Rate, plus an applicable margin that ranges, depending on the Company’s leverage, from 0.30 % to 1.05 %.

Pursuant to the amendment to the Credit Facility in August 2020, the “floor” on LIBOR was increased from 0.00 % to 0.25 %.

Pursuant to the terms of the Company’s Credit Facility, the “floor” on LIBOR was increased from 0.00 % to 0.25 %.

As of March 31, 2021, the Revolving Credit Facility and the Term Loan had an effective interest rate per annum equal to 3.21 % and 4.95 %, respectively.

Until the Commencement Quarter, the Company may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions.

These exceptions include paying dividends on the 7.375 % Series A Cumulative Redeemable Perpetual Preferred Stock, $ 0.01 par

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

As of September 30, 2020, the Revolving Credit Facility and the Term Loan had an effective interest rate per annum equal to 3.17 % and 4.95 %, respectively.

These exceptions include paying dividends on the Series A Preferred Stock or any other preferred stock the Company may issue and paying any cash distributions necessary to maintain its status as a REIT.

March 31, 2021

value per share (“Series A Preferred Stock”) or any other preferred stock the Company may issue and paying any cash distributions necessary to maintain its status as a REIT.

The Company may not pay any cash distributions (including dividends on Series A Preferred Stock) if a default or event of default exists or would result therefrom.

Beginning in the Commencement Quarter, the Company will be able to pay cash distributions to holders of common stock, subject to the restrictions described below.

Beginning in the Commencement Quarter, the Company may pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters may not exceed 95 % of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

The Company may pay cash distributions beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters do not exceed 95 % of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

In addition, beginning in the Commencement Quarter, the Company will be permitted to repurchase up to $ 50.0 million of shares of its common stock (including amounts previously repurchased during the term of the Revolving Credit Facility) if, after giving effect to the repurchases, the Company maintains cash and cash equivalents of at least $ 30.0 million and the Company’s ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 55.0 %.

The Credit Facility requires the Company to maintain a minimum ratio of consolidated total indebtedness to consolidated total asset value, a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges and a minimum consolidated tangible net worth.

The Credit Facility prohibits the Company from exceeding a maximum ratio of consolidated total indebtedness to consolidated total asset value, and requires the Company to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges and a minimum consolidated tangible net worth.

The maximum ratio of consolidated total indebtedness to consolidated total asset value is 67.5 % for the period from July 1, 2020 through June 30, 2021 and 65 % thereafter unless and until the Commencement Quarter, following which it will be 62.5 %.

The minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges is 1.50 to 1.00 for the period from July 1, 2020 through March 31, 2021, 1.55 to 1.00 for the period from April 1, 2021 through June 30, 2021, and 1.60 to 1.00 thereafter.

The minimum consolidated tangible net worth is the sum of (i) $ 1,188,928.00 , plus (ii) 75 % of any net offering proceeds (as defined in the Credit Facility) since the Credit Facility closed in March 2019.

As of September 30, 2020, the Company was in compliance with the financial covenants under the Credit Facility.

The minimum consolidated tangible net worth is the sum of (i) $ 1.2 million, plus (ii) 75 % of any net offering proceeds (as defined in the Credit Facility) since the Credit Facility closed in March 2019.

As of March 31, 2021, the Company was in compliance with the financial covenants under the Credit Facility.

Based upon the Company’s current expectations, the Company believes its operating results during the next 12 months will allow it to continue to comply with these covenants.

Fannie Mae Master Credit Facilities

On October 31, 2016, the Company, through wholly-owned subsidiaries of the OP, entered into a master credit facility agreement relating to a secured credit facility with KeyBank and a master credit facility agreement with Capital One for a secured credit facility with Capital One Multifamily Finance LLC, an affiliate of Capital One together, the “Fannie Mae Master Credit Facilities”).

On October 31, 2016, the Company, through wholly-owned subsidiaries of the OP, entered into a master credit facility agreement relating to a secured credit facility with KeyBank (the “KeyBank Facility”) and a master credit facility agreement with Capital One for a secured credit facility with Capital One Multifamily Finance LLC, an affiliate of Capital One (the “Capital One Credit Facility”;

the Capital One Facility and the KeyBank Facility are referred to herein individually as a “Fannie Mae Master Credit Facility” and together as the “Fannie Mae Master Credit Facilities”).

Advances made under these agreements are assigned by Capital One and KeyBank to Fannie Mae at closing for inclusion in Fannie Mae’s Multifamily MBS program.

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The two interest rate caps agreements extend three existing interest rate caps set to mature on the same date and are not designated as hedges ( see Note 7 — Derivatives and Hedging Activities for additional disclosure regarding the Company’s derivatives).

In November 2020, in conjunction with the sale and transfer of four of the Michigan SHOPs, one of which was encumbered under the Fannie Mae Master Credit Facility with Capital One, $ 4.2 million was repaid to Capital One upon the release of the property.

The Company may request future advances under the Fannie Mae Master Credit Facilities by borrowing against the value of the initial mortgaged properties, or by adding eligible properties to the collateral pool, subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Future Principal Payments

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to September 30, 2020 and thereafter, on all of the Company’s outstanding debt (mortgage notes payable and credit facilities):

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to March 31, 2021 and thereafter, on all of the Company’s outstanding debt (mortgage notes payable and credit facilities):

Future Principal

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LIBOR Transition

It is anticipated that LIBOR will only be available in substantially its current form until the end of 2021.

In July 2017, the Financial Conduct Authority (which regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts.

On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline announcing that it will cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021.

The remaining USD LIBOR settings will continue to be published through June 30, 2023.

The Company is not able to predict when there will be sufficient liquidity in the SOFR market.

The Company is monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps.

In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate.

While the Company’s expects LIBOR to be available in substantially its current form until at least the end of 2021, it is possible that LIBOR will become unavailable prior to that time.

This could occur, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator.

To transition from LIBOR under the Credit Facility, the Company will either utilize the Base Rate (as defined in the Credit Facility) or an alternative benchmark established by the agent in accordance with the terms of the Credit Facility, which will be determined with due consideration to the then current market practices for determining and implementing a rate of interest for newly originated floating rate commercial real estate loans in the United States and loans converted from a LIBOR based rate to a replacement index-based rate.

The Company has mortgages, credit facilities and derivative agreements that have terms that are based on LIBOR.

Certain of those agreements have alternative rates already contained in the agreements while others do not.

The Company anticipates that it will either utilize the alternative rates contained in the agreements (e.g., the Base Rate under the Credit Facility) or negotiate a replacement reference rates for LIBOR with the lenders and derivative counterparties.

The Company anticipates that it will either utilize the alternative rates contained in the agreements or negotiate a replacement reference rates for LIBOR with the lenders and derivative counterparties.

Note 6 — Fair Value of Financial Instruments

2 unchanged sentences

The three levels of the hierarchy are described below:

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

8 unchanged sentences

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.

However, as of September 30, 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives.

However, as of March 31, 2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives.

As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative.

1 unchanged sentence

In addition, credit valuation adjustments, are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

The following table presents information about the Company’s assets and liabilities measured at fair value as of September 30, 2020 and December 31, 2019, aggregated by the level in the fair value hierarchy within which those instruments fall.

The following table presents information about the Company’s assets and liabilities measured at fair value as of March 31, 2021 and December 31, 2020, aggregated by the level in the fair value hierarchy within which those instruments fall.

(In thousands) Quoted Prices in Active Markets

3 unchanged sentences

Level 3 Total

September 30, 2020

March 31, 2021

Derivative assets, at fair value $ — $ 111 $ — $ 111

Derivative liabilities, at fair value — ( 22,754 ) — ( 22,754 )

Total $ — $ ( 22,643 ) $ — $ ( 22,643 )

December 31, 2020

1 unchanged sentence

Derivative liabilities, at fair value — ( 38,389 ) — ( 38,389 )

Total $ — $ ( 38,376 ) $ — $ ( 38,376 )

A review of the fair value hierarchy classification is conducted on a quarterly basis.

Changes in the type of inputs may result in a reclassification for certain assets.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2020.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2021.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Real Estate Investments Measured at Fair Value on a Non-Recurring Basis

Real Estate Investments - Held for Use

The Company also had impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheet as of September 30, 2020.

As of September 30, 2020, the Company owned held for use properties for which the Company had reconsidered the projected cash flows due to various performance indicators.

As a result, the Company evaluated the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period.

As a result of this evaluation and its consideration of impairment, the Company did not record any impairments for its held for use real estate investments during the quarter ended September 30, 2020.

The Company primarily uses a market approach to estimate the future cash flows expected to be generated.

The Company also had impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheet as of March 31, 2021.

As of March 31, 2021, the Company owned one held for use property in Wellington, Florida for which the Company had reconsidered the projected sales proceeds due to the April 30, 2021 amendment to the PSA.

As a result, the Company evaluated the impact on its ability to recover the carrying value of the property based on the new sales terms of the PSA.

The Company used a sales approach to estimate the future cash flows expected to be generated from the sale.

Impaired real estate investments held for use are generally classified in Level 3 of the fair value hierarchy.

See Note 3 — Real Estate investments, Net - “Assets Held for Use and Related Impairments” for additional details.

Real Estate Investments - Held for Sale

The Company has impaired real estate investments held for sale, which are carried at fair value on a non-recurring basis on the consolidated balance sheets as of September 30, 2020 and December 31, 2019.

The Company has impaired real estate investments held for sale, which are carried at net realizable value on a non-recurring basis on the consolidated balance sheets as of March 31, 2021 and December 31, 2020.

Impaired real estate investments held for sale are generally classified in Level 3 of the fair value hierarchy.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

Financial Instruments not Measured at Fair Value

2 unchanged sentences

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported below:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

(In thousands) Level Carrying Amount Fair Value Carrying Amount Fair Value

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The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis, based on the Advisor’s experience with similar types of borrowing arrangements, excluding the value of derivatives.

At September 30, 2020, the carrying value under the Revolving Credit Facility and Fannie Mae Master Credit Facilities does not approximate fair value, due to the widening of the credit spread during the period.

At December 31, 2019, the carrying amount approximated the fair value.

At March 31, 2021 and December 31, 2020, the carrying values of the Credit Facility and Fannie Mae Master Credit Facilities did not approximate their fair values due to the widening of credit spreads during the periods.

Note 7 — Derivatives and Hedging Activities

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The Company does not anticipate that any of its counterparties will fail to meet their obligations.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2020 and December 31, 2019:

(In thousands) Balance Sheet Location September 30,

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2021 and December 31, 2020:

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(In thousands) Balance Sheet Location March 31,

2021 December 31, 2020

Derivatives designated as hedging instruments:

Interest rate “pay-fixed” swaps Derivative assets, at fair value $ — $ 377

Interest rate “pay-fixed” swaps Derivative liabilities, at fair value $ 22,754 $ 38,389

1 unchanged sentence

Interest rate caps Derivative assets, at fair value $ 111 $ 13

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

Cash Flow Hedges of Interest Rate Risk

2 unchanged sentences

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

During 2020 and 2019, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

During the first quarter of 2021 and the year ended December 31, 2020, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

In connection with the refinancing of the MOB Loan during the fourth quarter of 2019, the Company terminated two interest rate swaps with an aggregate notional amount of $ 250.0 million for a payment of approximately $ 2.2 million.

In connection with the refinancing of the $ 250.0 million loan made by Capital One, National Association and certain other lenders to certain subsidiaries of the OP on June 30, 2017 (the “MOB Loan”) during the fourth quarter of 2019, the Company terminated two interest rate swaps with an aggregate notional amount of $ 250.0 million for a payment of approximately $ 2.2 million.

Following these terminations, $ 2.2 million was recorded in AOCI and is being recorded as an adjustment to interest expense over the term of the two terminated swaps and the MOB Loan prior to its refinancing.

Of the amount recorded in AOCI following these terminations, $ 0.2 million and $ 0.6 million was recorded as an increase to interest expense for the three and nine months ended September 30, 2020 and approximately $ 1.5 million remained in AOCI as of September 30, 2020.

Of the amount recorded in AOCI following these terminations, $ 0.2 million was recorded as an increase to interest expense for the three months ended March 31, 2021 and approximately $ 1.1 million remained in AOCI as of March 31, 2021.

Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

During the next 12 months, from July 1, 2020 through June 30, 2021, the Company estimates that $ 10.6 million will be reclassified from other comprehensive loss as an increase to interest expense.

As of September 30, 2020 and December 31, 2019, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:

September 30, 2020 December 31, 2019

During the next 12 months, from April 1, 2021 through March 31, 2022, the Company estimates that $ 10.7 million will be reclassified from other comprehensive loss as an increase to interest expense.

As of March 31, 2021 and December 31, 2020, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:

March 31, 2021 December 31, 2020

Interest Rate Derivatives Number of Instruments Notional Amount Number of Instruments Notional Amount

1 unchanged sentence

Interest rate “pay-fixed” swaps 9 $ 578,500 9 $ 578,500

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

The table below details the location in the financial statements of the loss recognized on interest rate derivatives designated as cash flow hedges for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2021 2020

Amount of loss recognized in accumulated other comprehensive loss on interest rate derivatives

$ ( 405 ) $ ( 2,469 ) $ ( 42,631 ) $ ( 12,496 )

Amount of gain (loss) recognized in accumulated other comprehensive loss on interest rate derivatives $ 13,163 $ ( 37,715 )

Amount of (loss) gain reclassified from accumulated other comprehensive income into income as interest expense (effective portion)

$ ( 2,684 ) $ ( 450 )

Total amount of interest expense presented in the

consolidated statements of operations and comprehensive loss

Total amount of interest expense presented in the consolidated statements of operations and comprehensive gain (loss)

$ ( 12,322 ) $ ( 13,257 )

1 unchanged sentence

These derivatives are used to manage the Company’s exposure to interest rate movements, but do not meet the strict hedge accounting requirements to be classified as hedging instruments.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

Changes in the fair value of derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net loss and were $ 69,000 and $ 45,000 the three and nine months ended September 30, 2020 and a loss of $ 2,000 and $ 50,000 for the three and nine months ended September 30, 2019, respectively.

The Company paid $ 34,000 to enter into an interest rate cap contract during the three months ended March 31, 2020 with an effective date of April 1, 2020 and notional value of $ 53.4 million to replace two expiring caps with similar amounts.

As the cap was not yet effective as of September 30, 2019, it has been excluded from the notional amount in the table below.

The Company had the following outstanding interest rate derivatives that were not designated as hedges in qualified hedging relationships as of September 30, 2020 and December 31, 2019:

September 30, 2020 December 31, 2019

Changes in the fair value of derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net loss and were a gain of $ 14,000 for the three months ended March 31, 2021 and a gain of $ 16,000 for the three months ended March 31, 2020.

The Company paid $ 85,000 to enter into an interest rate cap contract during the three months ended March 31, 2021 with an effective date of April 1, 2021 and notional value of $ 60.0 million to replace an expiring interest rate cap contract with a similar notional value.

The Company had the following outstanding interest rate derivatives that were not designated as hedges in qualified hedging relationships as of March 31, 2021 and December 31, 2020:

March 31, 2021 December 31, 2020

Interest Rate Derivatives Number of Instruments Notional Amount Number of Instruments Notional Amount

2 unchanged sentences

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2020 and December 31, 2019.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2021 and December 31, 2020.

The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value.

2 unchanged sentences

(In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets presented in the Consolidated Balance Sheet Financial Instruments Cash Collateral Received Net Amount

September 30, 2020 $ 4 $ ( 42,899 ) $ — $ ( 42,895 ) $ — $ — $ ( 42,895 )

March 31, 2021 $ 111 $ — $ — $ 111 $ — $ — $ 111

March 31, 2021 $ — $ ( 22,754 ) $ — $ ( 22,754 ) $ — $ — $ ( 22,754 )

December 31, 2020 $ 13 $ — $ — $ 13 $ — $ — $ 13

Credit-risk-related Contingent Features

The Company has agreements in place with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

As of September 30, 2020, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $ 47.3 million.

As of September 30, 2020, the Company is not required to post any collateral related to these agreements and was not in breach of any agreement provisions.

If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $ 47.3 million at September 30, 2020.

Note 8 — Stockholders’ Equity

As of September 30, 2020 and December 31, 2019, the Company had 93,775,745 and 93,602,555 shares of common stock outstanding (retroactively adjusted for the Stock Dividend) , respectively, including unvested restricted shares and shares issued pursuant to the Company’s distribution reinvestment plan (“DRIP”), net of share repurchases.

From March 1, 2008 until June 30, 2020, the Company paid monthly distributions to stockholders at a rate equivalent to $ 0.85 per annum per share of common stock.

Distributions were payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.

Distribution were payments dependent on the

December 31, 2020 $ — $ ( 38,389 ) $ — $ ( 38,389 ) $ — $ — $ ( 38,389 )

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

availability of funds.

The Board may further reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.

On August 13, 2020, the Company announced that the Board had approved a change in the Company’s common stock distribution policy in order to preserve the Company’s liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and in light of the amendment to the Credit Facility described above.

Accordingly, distributions authorized by the Board on the Company’s shares of common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of the Company’s common stock valued at the Company’s estimated per share net asset value of common stock in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter.

On October 1, 2020, the Company declared the Stock Dividend of 0.01349 shares of the Company’s common stock on each share of the Company’s outstanding common stock.

This number of shares was based on the Company’s prior cash distribution rate of $ 0.85 per share per annum.

The Stock Dividend was paid on October 15, 2020 to holders of record of the Company’s common stock at the close of business on October 8, 2020.

Distribution payments are dependent on the availability of funds.

The Board may further change the Company’s common stock distribution policy at any time, further reduce the amount of distributions paid or suspend distribution payments at any time, and therefore distribution payments are not assured.

On April 3, 2020, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2019, which was approved by the Board on September 30, 2020.

March 31, 2021

Credit-risk-related Contingent Features

As of March 31, 2021, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $ 22.8 million.

As of March 31, 2021, the Company is not required to post any collateral related to these agreements and was not in breach of any agreement provisions.

If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $ 22.8 million at March 31, 2021.

Note 8 — Stockholders’ Equity

As of March 31, 2021 and December 31, 2020, the Company had 95,040,782 and 93,775,746 shares of common stock outstanding, respectively, including unvested restricted shares and shares issued pursuant to the Company’s distribution reinvestment plan (“DRIP”), net of share repurchases.

On April 1, 2021, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2020, which was approved by the Board on March 31, 2021.

The Company intends to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually.

Preferred Stock

The Company is authorized to issue up to 50,000,000 shares of preferred stock.

In connection with an underwritten offering in December 2019 (see details below), the Company classified and designated 1,610,000 shares of its authorized preferred stock as authorized shares of its Series A Preferred Stock.

The Company had 1,610,000 shares of Series A Preferred Stock issued and outstanding as of December 31, 2019 and September 30, 2020.

In December 2019, the Company issued and sold 1,610,000 shares of the Series A Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $ 25.00 per share.

On September 15, 2020, the Company entered into a preferred stock purchase agreement and registration rights agreement with B.

Riley Principal Capital, LLC (the “B.

Riley”), pursuant to which the Company has the right from time to time to sell up to an aggregate of $ 15 million of shares of its Series A Preferred Stock to B.

Riley until December 31, 2023, on the terms and subject to the conditions set forth in the purchase agreement.

This arrangement is also referred to as the “Preferred Stock Equity Line.” The Company controls the timing and amount of any sales to B.

Riley under the Preferred Stock Equity Line, and B.

Riley is obligated to make purchases of up to 3,500 shares of Series A Preferred Stock each time (as may be increased by mutual agreement by the parties) in accordance with the purchase agreement, upon certain terms and conditions being met.

The Company did no t sell any shares under the Preferred Stock Equity Line during the nine months ended September 30, 2020.

Dividends on Series A Preferred Stock accrue in an amount equal to $ 1.84375 per share each year ($ 0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375 % of the $ 25.00 liquidation preference per share of Series A Preferred Stock per annum.

Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by the Company’s board of directors and declared by us.

The first quarterly dividend for the Series A Preferred Stock was paid on January 15, 2020 and represented an accrual for less than a full quarter, covering the period from December 11, 2019 to December 31, 2019.

Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock become part of the liquidation preference thereof.

On January 9, 2020, the Company announced a tender offer (the “2020 Tender Offer”) to purchase up to 202,698 shares (retroactively adjusted for the Stock Dividend) of its common stock for cash at a purchase price equal to $ 8.39 per share (retroactively adjusted for the Stock Dividend) with the proration period and withdrawal rights expiring February 7, 2020.

On January 9, 2020, the Company announced a tender offer (the “2020 Tender Offer”) to purchase up to 200,000 shares of its common stock for cash at a purchase price equal to $ 8.50 per share with the proration period and withdrawal rights expiring February 7, 2020.

The Company made the 2020 Tender Offer in response to an unsolicited offer to stockholders commenced on December 31, 2019.

The 2020 Tender Offer expired in accordance with the terms on February 7, 2020.

In accordance with the 2020 Tender Offer, the Company accepted for purchase 202,698 shares (retroactively adjusted for the Stock Dividend) for a total cost of approximately $ 1.7 million, which was funded with available cash.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

In accordance with the 2020 Tender Offer, the Company accepted for purchase 200,000 shares for a total cost of approximately $ 1.7 million, which was funded with available cash.

Share Repurchase Program

Under the Company’s share repurchase program (the “SRP”), as amended from time to time, qualifying stockholders are able to sell their shares to the Company in limited circumstances.

Under the Company’s share repurchase program (as amended from time to time, the “SRP”), qualifying stockholders are able to sell their shares to the Company in limited circumstances.

The SRP permits investors to sell their shares back to the Company after they have held them for at least one year, subject to significant conditions and limitations.

2 unchanged sentences

Additionally, pursuant to the SRP, the repurchase price per share equals 100% of the Estimated Per-Share NAV in effect on the last day of the fiscal semester, or the six-month period ending June 30 or December 31.

The Company suspended the SRP during the pendency of the Tender Offer.

On June 29, 2018, the Company announced the Board unanimously determined to reactivate the SRP, effective June 30, 2018.

In connection with reactivating the SRP, the Board approved all repurchase requests received during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018 (see table below for additional details).

On January 29, 2019, the Company announced that the Board approved an amendment to the SRP changing the date on which any repurchases are to be made in respect of requests made during the period commencing March 13, 2018 up to and including December 31, 2018 to no later than March 31, 2019, rather than on or before the 31st day following December 31, 2018.

This SRP amendment became effective on January 30, 2019.

Additionally, on March 27, 2019, the Company announced that the Board approved an amendment to the SRP further extending the date on which any repurchases are to be made in respect of requests made during the period commencing March 13, 2018 up to and including December 31, 2018 to no later than April 30, 2019.

This SRP amendment became effective on March 28, 2019 (see table below for details on cumulative shares repurchased pursuant to the SRP, including shares repurchased during 2019).

On July 23, 2019, the Company announced that the Board approved a third amendment to the SRP, effective July 24, 2019, extending the date on which repurchases are able to be made in respect of requests made during the period commencing January 1, 2019 up to and including June 30, 2019 to no later than August 31, 2019, rather than on or before July 31, 2019.

On August 20, 2019, the Company announced that the Board approved a fourth amendment to the SRP, effective August 22, 2019 extending the date on which repurchases are able to be made in respect of requests made during the period commencing January 1, 2019 up to and including June 30, 2019 to no later than October 31, 2019, rather than on or before August 31, 2019.

The Company completed the repurchases on October 30, 2019.

On January 9, 2020, the Company announced that the Board approved a fifth amendment to the SRP, effective January 10, 2020 extending the date on which repurchases are able to be made in respect of requests made during the period commencing July 1, 2019 up to and including December 31, 2019 to on or before March 16, 2020, rather than on or before January 31, 2020.

On January 9, 2020, the Company also announced that the Board had suspended the SRP, and that it would not accept any repurchase requests or make any repurchases under the SRP during the pendency of the 2020 Tender Offer or for 10 business days thereafter.

On February 26, 2020, the Company repurchased 505,101 shares of common stock for approximately $ 8.8 million, at an average price per share of $ 17.50 pursuant to the SRP.

1 unchanged sentence

Pursuant to the SRP, repurchases were to be ma de in respect of requests made during the periods when the SRP was active during the active periods under the SRP during the six months ending June 30, 2020 - the period from January 1, 2020 to January 8, 2020 and the period from February 26, 2020 up to and including June 30, 2020 - no later than July 31, 2020.

On August 13, 2020, the Company announced that, in order to strategically maintain the Company’s liquidity in light of the continued impact of COVID-19 pandemic and in light of the amendment to the Credit Facility described above, on August 6, 2020, the Board determined that, effective on August 12, 2020, repurchases under the SRP would be suspended.

On August 13, 2020, in order to strategically maintain the Company’s liquidity in light of the continued impact of COVID-19 pandemic and to comply with an amendment to the Credit Facility described in Note 5 , which restricts the Company from repurchasing shares until no earlier than the quarter ending June 30, 2021, on August 6, 2020, the Board determined that, effective on August 12, 2020, repurchases under the SRP would be suspended.

The Board has also rejected all repurchase requests made during the period from January 1, 2020 until the effectiveness of the suspension of the SRP.

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

On October 1, 2020, the Company announced the declaration of the Stock Dividend of 0.01349 shares of the Company’s common stock on each share of the Company’s outstanding common stock.

The Stock Dividend was paid on October 15, 2020 to holders of record of the Company’s common stock at the close of business on October 8, 2020.

Since the Stock Dividend is treated similar to a stock split for accounting purposes, the result was an increase of 0.01349 shares for every one share of common stock.

All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Stock Dividend.

March 31, 2021

When a stockholder requests redemption and redemption is approved by the Board, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation.

Shares repurchased under the SRP have the status of authorized but unissued shares.

The table below reflects the number of shares repurchased and the average price per share (retroactively adjusted for the Stock Dividend), under the SRP and does not include any repurchases under tender offers (see above), cumulatively through September 30, 2020.

Number of Shares Repurchased (3)

Average Price per Share

The table below reflects the number of shares repurchased and the average price per share, under the SRP and does not include any repurchases under tender offers (see above), cumulatively through March 31, 2021.

Number of Shares Repurchased Average Price per Share

Cumulative repurchases as of December 31, 2020 4,896,620 $ 20.60

4,450,761 $ 20.67

Nine months ended September 30, 2020 (2)

511,915 17.27

Cumulative repurchases as of September 30, 2020 4,962,676 20.32

(1) Repurchases made in 2019 include:

(i) 665,288 common shares repurchased on April 30, 2019 with respect to 100% of repurchase requests made in good order following the death or qualifying disability of stockholders during the period commencing March 13, 2018 up to and including December 31, 2018 for $ 13.3 million at an average price per share of $ 19.98 and (ii) 452,858 shares of common stock repurchased for $ 7.8 million at an average price per share of $ 17.27 on October 30, 2019 with respect to 100% of repurchase requests made in good order following the death or qualifying disability of common stockholders during the period commencing January 1, 2019 up to and including June 30, 2019.

(2) Includes 511,915 shares of common stock repurchased on February 26, 2020 with respect to requests received during the period commencing July 1, 2019 up to and including December 31, 2019 for $ 8.8 million at an average price per share of $ 17.27 .

(3) Retroactively adjusted for the effects of the Stock Dividend (see Note 1 )

Three month ended March 31, 2021 — —

Cumulative repurchases as of March 31, 2021 4,896,620 20.60

Distribution Reinvestment Plan

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Shares issued under the DRIP are recorded as equity in the accompanying consolidated balance sheet in the period distributions are declared.

During the nine months ended September 30, 2020, the Company issued 1.9 million shares of common stock pursuant to the DRIP, generating aggregate proceeds of $ 0.3 million.

During the three months ended March 31, 2021, the Company did no t issue any shares of common stock pursuant to the DRIP and during the three months ended March 31, 2020, the Company issued 0.4 million shares of common stock pursuant to the DRIP, generating aggregate proceeds of $ 6.3 million.

1 unchanged sentence

In May 2020, the Company announced that the Board had approved a stockholder rights plan.

The dividend of one common share purchase right for each share of the Company’s common stock necessary for the rights plan to become effective has not yet been authorized by the Board.

In December 2020, the Company issued a dividend of one common share purchase right for each share of its common stock outstanding as authorized by its board of directors in its discretion.

Preferred Stock

The Company is authorized to issue up to 50,000,000 shares of preferred stock.

In September 2020, the Board authorized the classification of 600,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with the Preferred Stock Equity Line (as defined below) and in May 2021, the the Board authorized the classification of 2,530,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with an offering in May 2021 (see below and Note 17 — Subsequent Events) .

The Company had 1,610,000 shares of Series A Preferred Stock issued and outstanding as of March 31, 2021 and December 31, 2020.

On September 15, 2020, the Company entered into a preferred stock purchase agreement and registration rights agreement with B.

Riley Principal Capital, LLC “B.

Riley”), pursuant to which the Company has the right from time to time to sell up to an aggregate of $ 15 million of shares of its Series A Preferred Stock to B.

Riley until December 31, 2023, on the terms and subject to the conditions set forth in the purchase agreement.

This arrangement is also referred to as the “Preferred Stock Equity Line.” The Company controls the timing and amount of any sales to B.

Riley under the Preferred Stock Equity Line, and B.

The Company did no t sell any shares under the Preferred Stock Equity Line during the three months ended March 31, 2021 or the year ended December 31, 2020.

On May 11, 2021, the Company completed an underwritten public offering of its Series A Preferred Stock (see Note 17 — Subsequent Events ).

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Distributions and Dividends

In April 2013, the Board authorized, and the Company began paying distributions on a monthly basis at a rate equivalent to $ 1.70 per annum, per share of common stock, which began in May 2013.

In March 2017, the Board authorized a decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of April 1, 2017, to a rate equivalent to $ 1.45 per annum per share of common stock.

On February 20, 2018, the Board authorized a further decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of March 1, 2018, to a rate equivalent to $ 0.85 per annum per share of common stock

From March 1, 2018 until June 30, 2020, the Company paid monthly distributions to stockholders at a rate equivalent to $ 0.85 per annum per share of common stock.

Distributions were payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.

On August 13, 2020, the Board changed the Company’s common stock distribution policy in order to preserve the Company’s liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with an amendment to the Credit Facility described in Note 5 which restricts the Company from paying distributions on common stock until no earlier than the quarter ending June 30, 2021.

Under the new policy, distributions authorized by the Board on the Company’s shares of common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of the Company’s common stock valued at the Company’s estimated per share net asset value of common stock in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter.

The Company declared and paid Stock Dividends of 0.01349 shares of the Company’s common stock on each share of the Company’s outstanding common stock in each of October 2020 and January 2021 and 0.014655 shares of the Company’s common stock on each share of the Company’s outstanding common stock in April 2021.

These amounts were based on the Company’s prior cash distribution rate of $ 0.85 per share per annum and the then-current Estimated Per-Share NAV.

Note 9 — Related Party Transactions and Arrangements

As of September 30, 2020 and December 31, 2019, the Special Limited Partner owned 9,008 shares of the Company’s outstanding common stock.

As of March 31, 2021 and December 31, 2020, the Special Limited Partner owned 9,130 and 9,008 shares, respectively, of the Company’s outstanding common stock.

The Advisor and its affiliates may incur and pay costs and fees on behalf of the Company.

As of September 30, 2020 and December 31, 2019, the Advisor held 90 partnership units in the OP designated as “OP Units” (“OP Units”).

The limited partnership agreement of the OP allows for the special allocation, solely for tax purposes, of excess depreciation deductions of up to $ 10.0 million to the Advisor, a limited partner of the OP.

As of March 31, 2021 and December 31, 2020, the Advisor held 90 partnership units in the OP designated as “OP Units” (“OP Units”).

The limited partnership agreement of the OP (as amended from time to time, the “LPA”) allows for the special allocation, solely for tax purposes, of excess depreciation deductions of up to $ 10.0 million to the Advisor, a limited partner of the OP.

In connection with this special allocation, the Advisor has agreed to restore a deficit balance in its capital account in the event of a liquidation of the OP and has agreed to provide a guaranty or indemnity of indebtedness of the OP.

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The Second A&R Advisory Agreement, which superseded, amended and restated the previously effective advisory agreement (the “Original A&R Advisory Agreement”), took effect on February 17, 2017.

The initial term of the Second A&R Advisory Agreement expires February 17, 2027, and is automatically renewable for another ten-year term upon each ten-year anniversary unless the Second A&R Advisory Agreement is terminated (i) with notice of an election not to renew at least 365 days prior to the applicable tenth anniversary, (ii) in accordance with a change of control or a transition to self-management, (iii) by 67 % of the independent directors of the Board for cause, without penalty, with 45 days’ notice or (iv) with 60 days prior written notice by the Advisor for (a) a failure to obtain a satisfactory agreement for any successor to the Company to assume and agree to perform obligations under the Second A&R Advisory Agreement or (b) any material breach of the Second A&R Advisory Agreement of any nature whatsoever by the Company.

The initial term of the Second A&R Advisory Agreement expires February 17, 2027, and is automatically renewable for another ten-year term upon each ten-year anniversary unless the Second A&R Advisory Agreement is terminated (i) with notice of an election not to renew at least 365 days prior to the applicable tenth anniversary, (ii) in accordance with a change of control (as defined in the Second A&R Advisory Agreement) or a transition to self-management, (iii) by 67 % of the independent directors of the Board for cause, without penalty, with 45 days’ notice or (iv) with 60 days prior written notice by the Advisor for (a) a failure to obtain a satisfactory agreement for any successor to the Company to assume and agree to perform obligations under the Second A&R Advisory Agreement or (b) any material breach of the Second A&R Advisory Agreement of any nature whatsoever by the Company.

On July 25, 2019, the Company entered into Amendment No.

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Additional information on the Advisory Agreement Amendment is included later in this footnote under “—Professional Fees and Other Reimbursements.”

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March 31, 2021

Acquisition Expense Reimbursements

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Under the Second A&R Advisory Agreement, total acquisition expenses may not exceed 4.5 % of the contract purchase price of the Company’s portfolio or 4.5 % of the amount advanced for all loans or other investments.

This threshold has not been exceeded through September 30, 2020.

This threshold has not been exceeded through March 31, 2021.

Asset Management Fees and Variable Management/Incentive Fees

Under the limited partnership agreement of the OP and the advisory agreement that was superseded by the Original A&R Advisory Agreement and until March 31, 2015, for its asset management services, the Company issued the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the Board) to the Advisor partnership units of the OP designated as “Class B Units” (“Class B Units”).

Under the LPA and the advisory agreement that was superseded by the Original A&R Advisory Agreement and until March 31, 2015, for its asset management services, the Company issued the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the Board) to the Advisor partnership units of the OP designated as “Class B Units” (“Class B Units”).

The Class B Units were intended to be profit interests and vest, and no longer are subject to forfeiture, at such time as:

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or (b) the advisory agreement is terminated by an affirmative vote of a majority of the Company’s independent directors without cause before the Economic Hurdle has been met.

Subject to approval by the Board, the Class B Units were issued to the Advisor quarterly in arrears pursuant to the terms of the limited partnership agreement of the OP.

Subject to approval by the Board, the Class B Units were issued to the Advisor quarterly in arrears pursuant to the terms of the LPA.

The number of Class B Units issued in any quarter was equal to:

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The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the Performance Condition to be probable.

As of September 30, 2020, the Company

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September 30, 2020

cannot determine the probability of achieving the Performance Condition.

The Advisor receives cash distributions on each issued Class B Unit equivalent to the cash distribution paid if any on the Company’s common stock in an amount retroactively adjusted to reflect the Stock Dividend, other stock dividends and other similar events.

As of March 31, 2021, the Company cannot determine the probability of achieving the Performance Condition.

The Advisor receives cash distributions on each issued Class B Unit equivalent to the cash distribution paid, if any, on the Company’s common stock in an amount retroactively adjusted to reflect the Stock Dividends, other stock dividends and other similar events.

These distributions on Class B Units are included in general and administrative expenses in the consolidated statement of operations and comprehensive loss until the Performance Condition is considered probable to occur.

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In addition, the Second A&R Advisory Agreement requires the Company to pay the Advisor a variable management/incentive fee quarterly in arrears equal to (1) the product of fully diluted shares of common stock outstanding multiplied by (2) (x) 15.0 % of the applicable prior quarter’s Core Earnings (as defined below) per share in excess of $ 0.375 per share plus (y) 10.0 % of the applicable prior quarter’s Core Earnings per share in excess of $ 0.47 per share.

Core Earnings is defined as, for the applicable period, net income or loss, computed in accordance with GAAP, excluding non-cash equity compensation expense, the variable management/incentive fee, acquisition and transaction related fees and expenses, financing related fees and expenses, depreciation and amortization, realized gains and losses on the sale of assets, any unrealized gains or losses or other non-cash items recorded in net income or loss for the applicable period, regardless of whether such items are included in other comprehensive income or loss, or in net income, one-time events pursuant to changes in GAAP and certain non-cash charges, impairment losses on real estate related investments and other than temporary impairments of securities, amortization of deferred financing costs, amortization of tenant inducements, amortization of straight-line rent and any associated bad debt reserves, amortization of market lease intangibles, provision for loss loans, and other non-recurring revenue and expenses (in each case after discussions between the Advisor and the independent directors and approved by a majority of the independent directors).

Core Earnings is defined as, for

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March 31, 2021

the applicable period, net income or loss, computed in accordance with GAAP, excluding non-cash equity compensation expense, the variable management/incentive fee, acquisition and transaction related fees and expenses, financing related fees and expenses, depreciation and amortization, realized gains and losses on the sale of assets, any unrealized gains or losses or other non-cash items recorded in net income or loss for the applicable period, regardless of whether such items are included in other comprehensive income or loss, or in net income, one-time events pursuant to changes in GAAP and certain non-cash charges, impairment losses on real estate related investments and other than temporary impairments of securities, amortization of deferred financing costs, amortization of tenant inducements, amortization of straight-line rent and any associated bad debt reserves, amortization of market lease intangibles, provision for loss loans, and other non-recurring revenue and expenses (in each case after discussions between the Advisor and the independent directors and approved by a majority of the independent directors).

The variable management/incentive fee is payable to the Advisor or its assignees in cash or shares, or a combination of both, the form of payment to be determined in the sole discretion of the Advisor and the value of any share to be determined by the Advisor acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.

No variable management incentive fee was incurred for the nine months ended September 30, 2020 and 2019.

No variable management incentive fee was incurred for the three months ended March 31, 2021 or 2020.

Property Management Fees

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In no event will the Company pay the Property Manager or any affiliate of the Property Manager both a property management fee and an oversight fee with respect to any particular property.

If the Property Manager provides services other than those specified in the Property Management Agreement, the Company will pay the Property Manager a monthly fee equal

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September 30, 2020

to no more than that which the Company would pay to a third party that is not an affiliate of the Company or the Property Manager to provide the services.

If the Property Manager provides services other than those specified in the Property Management Agreement, the Company will pay the Property Manager a monthly fee equal to no more than that which the Company would pay to a third party that is not an affiliate of the Company or the Property Manager to provide the services.

On February 17, 2017, the Company entered into the Amended and Restated Property Management and Leasing Agreement (the “A&R Property Management Agreement”) with the OP and the Property Manager.

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On April 10, 2018, in connection with the Multi-Property CMBS Loan, the Company and the OP entered into a further amendment to the A&R Property Management Agreement confirming, consistent with the intent of the parties, that the borrowers under the Multi-Property CMBS Loan and other subsidiaries of the OP that own or lease the Company’s properties are the direct obligors under the arrangements pursuant to which the Company’s properties are managed by either the Property Manager or a third party overseen by the Property Manager pursuant to the A&R Property Management Agreement.

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March 31, 2021

Professional Fees and Other Reimbursements

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This reimbursement includes reasonable overhead expenses for employees of the Advisor or its affiliates directly involved in the performance of services on behalf of the Company, including the reimbursement of rent expense at certain properties that are both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor.

During the three and nine months ended September 30, 2020 the Company incurred $ 0.7 million and $ 5.4 million, respectively.

During the three and nine months ended September 30, 2019 the Company incurred $ 2.2 million and $ 5.9 million , respectively, of reimbursement expenses from the Advisor for providing administrative services.

These r eimbursement expenses are included in general and administrative expense on the consolidated statements of operations and comprehensive income (loss).

During the three months ended March 31, 2021 the Company incurred $ 2.2 million of reimbursement expenses from the Advisor for providing administrative services.

During the three months ended March 31, 2020, the Company incurred $ 2.2 million of reimbursement expenses from the Advisor for providing administrative services.

These reimbursement expenses are included in general and administrative expense on the consolidated statements of operations and comprehensive income (loss).

On July 25, 2019, the Company entered into the Advisory Agreement Amendment.

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Further, under the Advisory Agreement Amendment, the aggregate amount of expenses relating to salaries, wages and benefits, including for executive officers and all other employees of the Advisor or its affiliates (the “Capped Reimbursement Amount”), is limited to the greater of:

(a) $ 6.8 million (the “ Fixed Component”) and

(b) the variable component (the “Variable Component”), which is defined in the Advisory Agreement Amendment as, for any fiscal year:

(i) the sum of the total real estate investments, at cost as recorded on the balance sheet dated as of the last day of each fiscal quarter (the “Real Estate Cost”) in the year divided by four , which amount is then

(ii) multiplied by 0.29 %.

In the event of a reduction in the Real Estate Cost by 25.0 % or more pursuant to instructions from the Company’s board of directors, in one or a series of related dispositions in which the proceeds of the disposition(s) are not reinvested in Investments (as defined in the Advisory Agreement Amendment), then within 12 months following the disposition(s), the Advisor and the Company will enter into good faith negotiations to reset the Fixed Component;

provided that if the proceeds of the disposition(s) are paid to shareholders of the Company as a special distribution or used to repay loans with no intent of subsequently re-financing and re-investing the proceeds thereof in Investments, the Advisor and the Company will enter into good faith negotiations to reset the Fixed Component within 90 days thereof, in each case taking into account reasonable projections of reimbursable costs in light of the reduced assets of the Company.

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September 30, 2020

Both the Fixed Component and the Variable Component will also be increased by an annual cost of living adjustment equal to the portion of the Capped Reimbursement Amount (as determined above) multiplied by the greater of (x) 3.0 % and (y) the CPI for the prior year ended December 31st.

For these purposes, CPI will be calculated by reference to the United States Department of Labor’s Bureau of Labor Statistics Consumer Price Index, All Urban Consumer Price Index, New York-Newark-Jersey City with reference date (1982-1984) that equals 100.0 or the successor of this index.

As part of this reimbursement, the Company paid approximately $ 2.5 million in 2019 to the Advisor or its affiliates as reimbursement for bonuses of employees of the Advisor or its affiliates who provided administrative services during such calendar year, prorated for the time spent working on matters relating to the Company.

(a) a fixed component (the “Fixed Component”) and (b) a variable component (the “Variable Component”).

Both the Fixed Component and the Variable Component increase by an annual cost of living adjustment equal to the greater of (x) 3.0 % and (y) the CPI, as defined in the amendment for the prior year ended December 31st.

Initially, for the year ended December 31, 2019;

(a) the Fixed Component was equal to $ 6.8 million and (b) the Variable Component was equal to (i) the sum of the total real estate investments, at cost as recorded on the balance sheet dated as of the last day of each fiscal quarter (the “Real Estate Cost”) in the year divided by four , which amount is then (ii) multiplied by 0.29 %.

If the Company sells real estate investments aggregating an amount equal to or more than 25.0 % of Real Estate Cost, in one or a series of related dispositions in which the proceeds of the disposition(s) are not reinvested in Investments (as defined in the Advisory Agreement Amendment), then within 12 months following the disposition(s), the advisory agreement requires the Advisor and the Company to negotiate in good faith to reset the Fixed Component;

provided that if the proceeds of the disposition(s) are paid to shareholders of the Company as a special distribution or used to repay loans with no intent of subsequently re-financing and re-investing the proceeds thereof in Investments, the advisory agreement requires these negotiations within 90 days thereof, in each case taking into account reasonable projections of reimbursable costs in light of the Company’s reduced assets.

As part of this reimbursement, for the year ended December 31, 2020, the Company paid approximately $ 2.5 million in 2019 to the Advisor or its affiliates as reimbursement for bonuses of employees of the Advisor or its affiliates who provided administrative services during such calendar year, prorated for the time spent working on matters relating to the Company.

The Company does not reimburse the Advisor or its affiliates for any bonus amounts relating to time dedicated to the Company by Edward M.

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As a result, during the three months ended September 30, 2020, the Company recorded a receivable from the Advisor of $ 1.2 million in prepaid expenses and other assets on the consolidated balance sheet and a corresponding reduction in general and administrative expenses.

Pursuant to authorization by the independent members of the Company’s board of directors, the $ 1.2 million receivable is payable to the Company over a 10 -month period from November 2020 through August 2021.

Reimbursements for the cash portion of 2020 bonuses to employees of the Advisor or its affiliates continue to be expensed and reimbursed on a monthly basis during 2020 in accordance with estimates provided by the Advisor.

Pursuant to authorization by the independent members of the Company’s board of directors, the $ 1.2 million receivable is being paid back to the Company over a 10-month period from January 2021 through October 2021.

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March 31, 2021

Reimbursements for the cash portion of 2020 bonuses to employees of the Advisor or its affiliates were expensed and reimbursed on a monthly basis during 2020, and 2021 bonuses continue to be expensed and reimbursed on a monthly basis during 2021 in accordance with estimates provided by the Advisor.

Generally, prior to the 2019 Bonus Awards, employee bonuses have been formally awarded to employees of the Advisor or its affiliates in March as an all - cash award and paid out by the Advisor in the year subsequent to the year in which services were rendered to the Company.

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The following table details amounts incurred, forgiven and payable in connection with the Company’s operations-related services described above as of and for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30, Payable (Receivable) as of

2020 2019 2020 2019

(In thousands) Incurred Incurred )

Incurred September 30,

Three Months Ended March 31, Payable (Receivable) as of

(In thousands) Incurred Incurred March 31,

2021 December 31, 2020

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4,997 4,997 — —

Property management fees 987 1,067 2,978 2,910 ( 37 ) ( 44 )

Property management and fees (including leasing commissions) 954 1,052 42 288

Professional fees and other reimbursements (1)

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Distributions on Class B Units (2)

26 76 178 228 — —

Total related party operation fees and reimbursements

$ 8,559 $ 8,688 $ ( 686 ) $ ( 979 )

(1) Includes $ 1.4 million and $ 5.1 million subject to the Capped Reimbursement Amount for the three and nine months ended September 30, 2020, respectively.

Includes $ 1.6 million and $ 5.1 million subject to the Capped Reimbursement Amount for the three and nine months ended September 30, 2019, respectively.

(1) Included in general and administrative expenses in the consolidated statements of operations.

Includes $ 1.7 million and $ 1.6 million subject to the Capped Reimbursement Amount for the three months ended March 31, 2021 and March 31, 2020, respectively.

(2) Prior to April 1, 2015, the Company caused the OP to issue to the Advisor restricted performance based Class B Units for asset management services.

As of September 30, 2020, the Board had approved the issuance of, and the OP had issued 359,250 Class B Units to the Advisor in connection with this arrangement.

As of March 31, 2021, the Board had approved the issuance of, and the OP had issued 359,250 Class B Units to the Advisor in connection with this arrangement.

Effective April 1, 2015, the Company began paying an asset management fee to the Advisor or its assignees in cash, in shares, or a combination of both and no longer issues any Class B Units.

(3) Balance includes a receivable of $ 1.2 million from the Advisor related to the overpayment of 2019 Bonus Awards as of September 30, 2020 which, pursuant to authorization by the independent members of the Company’s board of directors, is payable over a ten month period from November 2020 through August 2021.

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September 30, 2020

Balance as of September 30, 2020 and December 31, 2019 also includes a receivable of $ 0.1 million and $ 0.5 million, respectively, from the Advisor previously recorded in the fourth quarter of 2018, which pursuant to authorization by the independent members of the Company’s board of directors, is payable over time during 2020.

For the three and nine months ended September 30, 2020, the Company received $ 0.1 million and $ 0.4 million, respectively, from the Advisor for this receivable.

((3) Balance includes a receivable of $ 0.9 million and $ 1.2 million as of March 31, 2021 and December 31, 2020, respectively, from the Advisor related to the overpayment of 2019 Bonus Awards which, pursuant to authorization by the independent members of the Company’s board of directors, is being paid back to the Company over a ten month period from January 2021 through October 2021.

Fees and Participations Incurred in Connection with a Listing or the Liquidation of the Company’s Real Estate Assets

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If the common stock of the Company is listed on a national exchange, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive a subordinated incentive listing distribution from the OP equal to 15.0 % of the amount by which the market value of all issued and outstanding shares of common stock plus distributions exceeds the aggregate capital contributed plus an amount equal to a 6.0 % cumulative, pre-tax non-compounded annual return to investors in the Company’s initial public offering of common stock.

No such distribution was incurred during the nine months ended September 30, 2020 or 2019.

No such distribution was incurred during the three months ended March 31, 2021 or 2020.

If the Special Limited Partner or any of its affiliates receives the subordinated incentive listing distribution the Special Limited Partner and its affiliates will no longer be entitled to receive the subordinated participation in net sales proceeds or the subordinated incentive termination distribution described below.

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Upon a liquidation or sale of all or substantially all of the Company’s assets, including through a merger or sale of stock, the Special Limited Partner will be entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets from the OP equal to 15.0 % of remaining net sale proceeds after return of capital contributions to investors in the Company’s initial public offering of common stock plus payment to investors of a 6.0 % cumulative, pre-tax non-compounded annual return on the capital contributed by investors.

No such participation in net sales proceeds became due and payable during the nine months ended September 30, 2020 or 2019.

Any amount of net sales proceeds paid to the Special Limited Partner or any of its affiliates prior to the Company’s listing or termination or non-renewal of the advisory agreement with the Advisor, as applicable, will reduce dollar for dollar the amount of the subordinated incentive listing distribution described above and subordinated incentive termination distribution described below.

No such participation in net sales proceeds became due and payable during the three months ended March 31, 2021 or 2020.

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March 31, 2021

as applicable, will reduce dollar for dollar the amount of the subordinated incentive listing distribution described above and subordinated incentive termination distribution described below.

Termination Fees

Under the operating partnership agreement of the OP, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0 % of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed by investors in the Company’s initial public offering of common stock plus an amount equal to an annual 6.0 % cumulative, pre-tax, non-compounded annual return to investors.

Under the operating partnership agreement of the OP, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0 % of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed plus an amount equal to an annual 6.0 % cumulative, pre-tax, non-compounded annual return to investors in the Company’s initial public offering of common stock.

The Special Limited Partner is able to elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.

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Upon a termination by either party in connection with a change of control (as defined in the Second A&R Advisory Agreement), the Company would pay the Advisor a change of control fee equal to the product of four (4) and the “Subject Fees.”

Upon a termination by the Company in connection with transition to self-management, the Company would pay the Advisor a transition fee equal to (i) $ 15.0 million plus (ii) the product of four multiplied by the Subject Fees, provided that the transition fee shall not exceed an amount equal (i) 4.5 multiplied by (ii) the Subject Fees.

The Subject Fees are equal to (i) the product of four multiplied by the actual base management fee plus (ii) the product of four multiplied by the actual variable management/incentive fee, in each of clauses (i) and (ii), payable for the fiscal quarter immediately prior to the fiscal quarter in which the change of control occurs or the transition to self-management is consummated, as applicable, plus (iii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity raised (but excluding proceeds from the DRIP) in respect to the fiscal quarter

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September 30, 2020

immediately prior to the fiscal quarter in which the change of control occurs or the transition to self-management is consummated, as applicable.

Upon a termination by the Company in connection with a transition to self-management, the Company would pay the Advisor a transition fee equal to (i) $ 15.0 million plus (ii) the product of four multiplied by the Subject Fees, provided that the transition fee shall not exceed an amount equal to 4.5 multiplied by the Subject Fees.

The Subject Fees are equal to (i) the product of four multiplied by the actual base management fee plus (ii) the product of four multiplied by the actual variable management/incentive fee, in each of clauses (i) and (ii), payable for the fiscal quarter immediately prior to the fiscal quarter in which the change of control occurs or the transition to self-management, as applicable, is consummated, plus (iii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity raised (but excluding proceeds from the DRIP) in respect to the fiscal quarter immediately prior to the fiscal quarter in which the change of control occurs or the transition to self-management, as applicable, is consummated.

The right to termination of the Second A&R Advisory Agreement in connection with a change of control or transition to self-management is subject to a lockout period that requires the notice of any termination in connection with a change of control or transition to self-management to be delivered after February 14, 2019.

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September 30, 2020

Note 10 — Economic Dependency

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In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

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March 31, 2021

Note 11 — Equity-Based Compensation

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The Company has adopted an employee and director incentive restricted share plan (as amended from time to time, the “RSP”), which provides the Company with the ability to grant awards of restricted shares of common stock (“restricted shares”) to the Company’s directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.

The total number of shares of common stock that may be subject to awards granted under the RSP may not exceed 5.0 % of the Company’s outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 3.4 million shares (as such number may further be adjusted for stock splits, stock dividends, combinations and similar events).

Prior to August 2017, the RSP provided for an automatic grant of 1,351 restricted shares (retroactively adjusted for the Stock Dividend) to each of the independent directors, without any further approval by the Board or the stockholders, on the date of his or her initial election to the Board and thereafter on the date of each annual stockholder meeting.

The restricted shares granted as annual automatic awards prior to August 2017 were subject to vesting over a five-year period following the date of grant.

In August 2017, the Board amended the RSP to provide that the number of restricted shares comprising the automatic annual award to each of the independent directors would be equal to the quotient of $ 30,000 divided by the then-current Estimated Per-Share NAV and subsequently amended and restated the RSP to eliminate the automatic annual awards and to make other revisions related to the implementation of a new independent director equity compensation program.

As part of this new independent director equity compensation program, the Board approved a one-time grant of restricted share awards to the independent directors as follows:

(i) 304,047 restricted shares to the chairman (retroactively adjusted for the Stock Dividend) with one-seventh of the shares vesting annually in equal increments over a seven-year period with initial vesting on August 4, 2018;

and (ii) 25,337 restricted shares (retroactively adjusted for the Stock Dividend) to each of the three other independent directors, with one-fifth of the shares vesting annually in equal increments over a five-year period with initial vesting on August 4, 2018.

In connection with these one-time grants, the restricted shares granted as automatic annual awards in connection with the Company’s 2017 annual meeting of stockholders on July 21, 2017 were forfeited.

In connection with his election to the Board in July 2019, B.J.

Penn received an award of 15,202 restricted shares (retroactively adjusted for the Stock Dividend) vesting annually in equal increments over a three-year period with initial vesting on August 4, 2020.

Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.

The total number of shares of common stock that may be subject to awards granted under the RSP may not exceed 5.0 % of the Company’s outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 3.5 million shares (as such number may be further adjusted for stock splits, stock dividends, combinations and similar events).

Restricted shares vest on a straight-line basis over periods of three to five years and may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.

Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed.

Any distributions payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

The following table reflects the amount of restricted shares outstanding as of September 30, 2020 and activity for the period presented, as retroactively adjusted for the Stock Dividend:

Number of Shares of Common Stock (1)

Weighted Average Issue Price

The following table reflects the amount of restricted shares outstanding as of March 31, 2021 and activity for the period presented:

Number of Shares of Common Stock Weighted Average Issue Price

Unvested, December 31, 2020 215,384 $ 21.11

Vested ( 64,794 ) 20.88

Stock dividend 2,906 15.75

Forfeitures — —

Unvested, September 30, 2020 216,187 20.89

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

(1) Retroactively adjusted for the effects of the Stock Dividend (see Note 1 )

As of September 30, 2020, the Company had $ 4.4 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

Unvested, March 31, 2021 218,290 21.04

As of March 31, 2021, the Company had $ 3.6 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

This cost will be recognized over a weighted-average period of 2.9 years.

Compensation expense related to restricted shares was approximately $ 0.4 million and $ 1.0 million for the three and nine months ended September 30, 2020, and September 20, 2019, respectively.

Compensation expense related to restricted shares was approximately $ 0.3 million and $ 0.3 million for the three months ended March 31, 2021 and 2020, respectively.

Other Share-Based Compensation

1 unchanged sentence

There are no restrictions on shares issued in lieu of cash compensation since these payments in lieu of cash relate to fees earned for services performed.

No such shares were issued during the nine months ended September 30, 2020 or 2019.

No such shares were issued during the three months ended March 31, 2021 or 2020.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

Note 12 — Accumulated Other Comprehensive Loss

5 unchanged sentences

Rebalancing of ownership percentage 2

Balance, September 30, 2020 $ ( 43,818 )

Balance, March 31, 2020 $ ( 23,827 )

Accumulated other comprehensive (loss) income predominately relates to the unrealized gains (losses) on designated derivatives, however, as previously discussed in Note 7 — Derivatives and Hedging Activities , a previously designated hedge was terminated and the termination costs are being amortized over the term of the hedged item.

The unamortized portion of the terminated swap still remaining in accumulated other comprehensive (loss) income is $ 1.1 million as of March 31, 2021.

Note 13 — Non-controlling Interests

1 unchanged sentence

The Company is the sole general partner and holds substantially all of the OP Units.

As of September 30, 2020 and December 31, 2019, the Advisor held 90 OP Units, which represents a nominal percentage of the aggregate ownership in the OP.

As of March 31, 2021 and December 31, 2020, the Advisor held 90 OP Units, which represents a nominal percentage of the aggregate ownership in the OP.

In November 2014, the Company partially funded the purchase of a MOB from an unaffiliated third party by causing the OP to issue 405,908 OP Units, with a value of $ 10.1 million, or $ 25.00 per unit, to the unaffiliated third party.

A holder of OP Units has the right to receive cash distributions equivalent to the cash distributions, if any, on the Company’s common stock in an amount retroactively adjusted to reflect the Stock Dividend, other stock dividends and other similar events.

After holding the OP Units for a period of one year , a holder of OP Units has the right to redeem OP Units for, at the option of the OP, the corresponding number of shares of the Company’s common stock, as retroactively adjusted for the Stock Dividend, other stock dividends and other similar events, or the cash equivalent.

After holding the OP Units for a period of one year , a holder of OP Units has the right to redeem OP Units for, at the option of the OP, the corresponding number of shares of the Company’s common stock, as retroactively adjusted for the Stock Dividends, other stock dividends and other similar events, or the cash equivalent.

The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

Dur ing the nine months ended September 30, 2020 and 2019, OP Unit non-controlling interest holders were paid distribu tions of $ 0.2 million and $ 0.3 million, respectively.

Dur ing the three months ended March 31, 2020, OP Unit non-controlling interest holders were paid distribu tions of $ 0.1 million.

No distributions were paid to non-controlling interest holders during the three months ended March 31, 2021.

Non-Controlling Interests in Property Owning Subsidiaries

4 unchanged sentences

A non-controlling interest is recorded for the investor’s ownership interest in the properties.

On November 4, 2020, the Company purchased all of the outstanding the membership interests in the joint venture that owns the UnityPoint Clinics in Muscatine, Iowa and Moline, Illinois for approximately $ 0.6 million, funded with cash on hand.

Following this transaction, the properties were wholly owned by the Company and added to the borrowing base under the Credit Facility.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

The following table summarizes the activity related to investment arrangements with the unaffiliated third parties:

Distributions Distributions

Third Party Net Investment Amount Non-Controlling Ownership Percentage Net Real Estate Assets Subject to Investment Arrangement Three Months Ended September 30, Nine Months Ended September 30,

Distributions

Third Party Net Investment Amount Non-Controlling Ownership Percentage Net Real Estate Assets Subject to Investment Arrangement Three Months Ended March 31,

Property Name

(Dollar amounts in thousands)

Investment Date September 30, 2020 September 30, 2020 September 30, 2020 As of December 31, 2019 2020 2019 2020 2019

Investment Date March 31, 2021 March 31, 2021 March 31, 2021 As of December 31, 2020 2021 2020

Plaza Del Rio Medical Office Campus Portfolio (1)

$ 353 2.3 % $ 12,564 $ 12,790 — 87

UnityPoint Clinic Portfolio (2)

December 2017 $ 488 5.0 % $ 8,546 $ 8,842 $ — $ — $ — $ —

(1) One property within the Plaza Del Rio Medical Office Campus Portfolio was pledged to secure the Multi-Property CMBS Loan.

See Note 4 - Mortgage Notes Payable for additional information.

(2) On November 4, 2020, the Company purchased all of the outstanding membership interests in the joint venture that owns the UnityPoint portfolio (see Note 17 — Subsequent Events , for additional information).

Note 14 — Net Loss Per Share

The following is a summary of the basic and diluted net loss per share computation for the periods presented and has been retroactively adjusted to reflect the Stock Dividend (see Note 1 — Organization for additional details):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The following is a summary of the basic and diluted net loss per share computation for the periods presented and has been retroactively adjusted to reflect the Stock Dividends (see Note 1 — Organization for additional details):

Three Months Ended March 31,

Net loss attributable to common stockholders (in thousands)

4 unchanged sentences

$ ( 0.13 ) $ ( 0.26 )

(1) Retroactively adjusted for the effects of the Stock Dividend (see Note 1 ).

(1) Retroactively adjusted for the effects of the Stock Dividends (see Note 1 — Organization for additional details).

Diluted net loss per share assumes the conversion of all common stock equivalents into an equivalent number of shares of common stock, unless the effect is antidilutive.

1 unchanged sentence

The Company had the following common stock equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share attributable to stockholders as their effect would have been antidilutive.

The amounts in the table below have been retroactively adjusted to reflect the Stock Dividend (see Note 1 — Organization for additional details):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The amounts in the table below have been retroactively adjusted to reflect the Stock Dividends (see Note 1 — Organization for additional details):

Three Months Ended March 31,

Unvested restricted shares (1)

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(1) Weighted average number of antidilutive unvested restricted shares outstanding for the periods presented.

There were 216,187 and 267,116 unvested restricted shares outstanding as of September 30, 2020 and 2019, respectively.

Th ere were 218,290 and 277,241 unvested restricted shares outstanding as of March 31, 2021 and 2020, respectively.

(2) Weighted average number of antidilutive OP Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the Stock Dividends.

There were 405,998 OP Units outstanding as of March 31, 2021 and 2020.

(3) Weighted average number of antidilutive Class B Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the Stock Dividends.

There were 359,250 Class B Units outstanding as of March 31, 2021 and 2020.

These Class B Units are unvested as of March 31, 2021 and 2020 (see Note 9 — Related Party Transactions for additional information).

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

(2) Weighted average number of antidilutive OP Units presented as shares outstanding for the periods presented.

There were 405,998 OP Units outstanding as of September 30, 2020 and 2019.

(3) Weighted average number of antidilutive Class B Units presented as shares outstanding for the periods presented.

There were 359,250 Class B Units outstanding as of September 30, 2020 and 2019.

These Class B Units are unvested as of September 30, 2020 and 2019 (see Note 9 — Related Party Transactions for additional information).

March 31, 2021

Note 15 — Segment Reporting

During the nine months ended September 30, 2020 and 2019, the Company operated in three reportable business segments for management and internal financial reporting purposes:

During the three months ended March 31, 2021 and 2020, the Company operated in three reportable business segments for management and internal financial reporting purposes:

MOBs, triple-net leased healthcare facilities, and SHOPs.

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The SHOP segment consists of direct investments in seniors housing properties, primarily providing assisted living, independent living and memory care services, which are operated through engaging independent third-party operators.

There were no intersegment sales or transfers during the periods presented.

Some of our properties move between our operating segments, for example if they are converted from being triple-net leased to third parties in our triple-net leased healthcare facilities segment to being leased to one of our TRSs and operated and managed on our behalf by a third-party operator in our SHOP segment.

When transfers between segments occur, we reclassify the operating results of the transferred properties to their current segment for both the current and all historical periods in order to present a consistent group of property results.

Some of the Company’s properties move between its operating segments, for example if they are converted from being triple-net leased to third parties in the triple-net leased healthcare facilities segment to being leased to the TRS and operated and managed on the Company’s behalf by a third-party operator in the SHOP segment.

When transfers between segments occur, the Company reclassifies the operating results of the transferred properties to their current segment for both the current and all historical periods in order to present a consistent group of property results.

See Note 3 — Real Estate Investments, Net - “Impairments” and “Held for Use Assets” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Over the last three years, we have had properties transfer between operating segments.

Upon such transfers the Company retroactively restates the historical operating results for the segment for all periods presented in that filing and, thereafter, the Company will restate other later prior periods when they are subsequently reported in later filings for comparative purpose.

Over the last three years, the Company has had properties transfer between operating segments.

Upon such transfers the Company retroactively restates the historical operating results for each segment for all periods presented in that filing and, thereafter, the Company will restate other later prior periods when they are subsequently reported in later filings for comparative purposes.

As a result, the Company provides transition disclosure adjustments only for properties that have transitioned since the prior numbers were previously reported.

In 2018, we transitioned (i.e.

this asset is now operating as a SHOP asset and is not leased to a third party) a property located in Lutz, Florida from our triple-net leased healthcare facilities segment to our SHOP segment.

The results of this property had previously been reclassified in our Same Store operating results in 2018 and, according, required no additional adjustment in 2019.

As described in more detail below, the Company transitioned one property located in Wellington, Florida and the LaSalle Properties on April 1, 2019 and July 1, 2020, respectively, from its triple-net leased healthcare facilities segment to its Seniors Housing — Operating Properties segment (collectively, the “Transition Properties”).

As described in more detail below, the Company transitioned its four LaSalle Properties on July 1, 2020, from its triple-net leased healthcare facilities segment to its SHOP segment (collectively, the “Transition Properties”).

See Note 3 — Real Estate Investments for further information about this property and the transition.

The results of operations from the Transition Properties are presented within the Seniors Housing — Operating Properties segment for and nine months ended September 30, 2020 and 2019.

The previously reported same store results had already been retroactively adjusted to reflect the movement of the results Transition Property located in Wellington, Florida and the property located in Lutz, Florida and require no further adjustments thereto.

On July 1, 2020, the Company transitioned the LaSalle Properties from the triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties are now leased to one of the Company’s TRSs and operated and managed on the Company’s behalf by a third-party operator.

This segment has been applied retrospectively to historical periods starting with the quarter ended September 30, 2020.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

The results of operations from the Transition Properties are presented within the SHOP segment for the three months ended March 31, 2021 and 2020.

The LaSalle Properties are now leased to the Company’s TRS and operated and managed on the Company’s behalf by a third-party operator.

This segment transition has been applied retrospectively to historical periods beginning with the quarter ended September 30, 2020.

Net Operating Income

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NOI should not be considered as an alternative to net income (loss) as an indication of the Company’s performance or to cash flows as a measure of the Company’s liquidity or ability to pay distributions.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

The following tables reconcile the segment activity, retroactively adjusted for the Transition Properties to consolidated net loss for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) Medical Office Buildings Triple-Net Leased Healthcare Facilities (1)

Seniors Housing — Operating Properties (1)

Consolidated Medical Office Buildings Triple-Net Leased Healthcare Facilities (1)

Seniors Housing — Operating Properties (1)

Three Months Ended March 31,

(In thousands) Medical Office Buildings Triple-Net Leased Healthcare Facilities Seniors Housing — Operating Properties Consolidated

Revenue from tenants

4 unchanged sentences

Impairment charges

( 1,011 ) ( 32,842 )

Operating fees to related parties

( 5,984 ) ( 17,969 )

Acquisition and transaction related

( 175 ) ( 680 )

General and administrative

( 3,162 ) ( 14,622 )

Depreciation and amortization

( 20,211 ) ( 60,589 )

Interest expense

( 12,840 ) ( 38,677 )

Interest and other income

3 unchanged sentences

Net income attributable to non-controlling interests ( 46 )

Preferred stock dividends

( 732 ) ( 2,224 )

Allocation for preferred stock ( 742 )

Net loss attributable to stockholders

$ ( 10,500 ) $ ( 58,055 )

(1) The results of operations from the Transition Properties are presented within the Seniors Housing — Operating Properties segment for the nine months ended September 30, 2020.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) Medical Office Buildings Triple-Net Leased Healthcare Facilities (1)

Seniors Housing — Operating Properties (1)

Consolidated Medical Office Buildings Triple-Net Leased Healthcare Facilities (1)

Seniors Housing — Operating Properties (1)

Revenue from tenants

4 unchanged sentences

Impairment charges

( 22,615 ) ( 22,634 )

Operating fees to related parties

( 5,941 ) ( 17,535 )

Acquisition and transaction related

( 112 ) ( 161 )

General and administrative

( 4,782 ) ( 15,394 )

Depreciation and amortization

( 20,140 ) ( 61,124 )

Interest expense

( 12,990 ) ( 39,739 )

Interest and other income

3 unchanged sentences

Net loss attributable to non-controlling interests 87

Allocation for preferred stock ( 742 )

Net loss attributable to stockholders

_______________

(1) The results of operations from the Transition Properties are presented within the Seniors Housing — Operating Properties segment for the nine months ended September 30, 2019.

(1) The results of operations from the Transition Properties are presented within the SHOP segment for the three months ended March 31, 2020.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

The following table reconciles the segment activity to consolidated total assets as of the periods presented:

(In thousands) September 30, 2020 December 31, 2019

(In thousands) March 31, 2021 December 31, 2020

Investments in real estate, net:

2 unchanged sentences

Triple-net leased healthcare facilities 236,266 238,427

241,383 305,250

Seniors housing — operating properties (1)

12 unchanged sentences

_____________

(1) The Transition Properties are presented within the Seniors Housing — Operating Properties segment as of September 30, 2020 and December 31, 2019.

(1) The Transition Properties are presented within the SHOP segment as of March 31, 2021 and December 31, 2020.

The following table reconciles capital expenditures by reportable business segment, excluding corporate non-real estate expenditures, for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2021 2020

2 unchanged sentences

Seniors housing — operating properties (1)

2,937 3,244 13,664 7,754

Total capital expenditures $ 4,029 $ 11,097

______________________

(1) The results of operations from the Transition Properties are presented within the Seniors Housing — Operating Properties segment for the three and nine months ended September 30, 2020 and 2019.

(1) The results of operations from the Transition Properties are presented within the SHOP segment for the three months ended March 31, 2020.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Note 16 — Commitments and Contingencies

As of September 30, 2020, the Company has eight operating and six direct financing lease agreements related to certain acquisitions under leasehold interests arrangements.

As of March 31, 2021, the Company has eight operating and six direct financing lease agreements related to certain acquisitions under leasehold interests arrangements.

The eight operating leases have durations, including assumed renewals, ranging from 11.5 years to 86.5 years.

The Company did not enter into any additional ground leases during the quarter ended September 30, 2020.

As of September 30, 2020, the Company’s balance sheet includes ROU assets and liabilities of $ 14.3 million and $ 9.2 million, respectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively.

The Company did not enter into any additional ground leases during the quarter ended March 31, 2021.

As of March 31, 2021, the Company’s balance sheet includes ROU assets and liabilities of $ 13.9 million and $ 9.2 million, respectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively.

In determining operating ROU assets and lease liabilities for the Company’s existing operating leases upon the adoption of the new lease guidance as well as for new operating leases in the current period, the Company was required to estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases.

Since the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment.

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 41.7 years and a weighted-average discount rate of 7.35 % as of September 30, 2020.

For the nine months ended September 30, 2020, the Company paid cash of $ 0.2 million, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.5 million, on a straight-line basis in accordance with the standard.

The Company recorded expense of $ 0.2 million for the three months ended March 31, 2019.

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 41.0 years and a weighted-average discount rate of 7.35 % as of March 31, 2021.

For the three months ended March 31, 2021, the Company paid cash of $ 0.2 million, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million, on a straight-line basis in accordance with the standard.

The Company paid cash of $ 0.2 million for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million for the three months ended March 31, 2020.

The lease expense is recorded in property operating expenses in the consolidated statements of operations and comprehensive loss.

The following table reflects the base cash rental payments due from the Company as of September 30, 2020:

The following table reflects the base cash rental payments due from the Company as of March 31, 2021:

Future Base Rent Payments

5 unchanged sentences

Total present value of minimum lease payments $ 9,159 $ 4,837

(1) The Direct Finance Lease liability is included in Accounts Payable and accrued expenses on the balance sheet as of September 30, 2020.

(1) The Direct Finance Lease liability is included in Accounts Payable and accrued expenses on the balance sheet as of March 31, 2021.

The Direct Financing lease asset is included as part of building and improvements as the land component was not required to be bifurcated under ASU 840.

4 unchanged sentences

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters.

As of September 30, 2020, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

As of March 31, 2021, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Note 17 — Subsequent Events

1 unchanged sentence

Dividend Declaration

On October 1, 2020, the Company announced the declaration of the Stock Dividend of 0.01349 shares of the Company’s common stock, on each share of the Company’s outstanding common stock.

The Stock Dividend was paid on October 15, 2020 to holders of record of the Company’s common stock at the close of business on October 8, 2020.

Since the Stock Dividend is treated similar to a stock split for accounting purposes, the result of the Stock Dividend was an increase of 0.01349 shares for every one share common stock.

On November 2, 2020, the initial closing under the PSA pursuant to which the Company has agreed to sell 11 Michigan SHOPs occurred, and the Company received payment of the full $ 11.8 million sales price for all 11 of the Michigan SHOPs, less $ 0.8 million held in escrow, and transferred seven of the properties to the buyer.

The remaining four properties are scheduled to be transferred to the buyer at a second closing in January 2021 when the $ 0.8 million held in escrow will be released to the buyer.

Of the properties transferred at the initial closing, four were part of the borrowing base under the Credit Facility, one was part of the collateral pool under the Fannie Mae Master Credit Facility with Capital One and two were unencumbered.

Of the properties to be transferred at the second closing, three were part of the borrowing base under the Credit Facility until the initial closing and one was unencumbered.

At the initial closing, $ 4.2 million of the net proceeds was used to repay amounts outstanding under the Fannie Mae Master Credit Facility with Capital One, $ 4.4 million of the net proceeds were used to repay amounts outstanding under the Revolving Credit Facility, with the remainder used for closing costs.

Acquisition of Non-Controlling Interest

Following this transaction, the properties were wholly owned by the Company and added to the borrowing base under the Credit Facility.

On April 2, 2021, the Company announced the declaration of the Stock Dividend of 0.014655 shares of the Company’s common stock, on each share of the Company’s outstanding Common Stock.

The Stock Dividend was paid on April 15, 2021 to holders of record of the Company’s common stock at the close of business on April 12, 2021.

Preferred Stock Series A Add-On

On May 11, 2021, the Company completed an underwritten public offering of 2,352,144 shares (which includes 152,144 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of its Series A Preferred Stock for net proceeds of $ 56.7 million after deducting the underwriters’ discount and a structuring fee aggregating to $ 2.1 million.

Pursuant to the terms of the Credit Facility amendment, all proceeds were used to repay amounts outstanding under the Credit Facility.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

5 unchanged sentences

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements including statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions.

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements.

Those statements include statements regarding the intent, belief or current expectations of Healthcare Trust, Inc.

(“we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions.

Actual results may differ materially from those contemplated by such forward-looking statements.

1 unchanged sentence

These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements.

Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and Part II.

Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

We were incorporated on October 15, 2012, and are a Maryland corporation that elected to be taxed as a real estate investment trust for U.S.

federal income tax purposes (“REIT”) beginning with its taxable year ended December 31, 2013.

Substantially all of our business is conducted through the OP.

We invest in healthcare real estate, focusing on seniors housing properties and medical office buildings (“MOB”) located in the United States.

The Advisor has been retained by us to manage our affairs on a day-to-day basis.

We have retained Healthcare Trust Properties, LLC (the “Property Manager”) to serve as our property manager.

The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, “AR Global”), and these related parties receive compensation, fees and expense reimbursements from us for services related to managing our business and investments.

As of September 30, 2020, we owned 200 properties (all references to number of properties and square footage are unaudited) located in 31 states and comprised of 9.7 million rentable square feet.

Our initial public offering of common stock, which is not listed on a national securities exchange, closed in November 2014, and, in December 2019, our initial public offering of our 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) closed, and we listed our Series A Preferred Stock on The Nasdaq Global Market under the symbol “HTIA.”

On October 1, 2020, we announced the declaration of a quarterly stock dividend of 0.01349 shares of our common stock on each outstanding share of our common stock (the “Stock Dividend”).

The Stock Dividend was paid on October 15, 2020 to holders of record of our common stock at the close of business on October 8, 2020.

Since the Stock Dividend is treated similar to a stock split for accounting purposes, the result of the Stock Dividend was an increase of 0.01349 shares for every one share of common stock.

All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the Stock Dividend.

On April 3, 2020, we published a new estimate of per share net asset value (“Estimated Per-Share NAV”) equal to $15.75 as of December 31, 2019 which was approved by our board of directors (the “Board”) on March 31, 2020.

We are an externally managed REIT that focuses on acquiring and managing a diversified portfolio of healthcare-related real estate focused on MOBs, NNN properties, and SHOPs.

As of March 31, 2021, we owned 190 properties located in 31 states and comprised of 9.3 million rentable square feet.

Substantially all of our business is conducted through the OP, a Delaware limited partnership, and its wholly owned subsidiaries.

Our Advisor manages our day-to-day business with the assistance of Healthcare Trust Properties, LLC (our “Property Manager”).

Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us.

We also reimburse these entities for certain expenses they incur in providing these services to us.

Healthcare Trust Special Limited Partnership, LLC (the “Special Limited Partner”), which is also under common control with AR Global, also has an interest in us through ownership of interests in our OP.

As of March 31, 2021, we owned 55 seniors housing properties under the REIT Investment Diversification and Empowerment Act (“RIDEA”) structure in our SHOP segment.

We have declared and paid quarterly dividends entirely in shares of our common stock.

Stock dividends paid in October 2020 and January 2021 were equal to 0.01349 shares of common stock on each share of our outstanding common stock The stock dividend paid in April 2021 was equal to 0.014655 shares of our common stock on each share of our outstanding common stock.

The aggregate impact of all three Stock Dividends was an increase of 1,392,822 shares.

Dividends payable entirely in shares of common stock are treated in fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods.

The aggregate impact of all three stock dividends was an increase of 1,392,822 shares.

No additional shares, except for the stock dividends, were issued during the three months ended March 31, 2021.

Additionally, other references to weighted-average shares outstanding and per-share amounts have been retroactively adjusted for the stock dividends and are noted as such throughout the accompanying financial statements and footnotes.

On April 1, 2021, we published a new Estimated Per-Share NAV equal to $14.50 as of December 31, 2020.

Our previous Estimated Per-Share NAV was equal to $15.75 as of December 31, 2019.

We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually.

Unlike the per share amounts in this Quarterly Report on Form 10-Q, the Estimated Per-Share NAV has not been retroactively adjusted to

reflect the Stock Dividend and will not be retroactively adjusted for stock dividends we expect to pay in the future until the Board determines a new Estimated Per-Share NAV.

The Stock Dividend and any other stock dividends will, all things equal, cause the value of each share of common stock to decline because the number of shares outstanding will increase when stock dividends are paid;

The Estimated Per-Share NAV reflects the October 2020 stock dividend we paid and took into consideration the January 2021 stock dividend we paid but has not been adjusted to reflect the April 2021 stock dividend we paid and will not be adjusted for stock dividends we pay in the future until the board of directors (the “Board”) determines a new Estimated Per-Share NAV.

Paying dividends in additional shares of common stock

will, all things equal, cause the value of each share to decline because the number of shares outstanding will increase when Stock Dividends are paid;

Unless we list our common stock on a national security exchange, we intend to publish Estimated Per-Share NAV at least once annually.

Management Update on the Impacts of the COVID-19 Pandemic

The economic uncertainty created by the COVID-19 global pandemic has created several risks and uncertainties that may impact our business, including our future results of operations and our liquidity.

A pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global pandemic of COVID-19 affecting states or regions in which we or our tenants operate could have material and adverse effects on our business, financial condition, results of operations and cash flows.

The ultimate impact on our results of operations, our liquidity and the ability of our tenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the COVID-19 pandemic.

Management is unable to predict the nature and scope of any of these factors.

These factors include the following, among others:

• The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all.

However, we have taken proactive steps with regard to rent collections to mitigate the impact on our business (see “—Management Actions” below).

The COVID-19 global pandemic has created several risks and uncertainties that have had and may continue to have an impact on our business, including our financial condition, future results of operations and our liquidity.

Negative impacts of the COVID-19 pandemic have caused some of our tenants to be unable to make rent payments to us timely, or at all.

There may be a decline in the demand for tenants to lease real estate, as well as a negative impact on rental rates.

As of September 30, 2020, our MOB segment had an occupancy of 91.4% with a weighted-average remaining lease term of 4.9 years, (based on annualized straight-line rent as of September 30, 2020) and our triple-net leased healthcare facilities segment had a high occupancy level of 94.5% with a weighted average remaining lease term of 6.7 years (based on annualized straight-line rent as of September 30, 2020) and our Seniors Housing — Operating Properties segment (“SHOP”) had an occupancy of 77.9%.

During the second and third quarters of 2020, we experienced a decline in occupancy and an increase in costs at our SHOP portfolio, however, we received grants under the CARES Act that helped offset the COVID-19 related operating costs.

For additional information on our SHOP portfolio, see the “Management Actions - Seniors Housing Properties” section below.

• Capital market volatility and a tightening of credit standards could negatively impact our ability to obtain debt financing.

We do not have any significant debt principal repayments due until 2023.

• The volatility in the global financial market could negatively impact our ability to raise capital through equity offerings, which as a result, could impact our decisions as to when and if we will seek additional equity funding.

• The negative impact of the pandemic on our results of operations and cash flows could impact our ability to comply with covenants in our senior secured credit facility (our “Credit Facility”) and the amount available for future borrowings thereunder.

• The potential negative impact on the health of personnel of our Advisor and operators of our SHOP facilities, particularly if a significant number of the Advisor’s employees or operator’s employees are impacted, could result in a deterioration in our ability to ensure business continuity.

For additional information on the risks and uncertainties associated with the COVID-19 pandemic, please see Item 1A .

“Risk Factors — We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, which has caused severe disruptions in the U.S.

and global economy and financial markets and has already had adverse effects and may worsen” included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

The Advisor has responded to the challenges resulting from the COVID-19 pandemic.

Beginning in early March, the Advisor took proactive steps to prepare for and actively mitigate the inevitable disruption COVID-19 would cause, such as enacting safety measures, both required or recommended by local and federal authorities, including remote working policies, cooperation with localized closure or curfew directives, and social distancing measures at all of our properties.

Additionally, there has been no material adverse impact on our financial reporting systems or internal controls and procedures and the Advisor’s ability to perform services for us.

In light of the current COVID-19 pandemic, we are supplementing the historical discussion of our results of operations for the third quarter of 2020 with a current update on the measures we have taken to mitigate the negative impacts of the pandemic on our business and future results of operations.

Management’s Actions

The extent to which the ongoing global COVID-19 pandemic, including the outbreaks that have occurred and may occur in markets where we own properties, impacts our operations and those of our tenants and third-party operators, will continue to depend on future developments, including the scope, severity and duration of the pandemic, and the actions taken to contain the COVID-19 or treat its impact, among others, which are highly uncertain and cannot be predicted with confidence, but could be material.

As of March 31, 2021, our MOB segment had an occupancy of 91.7% with a weighted-average remaining lease term of 4.8 years, (based on annualized straight-line rent as of March 31, 2021), our triple-net leased healthcare facilities segment had an occupancy of 94.5% with a weighted average remaining lease term of 6.2 years (based on annualized straight-line rent as of March 31, 2021) and our SHOP segment had an occupancy of 72.7%.

During the three months ended March 31, 2021, we experienced a decline in occupancy and an increase in costs at our SHOP portfolio, however, we received grants under the CARES Act of $5.1 million during the first quarter of 2021 which helped offset the COVID-19 related operating costs.

The negative impact of the pandemic on our results of operations and cash flows has impacted and could continue to impact our ability to comply with covenants in our senior secured credit facility (the“Credit Facility”), which is comprised of our revolving credit facility (the “Revolving Credit Facility”) and a term loan (the “Term Loan”), and the amount available for future borrowings thereunder.

For a further discussion of the risks and uncertainties associated with the impact of the COVID-19 pandemic on us, please see Item 1A .

“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.

Rent Collections

We experienced delays in rent collection in the second, third and fourth quarters of 2020 and the first quarter of 2021.

We have taken several steps to mitigate the impact of the pandemic on our business.

For rent collections, we have been in direct contact with our tenants and operators since the crisis began, cultivating open dialogue and deepening the fundamental relationships that we have carefully developed through prior transactions and historic operations.

Based on this approach and

the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic.

We reported cash collections of 99% and 92% for the MOB and triple-net leased healthcare facilities segments, respectively, for the second quarter of 2020 as of July 31, 2020.

There have been no material changes to second quarter cash rent collections as of October 31, 2020.

Amounts not collected are subject to deferral agreements between us and the applicable tenant which typically provide that payment of approximately 20% of the cash rent due each month for second quarter of 2020 is deferred until the latter part of 2020 or early part of 2021.

We have collected approximately 100% of the original cash rent due for the third quarter of 2020 in our MOB segment and 100% in our triple-net leased healthcare facilities segment.

Cash rental payments for our 67 SHOP properties is primarily paid for by the residents through private payer insurance or directly, and to a lesser extent, by government reimbursement programs such as Medicaid and Medicare.

These cash rental payments are subject to timing differences, therefore we have not provided the amount of second or third quarter 2020 cash rent collected for our SHOP segment.

Rent collections in October 2020 were materially consistent with the third quarter 2020, and we expect this trend to continue;

however, the cash rent status below may not be indicative of any future period and remains subject to changes based ongoing collection efforts and negotiation of additional agreements.

We have been in direct contact with our tenants and operators since the crisis began, cultivating open dialogue and deepening the fundamental relationships that we have carefully developed through prior transactions and historic operations.

We have achieved mutually agreeable solutions with our tenants and in some cases, during the year ended December 31, 2020, we executed lease amendments providing for deferral of rent.

Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic.

We have collected nearly 100% of the original cash rent due for the first quarter of 2021 in our MOB segment and 100% in our triple-net leased healthcare facilities segment.

Cash rental payments for our 55 SHOPs is primarily paid for by the residents through private payer insurance or directly, and to a lesser extent, by government reimbursement programs such as Medicaid and Medicare.

These cash rental payments are subject to timing differences, therefore we have not provided the amount of first quarter 2021 cash rent collected for our SHOP segment.

“Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their original executed lease agreement at inception or as amended, prior to any rent deferral agreement.

We calculate “original cash rent collections” by comparing the total amount of rent collected during the period to the original cash rent due.

Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements.

Eliminating the impact of deferred rent paid, we collected nearly 100% of original cash rent due for the first quarter of 2021.

A deferral agreement is an executed or approved amendment to an existing lease to defer a certain portion of cash rent due to a future period.

During the year ended December 31, 2020, we granted rent deferrals for an aggregate of $0.4 million or less than 1% of original cash rent due for the year.

No additional rent was deferred during the three months ended March 31, 2021.

Rent collections in April 2021 were materially consistent with the first quarter of 2021, and we expect this trend to continue.

We have also granted rent concessions which serve to reduce revenue in our SHOP segment.

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Seniors Housing Properties

In early March 2020, we implemented preventative actions at all our seniors housing properties in our SHOP segment, including restrictions on visitation except in very limited and controlled circumstances, social distancing measures, and the immediate screening of all persons entering these facilities.

Some of the additional steps we have taken to address the coronavirus pandemic include, among other things, enhanced training for staff members, the implementation of Telehealth to help residents be safe while keeping appointments with important, but non-emergency, health providers, virtual tours for potential new residents, and agreements between some of our facilities and local lab partners to provide testing services.

In the absence of visitors, outside vendors and the observance of other precautionary measures, our on-site team members and caregivers have stepped in to provide care for our residents in addition to required medical care.

In early March 2020, we implemented preventative actions at all our seniors housing properties in our SHOP segment, including restrictions on visitation except in very limited and controlled circumstances, social distancing measures, and the screening of all persons entering these facilities.

Some of the additional steps we have taken to address the COVID-19 pandemic include, enhanced training for staff members, the implementation of Telehealth to help residents be safe while keeping appointments with important, but non-emergency, health providers, virtual tours for potential new residents, and agreements between some of our facilities and local lab partners to provide COVID-19 testing services.

Starting in March 2020, the COVID-19 pandemic and measures to prevent its spread began to affect us in a number of ways.

In our SHOP portfolio, occupancy has trended lower since the second half of March as government policies and implementation of infection control best practices have materially limited or closed communities to new resident move-ins which has affected and could continue to affect our ability to fill vacancies.

Occupancy in our SHOP portfolio has trended lower since the second half of March 2020 as government policies and implementation of infection control best practices and prospective residents’ concerns about communal-setting COVID-19 spread limited resident move-ins.

We have also continued to experience lower inquiry volumes and reduced in-person tours during the pandemic.

SHOP occupancy has continued to decline from 84.1% as of March 31, 2020, to 79.5% as of June 30, 2020 and to 77.9%, as of September 30, 2020.

The decline in SHOP occupancy from second quarter is mainly attributable to the transition of four triple-net leased properties in Texas (collectively, the “LaSalle Properties”) from our triple-net leased healthcare facilities segment into our SHOP segment as described in more detail below.

Excluding the LaSalle Properties, SHOP occupancy would have been 78.4% as of September 30, 2020.

The declines in revenue we experienced during the third quarter were primarily attributable to this decline in occupancy which also represented a decline from September 30, 2019, when SHOP occupancy was 85.1%.

In addition, starting in mid-March, operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies, as our operators took appropriate actions to protect residents and caregivers.

These and other impacts of the COVID-19 pandemic have affected and could continue to affect our ability to fill vacancies.

We have also continued to experience lower inquiry volumes and reduced in-person tours during the pandemic.

SHOP occupancy has continued to decline from 84.1% as of March 31, 2020, to 79.5% as of June 30, 2020, to 77.9% as of September 30,2020, to 75.1% as of December 31, 2020 and to 72.7% as of March 31, 2021.

The declines in revenue we experienced during the first quarter of 2021 were primarily attributable to this decline in occupancy.

In addition, starting in mid-March of 2020, operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies, as our operators took appropriate actions to protect residents and caregivers.

At our SHOP facilities, we bear these cost increases.

These trends accelerated during the second quarter and have continued during the third quarter of 2020, and may continue to impact us in the future and have a material adverse effect on our revenues and income in the fourth quarter and other quarters thereafter.

These trends accelerated during the second, third and fourth quarters of 2020 and into the beginning of the first quarter of 2021 as the surge of new COVID-19 cases that started in late 2020 crested, and have continued through the end of the first quarter of 2021 and into the second quarter of 2021 and may continue to impact us in the and have a material adverse effect on our revenues and income in the other quarters thereafter.

We believe that, as infections decline and more vaccinations are administered during 2021, our occupancy will stop declining, and may start to increase, but there can be no assurance as to when or if we will be able to approach pre-pandemic levels of occupancy.

The pandemic raises the risk of an elevated level of resident exposure to illness and restrictions on move-ins at our SHOPs, which has and could also continue to adversely impact occupancy and revenues as well as increase costs.

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There have been some incidences of COVID-19 among the residents and staff at certain of our seniors housing properties.

Further incidences, or the perception that outbreaks may occur, could materially and adversely affect our revenues and income , as well as cause significant reputational harm to us and our tenants, managers and operators.

The extent to which the ongoing global coronavirus pandemic, including the outbreaks that have occurred and may occur in markets where we own properties, impacts our operations and those of our tenants and third-party operators, will continue to depend on future developments, including the scope, severity and duration of the pandemic, and the actions taken to contain the coronavirus or treat its impact, among others, which are highly uncertain and cannot be predicted with confidence, but could be material.

Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to

reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19.

We received $3.1 million in these funds during the second quarter of 2020 and $0.5 million for the third quarter related to four of its SHOP properties and considered the funds to be a grant contribution from the government.

The full amount was recognized as a reduction in property operating expenses in our consolidated statement of operations for the three and nine months ended September 30, 2020 to offset the incurred COVID-19 expenses.

There can be no assurance that the program will be extended or any further amounts received.

Further incidences, or the perception that outbreaks may occur, could materially and adversely affect our revenues and income , as well as cause reputational harm to us and our tenants, managers and operators.

On March 27, 2020, Coronav irus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic.

During the first quarter of 2021, we received an additional $5.1 million in CARES Act funding.

We consider the funds to be a grant contribution from the government and the full amount was recognized a s a reduction of property operating expenses in our consolidated statement of operations during the first quarter of 2021.

There can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs.

Significant Accounting Estimates and Critical Accounting Policies

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As discussed in Note 2 — Summary of Significant Accounting Policies - CARES Act Grants, we adopted a new policy with respect to accounting for such grants received.

The following table presents certain additional information about the properties we owned as of September 30, 2020:

The following table presents certain additional information about the properties we owned as of March 31, 2021:

Portfolio Number

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Triple-Net Leased Healthcare Facilities:

Seniors Housing — Triple-Net Leased (4)

6 514,962 90.7% 6.5 133,579

Hospitals 6 514,962 90.7% 6.0 133,580

Post-Acute / Skilled Nursing 8 354,016 100.0% 6.6 86,574

8 354,016 100.0% 7.1 86,566

Total Triple-Net Leased Healthcare Facilities 14 868,978 94.5% 6.2 220,154

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_______________

(1) Inclusive of leases signed but not yet commenced as of September 30, 2020.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of September 30, 2020.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of September 30, 2020) and the 11 SHOPs located in Michigan (“Michigan SHOPs”) included in assets held for sale at carrying value ($10.1 million total as of September 30, 2020), net of gross market lease intangible liabilities ($22.1 million total as of September 30, 2020).

(4) Four properties were transitioned from Seniors Housing – Triple Net Leased within our triple-net leased healthcare facilities segment to our SHOP segment effective July 1, 2020.

These Transition Properties (as defined below) are presented within the Seniors Housing — Operating Properties segment as of September 30, 2020.

See Results of Operations for more information on these properties.

(5) One property was transitioned from Post-Acute / Skilled Nursing within our triple-net leased healthcare facilities segment to our SHOP segment during the second quarter of 2019.

This Transition Property is presented within the Seniors Housing — Operating Properties segment as of September 30, 2020.

See Results of Operations for more information on this property.

(6) Weighted by unit count as of September 30, 2020.

(1) Inclusive of leases signed but not yet commenced as of March 31, 2021.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of March 31, 2021.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of March 31, 2021) net of gross market lease intangible liabilities ($22.2 million total as of March 31, 2021).

Impairment charges are already reflected within gross asset value.

(4) Weighted by unit count as of March 31, 2021.

(5) Our development property in Jupiter, Florida was substantially completed in the fourth quarter of 2019.

See Note 3 — Real Estate Investments - “Development Property” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Although a portion of the property has been leased since the fourth quarter of 2019, the property will be separately shown and excluded from combined occupancy numbers until a greater portion of the property has been leased and we consider the property stabilized.

Although a portion of the property has been leased as of March 31, 2021, the property is separately shown and excluded from combined occupancy numbers.

Occupancy in the triple-net leased healthcare facilities segment would have been 76.5% had the development property been included.

In August 2020, we entered into a definitive purchase and sale agreement (“PSA”) to sell the property.

The disposition is subject to conditions, and there can be no guarantee that the disposition will be completed on the contemplated terms, or at all.

This property is currently under a PSA to be sold.

Although the disposition is expected to be completed in the second quarter of 2021, and there can be no assurance that the disposition will be completed on its contemplated terms, or at all.

(6) One SHOP in Wellington, Florida is under a PSA to be sold.

Although the disposition is expected to be completed in the second quarter of 2021, there can be no assurance that the disposition will be completed on its contemplated terms, or at all.

During the three months ended March 31, 2021, four MI SHOPs located in Michigan were transferred to their buyer pursuant to their sale in November 2020.

N/A Not applicable.

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MOBs, triple-net leased healthcare facilities, and SHOPs.

In our MOB operating segment, we own, manage and lease, through the Property Manager or third party property managers, single and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent.

In our triple-net leased healthcare facilities operating segment, we own, manage and lease seniors housing properties, hospitals, post-acute care and skilled nursing facilities in the United States under long-term triple-net leases, and tenants are generally directly responsible for all operating costs of the respective properties.

In our SHOP segment, we invest in seniors housing properties under a structure permitted by the REIT rules.

Under the REIT rules, a REIT may lease “qualified health care” properties on an arm’s length basis to a taxable REIT subsidiary (“TRS”) if the property is operated on behalf of such subsidiary by an eligible independent contractor.

As of September 30, 2020, we had seven eligible independent contractors operating 67 SHOPs (not including two land parcels).

In our MOB operating segment, we own, manage and lease single and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent.

In our triple-net leased healthcare facilities operating segment, we own, manage and lease seniors housing properties, hospitals, post-acute care and skilled nursing facilities throughout the United States under long-term triple-net leases, and tenants are generally directly responsible for all operating costs of the respective properties.Our Property Manager or third party managers manage our MOBs and our triple-net leased healthcare facilities.

In our SHOP segment, we invest in seniors housing properties using the RIDEA structure.

As of March 31, 2021, we had six eligible independent contractors operating 55 SHOPs (not including two land parcels).

All of our properties across all three business segments are located throughout the United States.

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Information based on Same Store, Acquisitions and Dispositions (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered.

As of September 30, 2020, we owned 200 properties.

There were 183 properties (our “Same Store” properties) owned for the entire year ended December 31, 2019 and the nine months ended September 30, 2020.

As of March 31, 2021, we owned 190 properties.

There were 180 properties (our “Same Store” properties) owned for the entire year ended December 31, 2020 and the three months ended March 31, 2021.

Our Same Store properties include two vacant land parcels and one development property that was substantially completed in the fourth quarter of 2019.

Since January 1, 2019, we acquired 17 properties (our “Acquisitions”) and disposed of eight properties (our “Dispositions”).

As described in more detail under “ — Comparison of the Three Months Ended September 30, 2020 — Transition Properties” below, our Same Store properties include four Transition Properties that were transitioned from Senior Housing - Triple Net Leased to our SHOP segment effective July 1, 2020, and another Transition Property which transitioned from our Triple Net Leased segment effective April 1, 2019.

These five Transition Properties were owned for the entire same store period and merely moved between segments.

Since January 1, 2020, we acquired ten properties (our “Acquisitions”) and disposed of 13 properties (our “Dispositions”).

As described in more detail under “Results of Operations — Comparison of the Three Months Ended March 31, 2021 — Transition Properties” below, our Same Store properties include four Transition Properties that were transitioned from Senior Housing - Triple Net Leased to our SHOP segment effective July 1, 2020.

These four Transition Properties were owned for the entire same store period and merely moved between segments.

We retroactively adjusted our Same Store for those segments to include the Transition Properties as part of our Same Store in our SHOP segment and excluded them from the Same Store in our triple-net leased healthcare facilities segment (each segment as so retroactively adjusted, the “Segment Same Store”).

See Note 3 — Real Estate Investments, Net for further information about the Transition Properties and the transition.

The following table presents a roll-forward of our properties owned from January 1, 2019 to September 30, 2020:

The following table presents a roll-forward of our properties owned from January 1, 2019 to March 31, 2021:

Number of Properties

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Number of properties, December 31, 2020 193

Acquisition activity during the nine months ended September 30, 2020 8

Disposition activity during the nine months ended September 30, 2020 (1)

Number of properties, September 30, 2020 200

Acquisition activity during the three months ended March 31, 2021 1

Disposition activity during the three months ended March 31, 2021 (4)

Number of properties, March 31, 2021 190

Number of Same Store Properties (1)

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In addition to the comparative period-over-period discussions below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s responses.

Comparison of the Three Months Ended September 30, 2020 and 2019

Net loss attributable to common stockholders was $10.5 million and $28.8 million for the three months ended September 30, 2020 and 2019, respectively.

The following table shows our results of operations for the three months ended September 30, 2020 and 2019 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended September 30, Increase (Decrease)

Comparison of the Three Months Ended March 31, 2021 and 2020

Net loss attributable to common stockholders was $12.2 million and $24.7 million for the three months ended March 31, 2021 and 2020, respectively.

The following table shows our results of operations for the three months ended March 31, 2021 and 2020 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2021 2020 $

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Gain on sale of real estate investments (172) 2,306 (2,478)

Operating income (loss) 3,614 (16,090) 19,704

Operating loss 862 (10,521) 11,383

Other income (expense):

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Loss before income taxes (11,394) (23,757) 12,363

Income tax (expense) benefit (78) 271 (349)

Income tax expense (48) (332) 284

Net loss (11,442) (24,089) 12,647

Net (income) loss attributable to non-controlling interests (46) 87 (133)

Preferred stock dividends (732) — (732)

Allocation for preferred stock (742) (742) —

Net loss attributable to common stockholders $ (12,230) $ (24,744) $ 12,514

_______________

NM — Not Meaningful

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Over the last three years, we have had properties transfer between operating segments.

As a result, the Company provides transition disclosure adjustments only for properties that have transitioned since the prior

numbers were previously reported.

The Company had the following:

(i) 2020 Transition Property – the four LaSalle Properties (Effective July 1, 2020, reporting for the quarter ended September 30, 2020) – (ii) 2019 Transition Property – the Wellington Property (Effective in April, 2019, reporting for the quarter ended June 30, 2019).

Collectively, these are referred generically as the “Transition Properties.”

As described in more detail below, our Same Store includes five Transition Properties, our property in Wellington, Florida, which was transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the second quarter of 2019, and the four LaSalle Properties which transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the third quarter of 2020.

During the three months ended September 30, 2020, as shown in more detail in the table below, the Transition Properties contributed approximately $0.5 million of net operating income (“NOI”).

Upon such transfers we retroactively restate the historical operating results for the segment for all periods presented in that filing and, thereafter, we will restate other later prior periods when they are subsequently reported in later filings for comparative purposes.

As a result, we provide transition disclosure adjustments only for properties that have transitioned since the prior numbers were previously

We transitioned the four triple-net leased properties in Texas (the “LaSalle Properties”) effective July 1, 2020 (the “Transition Properties”).

As described in more detail below, our Same Store includes the four Transition Properties, which transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the third quarter of 2020.

During the three months ended March 31, 2021, as shown in more detail in the table below, the Transition Properties contributed approximately $(0.2) million of net operating income (“NOI”).

The results of operations of the Transition Properties are included in Segment Same Store with respect to the SHOP segment.

The bad debt expense relating to the Transition Properties is included as a reduction to revenue from tenants on the consolidated statement of operations.

On July 1, 2020, we transitioned the LaSalle Properties from the triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties are now leased to one of our TRSs and operated and managed on our behalf by a third-party operator.

Beginning with the Company’s reporting for the period ending September 30, 2020 these properties are part of the “Transition Properties” and the resultant change has been applied retrospectively to historical periods.

As of September 30, 2019 the LaSalle Properties are reported in the Transition Properties.

The previously reported same store results had already been retroactively adjusted to reflect the movement of the results 2019 Transition Property and the 2018 Transition Property and require no further adjustments thereto.

For purposes of the discussion and analysis of the segment results of operations during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, the results of operations for the Transition Properties are included as part of our SHOP segment and excluded entirely from our triple-net leased healthcare facilities segment.

For purposes of the discussion and analysis of the segment results of operations during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, the results of operations for the Transition Properties are included as part of our SHOP segment and excluded from our triple-net leased healthcare facilities segment.

The following table presents by segment Same Store properties’ NOI before and after adjusting for the Transition Properties as described above, to arrive at “Segment Same Store” results.

Our MOB segment was not affected by the Transition Properties.

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Increase (Decrease)

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Increase (Decrease)

(Dollar amounts in thousands) Same Store Properties Transition Properties Segment Same Store Same Store Properties Transition Properties Segment Same Store Same Store Properties Transition Properties Segment Same Store

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NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio.

NOI is equal to revenue from tenants less property operating and maintenance.

NOI is equal to revenue from tenants less property operating and maintenance expenses.

NOI excludes all other financial statement amounts included in net income (loss) attributable to common stockholders.

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Segment Results — Medical Office Buildings

The following table presents the components of NOI and the period to period change within our MOB segment for the three months ended September 30, 2020 and 2019:

The following table presents the components of NOI and the period to period change within our MOB segment for the three months ended March 31, 2021 and 2020:

Same Store (1)

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Segment Total (4)

Three Months Ended September 30, Increase (Decrease) Three Months Ended September 30, Increase (Decrease) Three Months Ended September 30, Increase (Decrease) Three Months Ended September 30, Increase (Decrease)

Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2021 2020 $ 2021 2020 $ 2021 2020 $ 2021 2020 $

5 unchanged sentences

(1) Our MOB segment included 112 Same Store properties.

(2) Our MOB segment included 12 Acquisition properties.

(3) Our MOB segment included seven Disposition properties.

(2) Our MOB segment included six Acquisition properties.

(3) Our MOB segment included one Disposition property.

(4) Our MOB segment included 118 properties.

NM — Not Meaningful

Revenue from tenants is primarily related to contractual rent received from tenants in our MOBs.

It also includes operating expense reimbursements which increase in proportion with the increase in property operating and maintenance expenses in our MOB segment.

Revenues from tenants is primarily related to contractual rent received from tenants in our MOBs.

It also includes operating expense reimbursements which generally increase in proportion with the increase in property operating and maintenance expenses in our MOB segment.

Pursuant to many of our lease agreements in our MOBs, tenants are required to pay their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, in addition to base rent.

Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third-party property management fees.

During the three months ended September 30, 2020, the MOB segment contributed a $0.8 million increase in NOI as compared to the three months ended September 30, 2019.

Of our 17 Acquisitions during the period from January 1, 2019 through September 30, 2020, 12 were MOBs which contributed a $0.8 million increase in NOI and our Disposition properties contributed a $0.3 million decrease in NOI due to lower property operating expenses, while NOI from our Same Store properties was relatively flat year-over-year.

During the three months ended March 31, 2021, the MOB segment contributed a $0.2 million decrease in NOI as compared to the three months ended March 31, 2020.

Of our ten Acquisitions during the period from January 1, 2020 through March 31, 2021, six were MOBs which contributed a $0.5 million increase in NOI and our Disposition properties contributed a $49,000 increase in NOI due to non-recurring property operating expenses, while NOI from our Same Store properties decreased by $0.7 million during the three months ended March 31, 2021 as compared to March 31, 2020.

Segment Results — Triple-Net Leased Healthcare Facilities

The following table presents the components of NOI and the period to period change within our triple-net leased healthcare facilities segment for the three months ended September 30, 2020 and 2019:

The following table presents the components of NOI and the period to period change within our triple-net leased healthcare facilities segment for the three months ended March 31, 2021 and 2020:

Same Store (1)

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Segment Total (4)

Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2021 2020 $ 2021 2020 $ 2021 2020 $ 2021 2020 $

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however, they may be paid by us and reimbursed by the tenants.

During the three months ended September 30, 2020, revenue from tenants in our triple-net leased healthcare facilities segment increased $0.5 million compared to the three months ended September 30, 2019, driven by our Same Store Properties.

Property operating and maintenance expenses of $0.8 million and $0.5 million during the three months ended September 30, 2020 and 2019, respectively, primarily relates to property taxes and operating expenses.

During the three months ended March 31, 2021, revenue from tenants in our triple-net leased healthcare facilities segment increased $0.1 million compared to the three months ended March 31, 2020, driven by our Same Store Properties.

Property operating and maintenance expenses of $1.0 million and $0.5 million during the three months ended March 31, 2021 and 2020, respectively, primarily relates to property taxes and operating expenses.

Segment Results — Seniors Housing - Operating Properties

The following table presents the components of NOI and the period to period change within our SHOP segment for the nine months ended September 30, 2020 and 2019:

The following table presents the components of NOI and the period to period change within our SHOP segment for the three months ended March 31, 2021 and 2020:

Same Store (1)

2 unchanged sentences

Segment Total (4)

Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2021 2020 $ 2021 2020 $ 2021 2020 $ 2021 2020 $

4 unchanged sentences

(1) Our SHOP segment included 53 Same Store properties, including two land parcels.

(2) Our SHOP segment included five Acquisition properties.

(3) Our SHOP segment included one Disposition property.

(2) Our SHOP segment included four Acquisition properties.

(3) Our SHOP segment included 12 Disposition properties.

(4) Our SHOP segment included 57 properties, including two land parcels.

Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services.

Revenue from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services.

Property operating and maintenance expenses relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators, and costs associated with maintaining the physical site.

During the three months ended September 30, 2020, revenues from tenants decreased by $0.3 million in our SHOP segment as compared to the three months ended September 30, 2019 which was primarily driven by a decrease in revenue of $4.7 million due to our Same Store properties, which includes our Transition Properties, partially offset by an increase of $4.6 million due to our Acquisition properties.

Revenues declined in our Same Store SHOP properties primarily due to a decrease in occupancy as a result of the impact of COVID-19 as discussed above.

SHOP occupancy has decline from 84.1% as of March 31, 2020 to 79.5% as of June 30, 2020, and to 77.9% as of September 30, 2020.

The decline in SHOP occupancy from second quarter included a 0.5% reduction in occupancy due to the transition of the LaSalle Properties from our triple-net leased healthcare facilities segment into our SHOP segment as described in more detail below.

Excluding the LaSalle Properties, SHOP occupancy would have been 78.4% as of September 30, 2020.

This decline in occupancy which also represented a decline from September 30, 2019, when SHOP occupancy was 85.1%.

Regulatory and government-imposed restrictions and infectious disease protocols have hindered and continue to hinder ability to accommodate and conduct in-person tours and process and attract new move-ins at our SHOP properties which has affected and could continue to affect our ability to fill vacancies.

In addition, we also generated a portion of our SHOP revenue from skilled nursing facilities (including ancillary revenue from non-residents) at four of our Same Store SHOP properties.

This revenue declined $2.0 million from $5.1 million during the three months ended September 30, 2019 to $3.1 million during the three months ended September 30, 2020 as a result of us limiting the services we offer at our skilled nursing facilities, during the COVID-19 pandemic, to protect our residents and on-site staff.

We also offered COVID-related rent concessions of $0.5 million for the three months ended September 30, 2020.

These revenue decreases were partially offset by $1.1 million in COVID-19 surcharges we began billing residents for Personal Protective Equipment (“PPE”) during the third quarter 2020, and less bad debt expense of $0.9 million relating to the LaSalle tenant, as described further below.

During the three months ended September 30, 2020, property operating and maintenance expenses increased $1.4 million in our SHOP segment as compared to the three months ended September 30, 2019, primarily due to an increase of $3.9 million due to our SHOP Acquisition properties, partially offset by a decrease of $2.4 million in our Same Store properties, which includes our Transition Properties.

We had a decrease in operating costs of $2.4 million in our Same Store properties.

This decrease was partly due to $0.5 million of funds received through the CARES ACT.

The full amount of the CARES Act funds was recognized as a reduction in our Same Store property operating expenses in the table above for the three months ended September 30, 2020 to offset the increase in operating costs related to COVID-19, which were $1.8 million for the three months ended September 30, 2020.

During the three months ended March 31, 2021, revenues from tenants decreased by $16.7 million in our SHOP segment as compared to the three months ended March 31, 2020 which was primarily driven by a decrease in revenue of $9.9 million due to our Same Store properties, which includes our Transition Properties, as well as a decrease in revenue of $8.6 million due to our Disposition properties.

These revenue decreases were partially offset by an increase of $1.8 million due to our Acquisition properties.

These revenue decreases were also offset by $0.5 million in COVID-19 surcharges during the quarter related to billing residents for Personal Protective Equipment (“PPE”).

Revenues declined in our Same Store SHOPs primarily due to a decrease in occupancy as a result of the impact of COVID-19 as discussed above.

SHOP occupancy has declined from 84.1% as of March 31, 2020 to 72.7% as of March 31, 2021.

Regulatory and government-imposed restrictions and infectious disease protocols have hindered, and continue to hinder, our ability to accommodate and conduct in-person tours, process and attract new move-ins at our SHOPs and these and other impacts of the COVID-19 pandemic have affected, and could continue to affect, our ability to fill vacancies.

In addition, we also generated a portion of our SHOP revenue from skilled nursing facilities (which include ancillary revenue from non-residents) at three of our Same Store SHOPs.

This revenue declined $0.8 million from $2.6 million during the three months ended March 31, 2020 to $1.8 million during the quarter ended March 31, 2021 as a result of us limiting the services we offer at our skilled nursing facilities, during the COVID-19 pandemic, to protect our residents and on-site staff.

We also offered COVID-related rent concessions of $0.1 million for the quarter ended March 31, 2021.

During the three months ended March 31, 2021, property operating and maintenance expenses decreased $13.1 million in our SHOP segment as compared to the three months ended March 31, 2020, primarily due to a decrease of $6.6 million due to our Same Store properties, which include our Transition properties, and a decrease of $7.9 million from our Disposition properties, partially offset by an increase of $1.5 million in our Acquisition properties.

The total decrease in Same Store operating costs mainly related to funds received through the CARES Act of $5.1 million which offset costs incurred from the ongoing COVID-19 pandemic which totaled $0.7 million for the quarter ended March 31, 2021.

The full amount of the CARES Act funds was recognized as a reduction to our Same Store property operating expenses in the table above for the quarter ended March 31, 2021.

The remaining decrease in property operating expenses at our Same Store properties are explained by lower operating expenses incurred due to lower levels of occupancy.

As a result we experienced a decrease in Same Store operating costs of $6.6 million year over year.

There can be no assurance that the program will be extended or any further amounts received.

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The LaSalle Properties

On July 1, 2020, we transitioned the LaSalle Properties from our triple-net leased healthcare facilities segment to our SHOP segment, and the LaSalle Properties are now leased to one of our TRSs and operated and managed on our behalf by a third-party operator.

As of September 30, 2019 the LaSalle Properties are reported in the Transition Properties.

As of September 30, 2020, the prior tenants at the LaSalle Properties remain in default of the forbearance agreement and owes us $12.7 million of rent, property taxes, late fees, and interest receivable thereunder .

We have the entire receivable balance, including any monetary damages, and related income from the LaSalle Properties fully reserved as of September 30, 2020 and 2019.

We incurred bad debt expense of $0.3 million and $1.2 million, related to the LaSalle Properties during the three months ended September 30, 2020 and 2019, respectively, which is included as a reduction in revenue from tenants on the consolidated statement of operations.

Now that the transition is complete, we have gained more control over the operations of the LaSalle Properties, and we believe this will allow us to improve performance and the cash flows generated by the LaSalle Properties.

There can be no assurance, however, that completing this transition will result in us achieving our operational objectives.

On July 1, 2020, we transitioned four triple-net leased properties in Texas (collectively, the “LaSalle Properties”) from the triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties are now leased to our TRS and operated and managed on our behalf by a third-party operator.

We have filed proofs of claims related to amounts previously awarded to it from the bankruptcy proceeding, however, we have no amounts due from the LaSalle Tenant in its consolidated balance sheets as of March 31, 2021 and December 2020 as we do not believe recovery is likely against the LaSalle Tenant.

Other Results of Operations

Impairment Charges

We incurred $1.0 million of impairment charges for the three months ended September 30, 2020 on the 11 Michigan SHOP properties as a result of expected additional closing costs that were not previously anticipated, which reduced the net amount expected to be realized on the sale of properties.

See Note 3 — Real Estate Investments to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges for the three months ended September 30, 2020.

We incurred $0.9 million of impairment charges for the three months ended March 31, 2021 due to an amended purchase and sale agreement (“PSA”) which reduced the sales price of the skilled nursing facility in Wellington, Florida to $30.7 million.

We incurred $18.0 million of impairment charges for the three months ended March 31, 2020 related to an amendment to a purchase and sale agreement (“PSA”) related to the sale of SHOP assets located in Michigan (the “Michigan SHOPs”) to reduce

the number of properties to be sold from 14 to 11 and to reduce the sale price from $71.8 million to $11.8 million.

Operating Fees to Related Parties

Operating fees to related parties were $6.0 million for the three months ended September 30, 2020 and $5.9 million for September 30, 2019 respectively.

Operating fees to related parties were $5.9 million for the three months ended March 31, 2021 and $6.0 million for March 31, 2020 respectively.

Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis.

We pay a base management fee equal to $1.6 million per month, while the variable portion of the base management fee is equal, per month, to one twelfth per month of 1.25% of the cumulative net proceeds of any equity raised subsequent to February 17, 2017.

Asset management fees were $5.0 million and $4.9 million or the three months ended September 30, 2020 and 2019, respectively.

The increase was due to an increase in the variable portion of the base management fee due to our offering of Series A Preferred Stock in the fourth quarter of 2019.

Property management fees were $1.0 million for the three months ended September 30, 2020 and $1.1 million for the three months ended September 30, 2019.

Asset management fees were $5.0 million in the three months ended March 31, 2021 and 2020, as we had raised any equity in the fourth quarter of 2019.

In May 2021, we raised net proceeds of $56.7 million in equity pursuant to an underwritten offering of our Series A Preferred Stock (see N ote 17 — Subsequent Events).

Property management fees were $1.0 million for the three months ended March 31, 2021 and $1.1 million for the three months ended March 31, 2020.

Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.

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Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses were $0.2 million for the three months ended September 30, 2020, compared to approximately $0.1 million for the three months ended September 30, 2019.

Acquisition and transaction related expenses were $0.1 million for the three months ended March 31, 2021, compared to approximately $0.3 million for the three months ended March 31, 2020.

The expenses in both periods relate to indirect costs related to acquisitions.

General and Administrative Expenses

General and administrative expenses decreased to $3.2 million for the three months ended September 30, 2020 compared to $4.8 million for the three months ended September 30, 2019, which includes $2.3 million and $2.4 million for the three months ended September 30, 2020 and September 30, 2019, respectively, incurred in expense reimbursements and distributions on

partnership units of the OP designated as “Class B Units” (“Class B Units”) to related parties.

General and administrative expenses decreased to $6.1 million for the three months ended March 31, 2021 compared to $6.7 million for the three months ended March 31, 2020, which includes $2.6 million and $2.6 million for the three months ended March 31, 2021 and March 31, 2020, respectively, incurred in expense reimbursements and distributions on partnership units of the OP designated as “Class B Units” (“Class B Units”) to related parties.

Class B Units will not receive distributions, and no expense will be incurred, for so long as we pay distributions to our common stockholders in stock instead of cash.

For additional details on these awards, see Note 9 — Related Party Transactions and Agreements to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Depreciation and Amortization Expenses

Depreciation and amortization expense increased $0.1 million to $20.2 million for the three months ended September 30, 2020 from $20.1 million for the three months ended September 30, 2019.

The decrease was due to acquisitions, dispositions and held for sale classifications.

Depreciation and amortization expense decreased $0.1 million to $20.1 million for the three months ended March 31, 2021 from $20.2 million for the three months ended March 31, 2020.

Gain on Sale of Real Estate Investments

During the three months ended September 30, 2020, we did not dispose of any properties.

In the three months ended September 30, 2019 we disposed of one MOB property for a contract purchase price of $13.6 million and one SHOP property for a contract purchase price of $3.5 million.

These dispositions resulted in an aggregated gain on sale of $2.7 million for the three months ended September 30, 2019.

During the three months ended March 31, 2021, we transferred the remaining four Michigan SHOPs to the buyer at a second closing in the first quarter of 2021 and as a result, we recorded a loss on sale of $0.2 million during the three months ended March 31, 2021.

During the three months ended March 31, 2020 we sold one MOB property which resulted in a gain on sale of $2.3 million.

This property sold for a contract purchase price of $8.6 million.

Interest Expense

Interest expense decreased by $0.2 million to $12.8 million for the three months ended September 30, 2020 from $13.0 million for the three months ended September 30, 2019.

The decrease in interest expense resulted from lower interest rates, partially offset by the increase on average outstanding debt in 2020 compared to 2019.

As of September 30, 2020 our outstanding debt obligations were $1.3 billion at a weighted average interest rate of 3.57% per year.

As of September 30, 2019, we had total borrowings of $1.0 billion, at a weighted average interest rate of 4.45% per year.

Our interest expense in future periods will vary based on our level of future borrowings and the cost of borrowings among other factors.

Interest expense decreased by $0.9 million to $12.3 million for the three months ended March 31, 2021 from $13.3 million for the three months ended March 31, 2020.

The decrease in interest expense resulted from lower interest rates.

As of March 31, 2021 our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 3.55% per year.

As of March 31, 2020, we had total borrowings of $1.3 billion, at a weighted average interest rate of 3.79% per year.

Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings among other factors.

Interest and Other Income

Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.

Interest and other income was approximately $2,000 and a $11,000 income for the three months ended September 30, 2020 and 2019, respectively.

Interest and other income was approximately $52,000 and a $5,000 income for the three months ended March 31, 2021 and 2020, respectively.

Gain (Loss) on Non-Designated Derivatives

The gain (loss) on non-designated derivative instruments for the three months ended September 30, 2020 and 2019 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates.

The gain (loss) on non-designated derivative instruments for the three months ended March 31, 2021 and 2020 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates.

Income Tax Expense

We recorded an income tax expense of $0.1 million and a $0.3 million benefit for the three months ended September 30, 2020 and 2019, respectively, primarily related to deferred tax assets generated by temporary differences and current period net operating income associated with our TRS.

We recorded an income tax expense of $48,000 and $0.3 million for the three months ended March 31, 2021 and 2020, respectively, primarily related to deferred tax assets generated by temporary differences and current period net operating income associated with our TRS.

These deferred tax assets are partially offset by other income tax benefits incurred during the same period.

Income taxes generally relate to our SHOPs, which are leased by our TRS.

Because of our TRS’s recent operating history of losses and the on-going impacts of the COVID-19 pandemic on the results of operations of our SHOP assets, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets;

thus we have retained a 100% valuation allowance as of March 31, 2021 of $4.3 million.

If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive income (loss).

Net Loss Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $0.4 million for the three months ended September 30, 2020.

Net loss attributable to non-controlling interests was approximately $0.0 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively.

These amounts represent the portion of our net loss that is related to the OP Units and non-controlling interest holders in our subsidiaries that own certain properties.

Comparison of the Nine Months Ended September 30, 2020 and 2019

Information based on Same Store, Acquisitions and Dispositions allows us to evaluate the performance of our portfolio based on a consistent population of properties.

Net loss attributable to common stockholders was $58.1 million and $40.0 million for the nine months ended September 30, 2020 and 2019, respectively.

The following table shows our results of operations for the nine months ended September 30, 2020 and 2019 and the period to period change by line item of the consolidated statements of operations:

Nine Months Ended September 30, Increase (Decrease)

(Dollars in thousands) 2020 2019 $

Revenue from tenants $ 290,734 $ 280,445 $ 10,289

Operating expenses:

Property operating and maintenance 183,189 172,258 10,931

Impairment charges 32,842 22,634 10,208

Operating fees to related parties 17,969 17,535 434

Acquisition and transaction related 680 161 519

General and administrative 14,622 15,394 (772)

Depreciation and amortization 60,589 61,124 (535)

Total expenses

309,891 289,106 20,785

Operating loss before gain on sale of real estate investments (19,157) (8,661) (10,496)

Gain on sale of real estate investments 2,306 8,793 (6,487)

Operating (loss) income

(16,851) 132 (16,983)

Other income (expense):

Interest expense (38,677) (39,739) 1,062

Interest and other income

Loss on non-designated derivatives (45) (50) 5

Total other expenses

(38,679) (39,774) 1,095

Loss before income taxes (55,530) (39,642) (15,888)

Income tax expense (78) (364) 286

Net loss (55,608) (40,006) (15,602)

Net (income) loss attributable to non-controlling interests (223) 52 (275)

Preferred stock dividends (2,224) — (2,224)

Net loss attributable to common stockholders $ (58,055) $ (39,954) $ (18,101)

Transition Properties

See Note 3 — Real Estate Investments, Net - “Impairments” and “Held for Use Assets” and Note 15 — Segment Reporting to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Over the last three years, we have had properties transfer between operating segments.

As a result, the Company provides transition disclosure adjustments only for properties that have transitioned since the prior numbers were previously reported.

The Company had the following:

Collectively, these are referred generically as the “Transition Properties.”

Beginning with our reporting for the period ended September 30, 2020, these properties are part of the “Transition Properties” and the resultant change has been applied retrospectively to historical periods.

As of September 30, 2020, the LaSalle Properties are reported in the Transition Properties.

For purposes of the discussion and analysis of the segment results of operations during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, the results of operations for the Transition Properties are included as part of our SHOP segment and excluded entirely from our triple-net leased healthcare facilities segment.

The following table presents by segment Same Store properties NOI before and after adjusting for the Transition Property as described above, to arrive at ‘Segment Same Store’ results.

Our MOB segment was not affected by the Transition Property.

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Increase (Decrease)

Revenue from tenants $ 27,195 $ (15,261) $ 11,934 $ 23,051 $ (12,271) $ 10,780 $ 4,144 $ (2,990) $ 1,154

Property operating and maintenance 16,512 (14,662) 1,850 12,125 (11,076) 1,049 4,387 (3,586) 801

NOI $ 10,683 $ (599) $ 10,084 $ 10,926 $ (1,195) $ 9,731 $ (243) $ 596 $ 353

Revenue from tenants $ 172,185 $ 15,261 $ 187,446 $ 179,872 $ 12,271 $ 192,143 $ (7,687) $ 2,990 $ (4,697)

Property operating and maintenance 132,598 14,662 147,260 135,049 11,076 146,125 (2,451) 3,586 1,135

NOI $ 39,587 $ 599 $ 40,186 $ 44,823 $ 1,195 $ 46,018 $ (5,236) $ (596) $ (5,832)

Net Operating Income

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio.

NOI is equal to revenue from tenants less property operating and maintenance.

NOI excludes all other financial statement amounts included in net income (loss) attributable to common stockholders.

We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measure s included elsewhere in this Quarterly Report for additional disclosure and a reconciliation to our net income (loss) attributable to common stockholders.

Segment Results — Medical Office Buildings

The following table presents the components of NOI and the period to period change within our MOB segment for the nine months ended September 30, 2020 and 2019:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease)

(Dollars in thousands) 2020 2019 $ 2020 2019 $ 2020 2019 $ 2020 2019 $

Revenue from tenants

$ 71,434 $ 71,525 $ (91) $ 6,309 $ 3,322 $ 2,987 $ 227 $ 1,150 $ (923) $ 77,970 $ 75,997 $ 1,973

Property operating and maintenance 21,212 21,808 (596) 1,858 1,327 531 36 567 (531) 23,106 23,702 (596)

NOI $ 50,222 $ 49,717 $ 505 $ 4,451 $ 1,995 $ 2,456 $ 191 $ 583 $ (392) $ 54,864 $ 52,295 $ 2,569

_______________

(1) Our MOB segment included 104 Same Store properties.

(2) Our MOB segment included 12 Acquisition properties.

(3) Our MOB segment included seven Disposition properties.

(4) Our MOB segment included 116 properties.

Revenue from tenants is primarily derived from contractual rent received from tenants in our MOBs.

It also includes operating expense reimbursements which increase in proportion with the increase in property operating and maintenance expenses in our MOB segment.

During the nine months ended September 30, 2020, the MOB segment contributed a $2.6 million increase in NOI as compared to the nine months ended September 30, 2019.

Of our 17 Acquisitions during the period from January 1, 2019 through September 30, 2020, 12 were MOBs which contributed a $2.5 million increase in NOI and our Same Store properties contributed a $0.5 million increase in NOI mainly due to a decrease in property operating and maintenance, which was partially offset by seven MOB Disposition properties which contributed a $0.4 million decrease in NOI.

Segment Results — Triple-Net Leased Healthcare Facilities

The following table presents the components of NOI and the period to period change within our triple-net leased healthcare facilities segment for the nine months ended September 30, 2020 and 2019:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

(Dollars in thousands) 2020 2019 $ 2020 2019 $ 2020 2019 $ 2020 2019 $

Revenue from tenants

$ 11,934 $ 10,780 $ 1,154 $ — $ — $ — $ — $ — $ — $ 11,934 $ 10,780 $ 1,154

Property operating and maintenance 1,850 1,049 801 — — — — — — 1,850 1,049 801

$ 10,084 $ 9,731 $ 353 $ — $ — $ — $ — $ — $ — $ 10,084 $ 9,731 $ 353

_______________

(1) Our triple-net leased healthcare facilities segment included 18 Same Store properties.

(2) Our triple-net leased healthcare facilities segment included zero Acquisition properties.

(3) Our triple-net leased healthcare facilities segment included zero Disposition properties.

(4) Our triple-net leased healthcare facilities segment included 18 properties.

Revenue from tenants for our triple-net leased healthcare facilities generally consist of fixed rental amounts (which may be subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms.

These revenues are contractual rent received from tenants that does not vary based on the underlying operating performance of the properties.

In addition, revenue from tenants also includes operating expense reimbursements in our triple-net leased healthcare facilities segment, which generally include reimbursement for property operating expenses that we pay on behalf of tenants in this segment.

However, pursuant to many of our lease agreements in this segment, tenants are generally directly responsible for all operating costs of the respective properties in addition to base rent.

Property operating and maintenance expenses should typically include minimal activity in our triple-net leased healthcare facilities segment except for real estate taxes and insurance.

Real estate taxes are typically paid directly by the tenants;

however, they may be paid by us and reimbursed by the tenants.

During the nine months ended September 30, 2020, revenue from tenants in our triple-net leased healthcare facilities segment increased $1.2 million compared to the nine months ended September 30, 2019 due to our Same Store properties.

Property operating and maintenance expenses of $1.9 million during the nine months ended September 30, 2020 primarily relates to property taxes and operating expenses.

Segment Results — Seniors Housing - Operating Properties

The following table presents the components of NOI and the period to period change within our SHOP segment for the nine months ended September 30, 2020 and 2019:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

(Dollars in thousands) 2020 2019 $ 2020 2019 $ 2020 2019 $ 2020 2019 $

Revenue from tenants

$ 187,446 $ 192,143 $ (4,697) $ 13,384 $ 465 $ 12,919 $ — $ 1,060 $ (1,060) $ 200,830 $ 193,668 $ 7,162

Property operating and maintenance 147,260 146,125 1,135 10,973 376 10,597 — 1,006 (1,006) 158,233 147,507 10,726

$ 40,186 $ 46,018 $ (5,832) $ 2,411 $ 89 $ 2,322 $ — $ 54 $ (54) $ 42,597 $ 46,161 $ (3,564)

_______________

(1) Our SHOP segment included 64 Same Store properties, including two land parcels.

(2) Our SHOP segment included five Acquisition properties.

(3) Our SHOP segment included one Disposition property.

(4) Our SHOP segment included 69 properties, including two land parcels.

Property operating

and maintenance expenses relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators, and costs associated with maintaining the physical site.

During the nine months ended September 30, 2020, revenues from tenants increased by $7.2 million in our SHOP segment as compared to the nine months ended September 30, 2019, primarily driven by $12.9 million of additional revenue through our Acquisition properties and a decrease in bad debt expense related to tenants at two of our Florida properties located in Lutz and Wellington, Florida (collectively, the “NuVista Tenant”) of $0.8 million compared to the nine months ended September 30, 2019.

For the nine months ended September 30, 2020, an additional $1.1 million was generated through COVID-19 surcharges which we began billing residents for PPE during the third quarter 2020.

These revenue increases were partially offset by a decrease of $4.7 million to our Same Store properties, which includes our Transition Properties.

Revenues declined in our Same Store SHOP properties primarily due to a decrease in occupancy as a result of COVID-19.

SHOP occupancy has declined from 84.1% as of March 31, 2020, to 79.5% as of June 30, 2020 and 77.9% as of September 30, 2020.

Excluding the four LaSalle Properties, SHOP occupancy would have been 78.4% as of September 30, 2020.

This decline in occupancy which also represented a decline from September 30, 2019, when SHOP occupancy was 85.1%.

Regulatory and government-imposed restrictions and infectious disease protocols have hindered and continue to hinder our ability to accommodate and conduct in-person tours and process and attract new move-ins at our SHOP properties which has affected and could continue to affect our ability to fill vacancies.

In addition, we also generate a portion of our SHOP revenue from skilled nursing facilities (including ancillary revenue from non-residents) at four of our same store SHOP properties.

This revenue declined $2.8 million from $12.8 million during the nine months ended September 30, 2019 to $10.0 million during the nine months ended September 30, 2020 as a result of us limiting the services we offer at our facilities, during the COVID-19 pandemic, to protect our residents and on-site staff.

These revenue decreases were partially offset by $1.1 million in COVID-19 surcharges we began billing residents for PPE during the third quarter 2020.

We also offered $0.8 million of rent concessions related to COVID-19.

During the nine months ended September 30, 2020, property operating and maintenance expenses increased $10.7 million in our SHOP segment as compared to the nine months ended September 30, 2019, primarily due to an increase of $10.6 million due to our Acquisition properties and an increase of $1.1 million from our Same Store properties, which includes our Transition Properties.

These increases were partially offset by a decrease of $1.0 million from our Disposition properties.

We had an increase in operating costs, primarily related to increased labor and supply costs related to COVID-19 in our SHOP segment of $5.0 million during the nine months ended September 30, 2020.

These increased operating costs were partially offset by $3.6 million in CARES ACT funds.

The full amount of these CARES ACT funds was recognized as a reduction in our Same Store property operating expenses in the table above for the nine months ended September 30, 2020 to offset the increase in operating costs related to COVID-19.

There can be no assurance that the program will be extended or any further amounts received.

See the “ Overview - Management Update on the Impacts of the COVID-19 Pandemic ” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken in response.

The LaSalle Properties

Beginning with our reporting for the period ending September 30, 2020 these properties are part of the “Transition Properties” and the resultant change has been applied retrospectively to historical periods.

As of September 30, 2020, the LaSalle Properties are reported in the Transition Properties.

As of September 30, 2020, the prior tenants at the LaSalle Properties remain in default of a forbearance agreement and owes us $12.7 million of rent, property taxes, late fees, and interest receivable thereunder.

We have the entire receivable balance, including any monetary damages, and related income from the prior tenant fully reserved as of September 30, 2020.

We incurred $0.3 million of bad debt expense, including straight-line rent write-offs, related to the LaSalle Properties during the nine months ended September 30, 2020, and we incurred $3.1 million in bad debt expense, including straight-lint rent write-offs during the nine months ended September 30, 2019, which is included as a reduction in revenue from tenants on the consolidated statement of operations.

The NuVista Properties

The NuVista Tenant was in default under its leases beginning from July 2017, and the applicable properties transitioned to the SHOP operating segment as of January 1, 2018 and April 1, 2019, respectively.

In connection with these transitions, we replaced the NuVista Tenant as a tenant with TRSs and engaged a third party to operate the properties.

$0.3 million in bad debt expense for the nine months ended September 30, 2020.

We incurred $1.1 million of bad debt expense related to the NuVista Tenant during the nine months ended September 30, 2019, respectively which is included as a reduction in revenue from tenants during the nine months ended September 30, 2020 and September 30, 2019.

Other Results of Operations

Impairment Charges

We recorded $32.8 million and $22.6 million of impairment charges for the nine months ended September 30, 2020 and 2019, respectively.

See Note 3 — Real Estate Investments to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges for the nine months ended September 30, 2020.

The impairment charges for the nine months ended September 30, 2019 primarily related to assets held for sale during that period in 2018 that had carrying values in excess of the net sales price of the assets.

Operating Fees to Related Parties

Operating fees to related parties increased $0.4 million to $18.0 million for the nine months ended September 30, 2020 from $17.5 million for the nine months ended September 30, 2019.

Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis (see — Results of Operations — Comparison of the Three Months Ended September 30, 2020 and 2019 for additional information).

Asset management fees were $15.0 million and $14.6 million for the nine months ended September 30, 2020 and 2019, respectively.

The increase was due to an increase in the variable portion of the base management fee due to our offering of Series A Preferred Stock in the fourth quarter of 2019.

Property management fees increased $0.1 million to $3.0 million during the nine months ended September 30, 2020 from $2.9 million for the nine months ended September 30, 2019.

Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.

See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on our fees and expense reimbursements.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses were $0.7 million for the nine months ended September 30, 2020 and $0.2 million for the nine months ended September 30, 2019.

The expenses in both periods relate to indirect costs related to acquisitions.

General and Administrative Expenses

General and administrative expenses decreased $0.8 million to $14.6 million for the nine months ended September 30, 2020 compared to $15.4 million for the nine months ended September 30, 2019, which includes $6.4 million and $7.9 million for the nine months ended September 30, 2020 and September 30, 2019, respectively, incurred in expense reimbursements and distributions on partnership units of the OP designated as Class B Units to related parties.

Class B Units will not receive distributions, and no expense will be incurred, for so long as we pay distributions to our common stockholders in stock instead of cash.

The decrease was primarily due to the reduction of expense related to 2019 bonus awards made by the Advisor to employees of the Advisor or its affiliates of $1.2 million as well as the decrease in distributions on Class B Units of $0.1 million, partially offset by increases of professional fees for audit, transfer agent and legal services as well as certain expenses reimbursed to related parties totaling $0.6 million.

For additional details on the 2019 bonus awards, see Note 9 — Related Party Transactions and Agreements to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Depreciation and Amortization Expenses

Depreciation and amortization expense decreased $0.5 million to $60.6 million for the nine months ended September 30, 2020 from $61.1 million for the nine months ended September 30, 2019.

The decrease was due to a decrease in Same Store depreciation and amortization of $3.8 million primarily due to several intangible assets becoming fully amortized and a decrease due to dispositions of $0.3 million, partially offset by an increase due to our acquisitions of approximately $3.5 million.

Gain on Sale of Real Estate Investments

During the nine months ended September 30, 2020, we sold one MOB property which resulted in a gain on sale of $2.3 million.

The property sold for a contract price of $8.6 million.

During the nine months ended September 30, 2019, we sold six MOB properties located in New York which resulted in gains on sale.

These properties sold for a contract price of $58.8 million.

Also, in August 2019, we sold one of our SHOP

properties for a contract price of $3.5 million.

As a result, of these sales, we recorded an aggregate gain on sale of real estate investments of $8.8 million for the nine months ended September 30, 2019.

Interest Expense

Interest expense decreased $1.1 million to $38.7 million for the nine months ended September 30, 2020 from $39.7 million for the nine months ended September 30, 2019.

The decrease in interest expense resulted from lower interest rates, partially offset by the increase on average outstanding debt in 2020 compared to 2019.

As of September 30, 2020, we had total borrowings of $1.3 billion, at a weighted average interest rate of 3.57% per year.

As of September 30, 2019 we had total borrowings of $1.0 billion, at a weighted average interest rate of 4.45% per year.

Our interest expense in future periods will vary based on our level of future borrowings and the cost of borrowings, among other factors.

Interest and Other Income

Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.

Interest and other income was approximately $43,000 for the nine months ended September 30, 2020 and $15,000 for the nine months ended September 30, 2019.

Gain (Loss) on Non-Designated Derivatives

Gain (loss) on non-designated derivative instruments for the nine months ended September 30, 2020 and 2019 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with the Fannie Mae Master Credit Facilities, which have floating interest rates.

Income Tax Benefit (expense)

We recorded an income tax benefit of $0.1 million and an expense of $0.4 million for the nine months ended September 30, 2020 and 2019, respectively, related to deferred tax assets generated by current period net operating losses associated with our TRS.

These deferred tax assets are partially offset by other income tax benefit incurred during the same period.

Income taxes generally relate to our SHOPs, which are leased by our TRS.

Net Loss Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $0.2 million and approximately $52,000 for the nine months ended September 30, 2020 and 2019, which represents the portion of our net income that is related to the OP Units and other non-controlling interest holders in our subsidiaries that own certain properties.

Cash Flows from Operating Activities

During the nine months ended September 30, 2020, net cash provided by operating activities was $41.8 million.

During the three months ended March 31, 2021, net cash provided by operating activities was $14.0 million.

The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses.

Cash inflows include non-cash items of $42.8 million (net loss of $55.6 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges), an increase in accounts payable and accrued expenses of $6.3 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees.

These cash inflows were partially offset by an increase in prepaid expenses and other assets of $3.1 million and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $2.3 million.

During the nine months ended September 30, 2019, net cash provided by operating activities was $39.4 million.

The level of cash flows provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses.

Cash inflows include non-cash items of $45.5 million (net loss of $40.0 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, share based compensation, gain on non-designated derivatives and impairment charges).

In addition, cash provided by operating activities was impacted by an increase in accounts payable and accrued expenses of $3.6 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees and an increase in deferred rent of $1.0 million.

These cash inflows were partially offset by a net increase in prepaid and other assets of $7.7 million and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $3.0 million.

Cash inflows include non-cash items of $11.5 million (net loss of $11.4 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges), an decrease in prepaid expenses and other assets of $2.7 million and in increase in deferred rent an other liabilities of $1.2 million.

These cash inflows were partially offset a decrease in accounts payable and accrued expenses of $1.2 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.2 million.

During the three months ended March 31, 2020, net cash provided by operating activities was $19.0 million.

Cash inflows include non-cash items of $14.3 million (net loss of $24.1 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges), an increase in accounts payable and accrued expenses of $4.3 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees and a decrease in prepaid expenses and other assets of $1.3 million.

These cash inflows were partially offset by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $1.2 million.

Cash Flows from Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2020 was $101.8 million.

Net cash used in investing activities during the three months ended March 31, 2021 was $10.9 million.

The cash used in investing activities included $6.7 million for the acquisition of one property and $4.0 million in capital expenditures.

Net cash used in investing activities during the three months ended March 31, 2020 was $93.8 million.

The cash used in investing activities included $91.0 million for the acquisition of eight properties and $11.1 million in capital expenditures.

These cash outflows were partially offset by proceeds from sale of real estate of $8.3 million.

Net cash provided by investing activities during the nine months ended September 30, 2019 was $40.1 million.

The net cash used in investing activities was due to cash used of $91.6 million for the acquisition of nine properties during the period and $10.9 million in capital expenditures, partially offset by proceeds from sale of real estate of $62.5 million.

Cash Flows from Financing Activities

Net cash used in financing activities of $47.7 million during the nine months ended September 30, 2020 included proceeds of $95.0 million from our Revolving Credit Facility.

Net cash used in financing activities of $1.3 million during the three months ended March 31, 2021 related to cash outflows of payments of deferred financing costs of $0.0 million and dividends paid to preferred stockholders of $0.7 million, payments for derivative instruments of $0.1 million and principal payments on mortgages of $0.3 million.

Net cash used in financing activities of $69.8 million during the three months ended March 31, 2020 related to proceeds of $95.0 million from our Revolving Credit Facility.

These cash inflows were partially offset by distributions to stockholders of $13.2 million, common stock repurchases of $10.5 million, payments of deferred financing costs of $0.9 million and dividends paid to preferred stockholders of $0.2 million.

Net cash used in financing activities of $19.1 million during the nine months ended September 30, 2019 related to payments on our prior credit facility we, through the OP, entered into on March 21, 2014, of $243.3 million, mortgage principal repayments of $27.4 million, distributions to stockholders of $38.2 million, common stock repurchases of $13.3 million and payments of deferred financing costs of $10.3 million.

These cash outflows were partially offset by total proceeds received under our Credit Facility of $313.6 million.

Liquidity and Capital Resources

The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which has, and could continue to have, an adverse effect on the amount of cash we receive from our operations.

The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which has had, and could continue to have, an adverse effect on the amount of cash we receive from our operations.

In addition to the discussion below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken in response.

As of September 30, 2020, we had $82.2 million of cash and cash equivalents.

As of March 31, 2021, we had $74.1 million of cash and cash equivalents.

Our ability to use this cash on hand is restricted.

Under our Credit Facility, as amended on August 2020, we are required to maintain a combination of cash, cash equivalents and availability for future borrowings under our revolving credit facility under our Credit Facility (our “Revolving Credit Facility”) totaling at least $50.0 million.

As of September 30, 2020, $29.5 million was available for future borrowings under our Revolving Credit Facility.

Pursuant to an amendment to our Credit Facility in August 2020, certain other restrictions and conditions described below will no longer apply starting in a quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5% (the “Commencement Quarter”).

Under our amended Credit Facility, we are required to maintain a combination of cash, cash equivalents and availability for future borrowings under our revolving credit facility under our Credit Facility (our “Revolving Credit Facility”) totaling at least $50.0 million.

As of March 31, 2021, $42.8 million was available for future borrowings under our Revolving Credit Facility.

Certain other restrictions and conditions described below will no longer apply starting in the “Commencement Quarter” which is a quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%.

As of March 31, 2021, our ratio of consolidated total indebtedness to consolidated total asset value for these purposes was 63.0%.

The Commencement Quarter may be no earlier than the fiscal quarter ending June 30, 2021.

We did not, however, satisfy the conditions to make the quarter ending June 30, 2021 the Commencement Quarter.

There can be no assurance as to if, or when, we will be able to satisfy these conditions.

Moreover, beginning in the Commencement Quarter, we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters may not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

See “Item 1A.

Risk Factors.

Our Credit Facility restricts us from paying cash distributions on or repurchasing our common stock until at least the fiscal quarter ending June 30, 2021, and there can be no assurance we will be able to resume paying distributions on our common stock, and at what rate, or continue paying dividends on our Series A Preferred Stock at the current rate.”

Following the amendment in August 2020, our Credit Facility also restricts our sources of liquidity.

We, may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Commencement Quarter.

Moreover, beginning in the Commencement Quarter, we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

Our amended Credit Facility also restricts our sources of liquidity.

Until the first day of the Commencement Quarter, we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility.

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See “Item 1A.

Risk Factors.

Risk Factors to our Annual Report on Form 10-K for the year ended December 31, 2020.

Our Credit Facility restricts our ability to use cash that would otherwise be available to us, and there can be no assurance our available liquidity will be sufficient to meet our capital needs.”

We expect to fund our future short-term operating liquidity requirements, including dividends to holders of Series A Preferred Stock, through a combination of current cash on hand, net cash provided by our property operations and proceeds from the Revolving Credit Facility, which may include amounts reborrowed following the repayments we were required to make with the net proceeds from our dispositions and Series A Preferred Stock offering completed in May 2021.

Our principal demands for cash are for acquisitions, capital expenditures, the payment of our operating and administrative expenses, debt service obligations (including principal repayment), and dividends to holders of our Series A Preferred Stock.

We closely monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months.

Our future liquidity requirements, and available liquidity, however, depend on many factors, such as the on-going impact of COVID-19 on our tenants and operators and our ability to complete our pending dispositions on their contemplated terms, or at all.

Preferred Stock Equity Line with B.

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On September 15, 2020, we entered into a preferred stock purchase agreement and registration rights agreement with B.

Riley Principal Capital, LLC (the “B.

Riley Principal Capital, LLC (“B.

Riley”), pursuant to which we have the right from time to time to sell up to an aggregate of $15 million of shares of our Series A Preferred Stock to B.

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We did not sell any shares under the Preferred Stock Equity Line during the nine months ended September 30, 2020.

As of September 30, 2020, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.4%.

We did not sell any shares under the Preferred Stock Equity Line during the quarter ended March 31, 2021 or year ended December 31, 2020.

Series A Preferred Stock Add-On Offering

On May 11, 2021, we completed an underwritten public offering of 2,352,144 shares (which includes 152,144 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of its Series A Preferred Stock for net proceeds of $56.7 million after deducting the underwriters’ discount and a structuring fee aggregating to $2.1 million.

Pursuant to the terms under the Credit Facility amendment all proceeds were used to prepay amounts outstanding under the Credit Facility.

As of March 31, 2021, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.3%.

Net debt totaled $1.2 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($74.1 million).

Gross asset value totaled $2.6 billion, which represents total real estate investments, at cost ($2.6 billion) and assets held for sale at carrying value ($10.1 million), net of gross market lease intangible liabilities $22.1 million.

Gross asset value totaled $2.6 billion, which represents total real estate investments, at cost ($2.6 billion) net of gross market lease intangible liabilities $22.2 million.

Impairment charges are already reflected within gross asset value.

As of September 30, 2020, we had total gross borrowings of $1.3 billion, at a weighted average interest rate of 3.6%.

As of March 31, 2021, we had total gross borrowings of $1.2 billion, at a weighted average interest rate of 3.5%.

As of December 31, 2020, we had total gross borrowings of $1.2 billion at a weighted average interest rate of 3.6%.

As of September 30, 2020, the carrying value of our real estate investments, at cost was $2.6 billion, with $0.9 billion of this asset value pledged as collateral for mortgage notes payable, $0.5 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities and $1.3 billion of this asset value comprising the borrowing base of the Credit Facility.

As of March 31, 2021, the carrying value of our real estate investments, at cost was $2.6 billion, with $0.9 billion of this asset value pledged as collateral for mortgage notes payable, $0.6 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities and $0.9 billion of this asset value comprising the borrowing base of the Credit Facility.

These real estate assets are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable unless the existing indebtedness associated with the property is satisfied or the property is removed from the borrowing base of the Credit Facility, which would impact availability thereunder.

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These actions may require us to add some or all of our unencumbered properties to the borrowing base under our Credit Facility.

Unencumbered real estate investments, at cost as of September 30, 2020 was $285.6 million, although three of these assets - all Michigan SHOPs and representing $10.1 million in real estate investments, at cost, were sold in November 2020, and our recently completed development property in Jupiter, Florida - representing $60.0 million in real estate investments, at cost, is currently subject to a PSA and expected to be sold.

Unencumbered real estate investments, at cost as of March 31, 2021 was $200.0 million.

There can be no assurance as to the amount of liquidity we would be able to generate from adding any of the unencumbered assets we own to the borrowing base of our Credit Facility.

Pursuant to the Credit Facility, any resulting net proceeds from these dispositions prior to the Commencement Quarter must be used to prepay amounts outstanding under the Revolving Credit Facility.

Mortgage Notes Payable

As of September 30, 2020, we had $550.7 million in mortgage notes payable outstanding.

As of March 31, 2021, we had $550.1 million in mortgage notes payable outstanding.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2021 are $1.0 million.

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The Credit Facility includes an uncommitted “accordion feature” that may be used to increase the commitments under either component of the Credit Facility by up to an additional $370.0 million to a total of $1.0 billion.

As of September 30, 2020, $345.6 million was outstanding under the Credit Facility and the unused borrowing availability under the Credit Facility was $29.5 million.

As of March 31, 2021, $323.7 million was outstanding under the Credit Facility and the unused borrowing availability under the Credit Facility was $42.8 million.

The amount available for future borrowings under the Credit Facility is based on either the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, or a minimum debt service coverage ratio with respect to the borrowing base.

Both of these amounts are calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and, therefore, availability under our Credit Facility has been adversely affected by the decreases in cash rent collected from our tenants and income from our operators due to the effects of the COVID-19 pandemic, and may continue to be adversely affected .

As of September 30, 2020, $150.0 million was outstanding under our Term Loan, and $195.6 million was outstanding under the Revolving Credit Facility.

As of March 31, 2021, $150.0 million was outstanding under our Term Loan, and $173.7 million was outstanding under the Revolving Credit Facility.

The equity interests and related rights in our wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility are pledged for the benefit of the lenders thereunder.

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The applicable margin used to determine the interest rate under both the Term Loan and Revolving Credit Facility components of the Credit Facility varies based on our leverage.

As of September 30, 2020, the Revolving Credit Facility and the Term Loan had an effective interest rate per annum equal to 3.17% and 4.95%, respectively.

The Credit Facility requires us to maintain a minimum ratio of consolidated total indebtedness to consolidated total asset value, a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges on a quarterly basis and a minimum consolidated tangible net worth.

As of September 30, 2020, we were in compliance with the financial covenants under the Credit Facility.

Fannie Mae Fannie Mae Master Credit Facilities

As of September 30, 2020, $359.3 million was outstanding under the Fannie Mae Master Credit Facilities.

As of March 31, 2021, the Revolving Credit Facility and the Term Loan had an effective interest rate per annum equal to 3.21% and 4.95%, respectively.

The Credit Facility prohibits us from exceeding a maximum ratio of consolidated total indebtedness to consolidated total asset value, and requires us to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges on a quarterly basis and a minimum consolidated tangible net

As of March 31, 2021, we were in compliance with the financial covenants under the Credit Facility.

Based upon our current expectations, we believe our operating results during the next 12 months will allow us to comply with these covenants.

Fannie Mae Master Credit Facilities

As of March 31, 2021, $355.2 million was outstanding under the Fannie Mae Master Credit Facilities.

We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool or by borrowing-up against the increased value of the collateral pool, subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

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Capital Expenditures

During the first nine months of 2020, our capital expenditures were $17.6 million, of which approximately $3.8 million was related to our development property in Jupiter, Florida, $2.8 million related our MOB segment and $7.3 million related to our SHOP segment.

During the first three months of 2021, our capital expenditures were $4.0 million, of which $0.5 million related our MOB segment and $3.5 million related to our SHOP segment.

All other capital expenditures were typical in nature for the other properties in our portfolio.

We anticipate this rate of capital expenditures for the MOB and SHOP segments throughout 2020, however, given the recent economic uncertainty created by the COVID-19 global pandemic will continue to impact our decisions on the amount and timing of future capital expenditures.

Acquisitions — Nine Months Ended September 30, 2020

During the nine months ended September 30, 2020, we completed the acquisitions of one multi-tenant MOBs, three single tenant MOBs and four SHOP for an aggregate contract purchase price of $103.9 million.

These acquisitions were completed during the three months ended March 31, 2020.

The properties are located in Roscoe, Illinois, Pinnacle, Pennsylvania and Naples, FL and comprise approximately 320,895 square feet.

These acquisitions were funded with proceeds from financings (including amounts borrowed under our Credit Facility) and cash on hand.

and currently we have three MOB pending acquisitions for a contract purchase price of $18.5 million.

Acquisitions and Dispositions — Subsequent to September 30, 2020

We did not complete any acquisitions subsequent to September 30, 2020.

We have signed two definitive purchase and sale agreements PSAs to acquire a total of two MOBs located in Ohio and Pennsylvania or an aggregate contract purchase price of approximately $11.8 million.

We have signed one non-binding letter of intent (“LOI”) to acquire one MOB located in Texas for a contract purchase price of approximately $6.6 million.

Acquisitions — Three Months Ended March 31, 2021

During the three months ended March 31, 2021, we completed the acquisitions of one multi-tenant MOB for a contract purchase price of $6.6 million.

This acquisition was funded with proceeds from cash on hand.

Acquisitions — Subsequent to March 31, 2021

We did not complete any acquisitions subsequent to March 31, 2021.

We have signed two definitive purchase and sale agreements PSAs to acquire a total of two MOBs for an aggregate contract purchase price of approximately $10.1 million and we have signed one non-binding letter of intent (“LOI”) for a portfolio of MOBs for an aggregate contract purchase price of approximately $19.7 million.

We anticipate using cash on hand to fund the consideration required to complete these acquisitions.

The PSAs are subject to conditions and the LOI may not lead to a definitive agreement.

The PSAs are subject to conditions and the LOI is non-binding.

There can be no assurance we will complete any of these acquisitions, or any future acquisitions or other investments, on a timely basis or on acceptable terms and conditions, if at all.

Acquisition of Non-Controlling Interest

In November 2020, we purchased all of the outstanding membership interests in the joint venture that owns the UnityPoint Clinics in Muscatine, Iowa and Moline, Illinois for approximately $0.6 million, funded with cash on hand.

Following this transaction, the properties were wholly owned by us and added to the borrowing base under our Credit Facility.

Disposition and Assets Held for Sale

During the nine months ended September 30, 2020, we sold one MOB property which resulted in a gain on sale of $2.3 million.

This property sold for a contract price of $8.6 million.

There was no mortgage on this property.

We did not dispose of any properties subsequent to September 30, 2020.

Also, during the fourth quarter of 2019, we began to evaluate the two skilled nursing facilities in Lutz, Florida, Wellington, Florida and our development property in Jupiter, Florida for potential sale.

In August 2020, we entered into two definitive PSAs

with the same buyer, one PSA to sell the property in Jupiter, Florida for $65.0 million and one PSA to sell the two skilled nursing facilities in Lutz, Florida and Wellington, Florida for $20.0 million and $33.0 million, respectively.

The sales of t hese assets a re subject to conditions, and, due to the persistence of the COVID-19 pandemic and other factors beyond our control, there can be no assurance that we will be able to meet these conditions and that these dispositions will be completed on their contemplated terms, or at all.

With respect to the two skilled nursing facilities in Lutz, Florida and Wellington, Florida, closing may not occur unless, among other conditions, certain occupancy and revenue levels have been maintained at each property for a period of time.

With respect to the property in Jupiter, Florida, closing may not occur unless, among other conditions, the closing of the disposition of either or both of the two skilled nursing facilities in Lutz, Florida and Wellington, Florida has occurred or will occur concurrently.

Disposition — Three Months Ended March 31, 2021

During the three months ended March 31, 2021, four Michigan SHOPs were transferred to their buyer pursuant to their sale in November, 2020, which resulted in a loss on sale of $0.2 million.

There were no assets classified as held for sale as of March 31, 2021.

With respect to the sale of the Michigan SHOPs, in November 2020, we received payment of the full $11.8 million sales price for all 11 of the Michigan SHOPs, less $0.8 million held in escrow, and transferred seven of the properties to the buyer.

The remaining four properties were transferred to the buyer at a second closing in January 2021 when the $0.8 million held in escrow was released to the buyer.

Of the properties transferred at the second closing, three were part of the borrowing base under the Credit Facility until the initial closing and one was unencumbered.

At the initial closing, $4.2 million of the net proceeds was used to repay amounts outstanding under the Fannie Mae Master Credit Facility with Capital One, $4.4 million of the net proceeds were used to repay amounts outstanding under the Revolving Credit Facility, with the remainder used for closing costs.

Following the sale of the SHOP in Lutz, Florida, all $17.6 million of the net proceeds were used to repay amounts outstanding under the Credit Facility.

Dispositions — Subsequent to March 31, 2021

We had previously entered into a definitive PSA to sell the property in Jupiter Florida for $65.0 million and a skilled nursing facility in Wellington, Florida for $33.0 million.

On April 30, 2021, we amended the PSA which reduced the sales price of the skilled nursing facility in Wellington, Florida to $30.7 million.

The sales of these assets are subject to conditions, and, due to the persistence of the COVID-19 pandemic and other factors beyond our control, there can be no assurance that we will be able to meet these conditions and that these dispositions will be completed on their contemplated terms, or at all.

With respect to the skilled nursing facility in Wellington, Florida, closing may not occur unless, among other conditions, certain occupancy and revenue levels have been maintained at the property for a period of time.

The property in Jupiter, Florida is not currently encumbered by any mortgage debt or part of the borrowing base under our Credit Facility.

The two skilled nursing facilities in Lutz, Florida and Wellington Florida are part of the borrowing base under our Credit Facility.

There can be no guarantee that the disposition of any of these properties will be completed on the contemplated terms, or at all.

These properties are not currently encumbered by any mortgage debt or part of the borrowing base under our Credit Facility.

Pursuant to the terms of the amendment to our Credit Facility in August 2020, the net cash proceeds from any completed dispositions must be used to prepay amounts outstanding under the Revolving Credit Facility and will therefore not be available to us for any other purpose.

The skilled nursing facility in Wellington Florida is part of the borrowing base under our Credit Facility.

Pursuant to the terms of our amended Credit Facility,

the net cash proceeds from any completed dispositions must be used to prepay amounts outstanding under the Revolving Credit Facility and will therefore not be available to us for any other purpose.

We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings.

There can be no assurance these conditions will be met.

In November 2020, we received payment of the full $11.8 million sales price for all 11 of the Michigan SHOPs, less $0.8 million held in escrow, and transferred seven of the properties to the buyer.

The remaining four properties are scheduled to be transferred to the buyer at a second closing in January 2021 when the $0.8 million held in escrow will be released to the buyer.

Of the properties to be transferred at the second closing, three were part of the borrowing base under the Credit Facility until the initial closing and one was unencumbered.

At the initial closing, $4.2 million of the net proceeds was used to repay amounts outstanding under the Fannie Mae Master Credit Facility with Capital One, $4.4 million of the net proceeds were used to repay amounts outstanding under the Revolving Credit Facility, with the remainder used for closing costs.

Share Repurchase Program

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We are only authorized to repurchase shares using the proceeds secured from our DRIP in any given period, although the Board has the power, in its sole discretion, to determine the number of shares repurchased during any period as well as the amount of funds to be used for that purpose.

Under the currentl y effective amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions would be considered for repurchase.

Under the currently effective amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions would be considered for repurchase.

The amendment to the Credit Facility on August 10, 2020 provides that we may not repurchase shares of our common stock until the Commencement Quarter.

In light of this amendment, the Board suspended repurchases under the SRP effective August 14, 2020.

The amended Credit Facility restricts the Company from repurchasing shares until no earlier than the quarter ending June 30, 2021.

In light of this provision, the Board suspended repurchases under the SRP effective August 14, 2020.

The Board has also rejected all repurchase requests made during the period from January 1, 2020 until the effectiveness of the suspension of the SRP.

No further repurchase requests under the SRP may be made unless and until the SRP is reactivated.

Prior to the Commencement Quarter, we may not repurchase shares of our common stock.

Beginning in the Commencement Quarter, we will be permitted to repurchase up to $50.0 million of shares of our common stock (including amounts previously repurchased during the term of the Revolving Credit Facility) if, after giving effect to the repurchases, we maintain cash and cash equivalents of at least $30.0 million and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 55.0%.

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Accounting Treatment of Rent Deferrals

All of the concessions granted to our tenants as a result of the COVID-19 pandemic were rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information on April rent deferrals).

As a result of relief granted by the FASB and SEC related to lease modification accounting, we do not expect rental revenue used to calculate Net Income and NAREIT FFO to be significantly impacted by these types of deferrals.

In addition, because we currently believe that these amounts are collectible, we have excluded from the increase in straight line rent for MFFO purposes the amounts recognized under GAAP relating to these types of rent deferrals.

For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 — Significant Accounting Polices to our consolidated financial statements included in the Quarterly Report on Form 10-Q.

The tables below reflect the items deducted from or added to net loss attributable to common stockholders in our calculation of FFO and MFFO for the periods indicated.

All of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information).

As a result of relief granted by the FASB and SEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO has not been, and we do not expect it to be, significantly impacted by these types of deferrals.

In addition, since we currently believe that these deferral amounts are collectable, we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these types of rent deferrals.

The table below reflects the items deducted from or added to net loss attributable to stockholders in our calculation of FFO and MFFO for the periods indicated.

In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2021 2020

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Gain on sale of real estate investment

— (2,715) (2,306) (8,793)

Adjustments for non-controlling interests (2)

(101) (187) (424) (357)

FFO (as defined by NAREIT) attributable to stockholders

10,263 10,797 31,587 33,925

Acquisition and transaction related 132 327

(Accretion) amortization of market lease and other intangibles, net

9 10 (111) (25)

Straight-line rent adjustments

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Amortization of mortgage premiums and discounts, net

16 (32) 45 (135)

(Gain) loss on non-designated derivatives (14) (16)

Capitalized construction interest costs — (1,023) — (2,756)

Deferred tax asset allowance (4)

Adjustments for non-controlling interests (3)

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(2) Represents the amount of deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced.

These amounts are included in the straight-line rent receivable on our balance sheet but are considered to be cash, for purposes of MFFO, that is expected to be collected.

These amounts are included in the straight-line rent receivable on our consolidated balance sheet but are considered to be earned revenue attributed to the current period for purposes of MFFO as they are expected to be collected.

(3) Represents the portion of the adjustments allocable to non-controlling interest.

(4) Represents the reversal of a previously recorded non-cash add-back.

Net Operating Income

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NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay distributions.

The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of NOI for the three months ended September 30, 2020:

The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of NOI for the three months ended March 31, 2021:

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

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(14) — — (38) (52)

Loss on sale of real estate investments — — 172 — 172

Gain on non-designated derivative instruments

Income tax (benefit) expense

Preferred Stock dividends

— — — (14) (14)

Net loss (income) attributable to non-controlling interests — — — 397 397

NOI $ 31,683 $ 2,474 $ — $ — $ 34,157

The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store, Acquisitions and Dispositions NOI for the three months ended September 30, 2019:

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

Net income (loss) attributable to common stockholders (in accordance with GAAP)

$ (8,374) $ 460 $ 2,912 $ (23,787) $ (28,789)

Impairment charges

22,615 — — — 22,615

Operating fees to related parties

— — — 5,941 5,941

Acquisition and transaction related

— 4 — 108 112

General and administrative

14 — — 4,768 4,782

Depreciation and amortization

19,557 528 55 — 20,140

Interest expense

(271) — — 13,261 12,990

Interest and other income

— — — (11) (11)

Gain on sale of real estate investments

— — (2,715) — (2,715)

Loss on non-designated derivative instruments

Income tax (benefit) expense

— (271) (271)

Net loss (income) attributable to non-controlling interests

— — — (11) (11)

Allocation for preferred stock — — — 742 742

Net income attributable to non-controlling interests — — — 46 46

NOI $ 32,110 $ 1,488 $ 483 $ — $ 34,081

The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store and Dispositions NOI for the nine months ended September 30, 2020:

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

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Loss on non-designated derivative instruments

Income tax (benefit) expense

Net income (loss) attributable to non-controlling interests

Preferred Stock dividends

— — — (16) (16)

NOI $ 100,492 $ 6,862 $ 191 $ — $ 107,545

(In thousands) Same Store Acquisition Dispositions Non-Property Specific Total

Net income (loss) attributable to common stockholders (in accordance with GAAP)

$ 23,502 $ 836 $ 9,066 $ (73,358) $ (39,954)

Impairment charges

22,634 — — — 22,634

Operating fees to related parties

— — — 17,535 17,535

Acquisition and transaction related

(1) 23 — 139 161

General and administrative

60 1 9 15,324 15,394

Depreciation and amortization

59,545 1,224 355 — 61,124

Interest expense (292) — — 40,031 39,739

Interest and other income (6) — — (9) (15)

Gain on sale of real estate investment — — (8,793) — (8,793)

Loss on non-designated derivative instruments

Income tax (benefit) expense

— — — 332 332

Net income (loss) attributable to non-controlling interests

24 — — (76) (52)

Allocation for preferred stock — — — 742 742

Net loss attributable to non-controlling interests — — — (87) (87)

NOI $ 36,716 $ 669 $ 1,127 $ — $ 38,512

Distributions and Dividends

Dividends on our Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum.

Dividends on our Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375% of per annum in the $25.00 liquidation preference per share of Series A Preferred Stock.

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Instead, any future distributions authorized by the Board on shares of our common stock were to be paid on a monthly basis in arrears based on a single record date during the applicable month.

On August 10, 2020, we entered into an amendment to our Credit Facility pursuant to which we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions.

As noted herein under our amended Credit Facility we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions.

These exceptions include paying cash dividends on the Series A Preferred Stock or any other preferred stock we may issue and paying any cash distributions necessary to maintain our status as a REIT.

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There can be no assurance as to if, or when, we will be able to satisfy these conditions.

Beginning in the Commencement Quarter, we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters may not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

On August 13, 2020, we announced that the Board had approved a change in our common stock distribution policy in order to preserve our liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and in light of the amendment to the Credit Facility described above.

Accordingly, distributions in light of the amendment to the Credit Facility described above.

Accordingly, distributions authorized by the Board on shares of our common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of our common stock valued at the Estimated Per-Share NAV in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter.

On October 1, 2020, we declared the Stock Dividend of 0.01349 shares of our common stock on each share of our outstanding common stock.

This number of shares was based on our prior cash distribution rate of $0.85 per share per annum.

The Stock Dividend was paid on October 15, 2020 to holders of record of our common stock at the close of business on October 8, 2020.

Unlike the per share amounts in this Quarterly Report on Form 10-Q, the Estimated Per-Share NAV has not been retroactively adjusted to reflect the Stock Dividend and will not be retroactively adjusted for stock dividends we expect to pay in the future until the Board determines a new Estimated Per-Share NAV.

Subject to the restrictions in our Credit Facility, the amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).

We may only pay cash distributions beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

Until four full fiscal quarters have elapsed after the commencement of Commencement Quarter, the aggregate amount of permitted distributions and Modified FFO will be determined by using only the fiscal quarters that have elapsed from and after the Commencement Quarter and annualizing those amounts.

On August 13, 2020, the Board changed our common stock distribution policy in order to preserve our liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with the amended Credit Facility described above.

Under the new policy, distributions authorized by the Board on shares of our common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of our common stock valued at the Estimated Per-Share NAV in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter.

In each of October 2020 and January 2021, we declared and paid stock dividends equal to 0.01349 shares of common stock on each share of outstanding common stock , and, in April 2021, we declared and paid a stock dividend equal to 0.01466 shares of common stock on each share of outstanding common stock.

The amounts of these stock dividends were based on our prior cash distribution rate of $0.85 per share per annum and the then applicable Estimated Per-Share NAV.

We did not pay any cash dividends on our common stock during the first quarter of 2021.

See “— Overview” for additional information on the impact of the stock dividends.

Subject to the restrictions in our amended Credit Facility, the amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986 (the “Code”).

Distribution payments are dependent on the availability of funds.

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Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock become part of the liquidation preference thereof.

The following table shows the sources for the payment of distributions to common stockholders preferred stockholders, including distributions on unvested restricted shares and OP Units, but excluding distributions related to Class B Units as these distributions are recorded as an expense in our consolidated statement of operations and comprehensive loss, for the periods indicated:

Three Months Ended Year-To-Date

March 31, 2020 June 30, 2020 September 30, 2020 September 30, 2020

(In thousands) Percentage of Distributions Percentage of Distributions Percentage of Distributions Percentage of Distributions

The following table shows the sources for the payment of distributions to preferred stockholders, including distributions on unvested restricted shares and OP Units, but excluding distributions related to Class B Units as these distributions are recorded as an expense in our consolidated statement of operations and comprehensive loss, for the periods indicated:

March 31, 2021

(In thousands) Percentage of Distributions

Distributions:

Distributions to common stockholders not reinvested in common stock issued under the DRIP

$ 13,225 $ 13,729 $ 4,400 $ 31,354

Distributions reinvested in common stock issued under the DRIP

6,322 6,267 2,015 14,604

Dividends to preferred stockholders

173 742 742 1,657

Distributions on OP Units

Total distributions $ 742

$ 19,806 $ 20,825 $ 7,185 $ 47,816

Source of distribution coverage:

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$ 742 100.0 %

Proceeds received from common stock issued under the DRIP (2)

854 4.3 % 6,267 30.1 % — — % 6,033 (3) 12.6 %

Available cash on hand

— — % 2,264 10.9 % — — % — — %

Total source of distribution coverage $ 742 100 %

Cash flows provided by operations (in accordance with GAAP)

$ 18,952 $ 12,294 $ 10,537 $ 41,783

Net loss attributable to stockholders (in accordance with GAAP)

$ (24,744) $ (22.811) $ (10,500) $ (58,055)

(1) Excludes distributions related to Class B Units and distributions to non-controlling interest holders other than those paid on our OP Units.

The decrease in total distributions was due to the change in the timing of our distributions to common stockholders (see disclosure above).

(1) Assumes the use of available cash flow from operations before any other sources.

(3) Year-to-date total does not equal the sum of the quarters.

Each quarter and year-to-date period is evaluated separately for purposes of this table.

For the nine months ended September 30, 2020, cash flows provided by operations were $41.8 million.

For the three months ended March 31, 2021, cash flows provided by operations were $14.0 million.

We had not historically generated sufficient cash flow from operations to fund the payment of dividends and other distributions at the current rate prior to switching from paying cash dividends to stock dividends on our common stock.

As shown in the table above, we funded distributions with cash flows provided by operations, proceeds received from common stock issued under our DRIP and available cash on hand, comprised of proceeds from financings and dispositions.

Because shares of common stock are only offered and sold pursuant to the DRIP in connection with the reinvestment of distributions paid in cash, participants in the DRIP will not be able to reinvest in shares thereunder for so long as we pay distributions in stock instead of cash, so this source will not be available again until we are able to resume paying distributions on our common stock, and there can be no assurance we will maintain participation at current levels.

Our ability to pay dividends on our Series A Preferred Stock and starting with the Commencement Quarter, other distributions and maintain compliance with the restrictions on the payment of distributions in our Credit Facility depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties.

There can be no

assurance that we will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all.

There can be no assurance that we will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all.

Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, and there can be no assurance we will be successful in achieving this objective.

As with the similar restriction in effect prior to the amendment to our Credit Facility in August 2020, we may still pay any cash distributions necessary to maintain its status as a REIT and may not pay any cash distributions (including dividends on Series A Preferred Stock) if a default or event of default exists or would result therefrom.

We may still pay any cash distributions necessary to maintain our status as a REIT and may not pay any cash distributions (including dividends on Series A Preferred Stock) if a default or event of default exists or would result therefrom under the Credit Facility.

The amendment provided that the covenants restricting payment of distributions to a threshold based on Modified FFO and requiring maintenance of a minimum ratio of consolidated total indebtedness to consolidated total asset value and a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges did not apply for the fiscal quarter ended June 30, 2020.

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Our loan agreements require us to comply with specific reporting covenants.

As of September 30, 2020, we were in compliance with the financial and reporting covenants under our loan agreements.

Following the amendment to our Credit Facility in August 2020, until the first day of the Commencement Quarter, we must use all the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility.

As of March 31, 2021, we were in compliance with the financial and reporting covenants under our loan agreements.

Under our amended Credit Facility, until the first day of the Commencement Quarter, we must use all the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility.

We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings.

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Contractual Obligations

There were no material changes in our contractual obligations as of September 30, 2020, as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

There were no material changes in our contractual obligations as of March 31, 2021, as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2020.

Election as a REIT

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

What changed 10-Q

Item 1. Financial Statements