What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-12 compared with 2022-05-13 · 873 added, 581 removed, 1489 unchanged (49% of the section changed)

18 unchanged sentences

Operating lease right-of-use assets 7,864 7,914

Prepaid expenses and other assets (including $ 172 and $ 929 due from related parties as of March 31, 2022 and December 31, 2021, respectively)

Prepaid expenses and other assets (including $ 73 and $ 929 due from related parties as of June 30, 2022 and December 31, 2021, respectively)

29,630 32,564

6 unchanged sentences

Derivative liabilities, at fair value — 13,903

Accounts payable and accrued expenses (including $ 391 and $ 47 due to related parties as of March 31, 2022 and December 31, 2021)

Accounts payable and accrued expenses (including $ 33 and $ 47 due to related parties as of June 30, 2022 and December 31, 2021)

40,075 42,709

5 unchanged sentences

7.375 % Series A cumulative redeemable perpetual preferred stock, $ 0.01 par value, 4,740,000 authorized;

3,977,144 issued and outstanding as of March 31, 2022 and December 31, 2021

3,977,144 issued and outstanding as of June 30, 2022 and December 31, 2021

7.125 % Series B cumulative redeemable perpetual preferred stock, $ 0.01 par value, 3,680,000 authorized;

3,630,000 issued and outstanding as of March 31, 2022 and December 31, 2021

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 100,737,224 shares and 99,281,754 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

3,630,000 issued and outstanding as of June 30, 2022 and December 31, 2021

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 102,164,671 shares and 99,281,754 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 2,372,889 2,329,839

10 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenue from tenants $ 83,826 $ 81,160 $ 167,476 $ 164,596

9 unchanged sentences

Operating income (loss) before gain on sale of real estate investments ( 5,936 ) ( 4,572 ) ( 18,236 ) ( 3,538 )

Losses on sale of real estate investments ( 303 ) ( 172 )

Gain/(loss) on sale of real estate investments — 2,456 ( 303 ) 2,284

Operating income (loss) ( 5,936 ) ( 2,116 ) ( 18,539 ) ( 1,254 )

2 unchanged sentences

Interest and other income

Gains on non-designated derivatives 994 14

Gains (losses) on non-designated derivatives 392 ( 13 ) 1,386 1

Total other expenses

7 unchanged sentences

Other comprehensive income (loss):

Unrealized gain on designated derivatives 26,266 15,846

Unrealized gain (loss) on designated derivatives 10,170 ( 1,795 ) 36,436 14,051

Comprehensive (loss) income attributable to common stockholders $ ( 10,885 ) $ ( 17,780 ) $ ( 11,420 ) $ ( 14,164 )

9 unchanged sentences

(In thousands, except share data)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Series A Preferred Stock Series B Preferred Stock Common Stock Accumulated Other Comprehensive Loss

16 unchanged sentences

Rebalancing of ownership percentage — — — — — — ( 143 ) — — ( 143 ) 143 —

Balance, March 31, 2022 3,977,144 $ 40 3,630,000 $ 36 100,737,224 $ 1,007 $ 2,350,902 $ 11,925 $ ( 1,330,730 ) $ 1,033,180 $ 6,914 $ 1,040,094

Three Months Ended March 31, 2021

Preferred Stock Common Stock Accumulated Other Comprehensive Loss

Balance, June 30, 2022 3,977,144 $ 40 3,630,000 $ 36 102,164,671 $ 1,022 $ 2,372,889 $ 22,095 $ ( 1,373,296 ) $ 1,022,786 $ 6,677 $ 1,029,463

Three Months Ended June 30, 2022

Series A Preferred Stock Series B Preferred Stock Common Stock Accumulated Other Comprehensive Loss

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 Series A Preferred Stock, net — — — — — — — — — —

Issuance of Series B Preferred Stock, net — — — — — — — — — —

Balance, March 31, 2022 3,977,144 40 3,630,000 $ 36 100,737,224 $ 1,007 $ 2,350,902 $ 11,925 $ ( 1,330,730 ) $ 1,033,180 $ 6,914 $ 1,040,094

Issuance of Preferred Stock, net — — — — — — 43 — — 43 — 43

Share-based compensation, net — — — — — — 332 — — 332 — 332

— — — — 332 — — 332 — 332

Distributions declared in common stock, $ 0.21 per share

2 unchanged sentences

— — — — — — — — ( 1,789 ) ( 1,789 ) — ( 1,789 )

Distributions declared on Series B Preferred Stock, $ 0.45 per share

— — — — — — — — ( 1,706 ) ( 1,706 ) — ( 1,706 )

Distributions to non-controlling interest holders — — — — — — — — — — ( 46 ) ( 46 )

Net loss — — — — — — — — ( 17,606 ) ( 17,606 ) ( 29 ) ( 17,635 )

Unrealized gain on designated derivatives — — — — — — — 10,170 — 10,170 — 10,170

Rebalancing of ownership percentage — — — — — — 162 — — 162 ( 162 ) —

Balance, June 30, 2022 3,977,144 $ 40 3,630,000 $ 36 102,164,671 $ 1,022 $ 2,372,889 $ 22,095 $ ( 1,373,296 ) $ 1,022,786 $ 6,677 $ 1,029,463

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)

Six Months Ended June 30, 2021

Series A Preferred Stock Common Stock Accumulated Other Comprehensive Loss

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, 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 2,352,144 24 — — 56,220 — — 56,244 — 56,244

Share-based compensation, net — — — — 662 — — 662 — 662

Distributions declared in common stock, $ 0.42 per share

— — 2,658,334 26 40,102 — ( 40,128 ) — — —

Distributions declared on preferred stock, $ 0.92 per share

— — — — — — ( 2,568 ) ( 2,568 ) — ( 2,568 )

Unrealized loss on designated derivatives — — — — — 14,052 — 14,052 — 14,052

Net loss — — — — — — ( 25,647 ) ( 25,647 ) 102 ( 25,545 )

Rebalancing of ownership percentage — — — — 138 — — 138 ( 138 ) —

Balance, June 30, 2021 3,962,144 $ 40 96,434,080 $ 964 $ 2,201,383 $ ( 25,621 ) $ ( 1,176,900 ) $ 999,866 $ 4,351 $ 1,004,217

Three Months Ended June 30, 2021

Series A Preferred Stock Common Stock Accumulated Other Comprehensive Loss

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, 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

Issuance of Preferred Stock, net 2,352,144 24 — — 56,220 — — 56,244 — 56,244

Share-based compensation, net

— — — — 330 — — 330 — 330

Distributions declared in common stock, $ 0.21 per share

— — 1,393,298 14 20,188 — ( 20,202 ) — — —

Distributions declared on preferred stock, $ 0.46 per share

— — — — — — ( 1,826 ) ( 1,826 ) — ( 1,826 )

Unrealized loss on designated derivatives — — — — — ( 1,792 ) — ( 1,792 ) — ( 1,792 )

Net loss — — — — — — ( 14,159 ) ( 14,159 ) 56 ( 14,103 )

Rebalancing of ownership percentage — — — — 135 ( 2 ) — 133 ( 133 ) —

Balance, June 30, 2021 3,962,144 $ 40 96,434,080 $ 964 $ 2,201,383 $ ( 25,621 ) $ ( 1,176,900 ) $ 999,866 $ 4,351 $ 1,004,217

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

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

8 unchanged sentences

Equity-based compensation 664 662

Losses on sale of real estate investments, net 303 172

Losses (gains) on sale of real estate investments, net 303 ( 2,284 )

Gains on non-designated derivative instruments ( 1,386 ) ( 1 )

9 unchanged sentences

Capital expenditures and other assets acquired ( 9,075 ) ( 7,155 )

Deposits for real estate investments — ( 146 )

Proceeds from sales of real estate investments 11,759 94,461

Net cash provided by (used in) investing activities 8,448 ( 10,869 )

Net cash (used in) provided by investing activities ( 15,115 ) 43,057

Cash flows from financing activities:

Payments on credit facilities — ( 173,674 )

Proceeds from credit facilities — 40,000

Payments on mortgage notes payable ( 7,199 ) ( 621 )

1 unchanged sentence

Payments of deferred financing costs ( 277 ) ( 50 )

Proceeds from sale of preferred stock, net — 56,244

Preferred stock issuance costs ( 6 ) ( 176 )

10 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash, cash equivalents, end of period $ 42,664 $ 46,726

10 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Note 1 — Organization

5 unchanged sentences

Prior to December 31, 2021, the Company reported in three reportable segments, see Note 15 —Segment Reporting for additional information.

As of March 31, 2022, the Company owned 198 properties located in 33 states and comprised of 9.0 million rentable square feet.

As of June 30, 2022, the Company owned 201 properties located in 33 states and comprised of 9.1 million rentable square feet.

Substantially all of the Company’s business is conducted through the OP and its wholly owned subsidiaries including taxable REIT 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’s advisor, Healthcare Trust Advisors, LLC (the “Advisor”) manages its day-to-day business with the assistance of its property manager, Healthcare Trust Properties, LLC (the “Property Manager”).

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 March 31, 2022, the Company owned 50 seniors housing properties under the REIT Investment Diversification and Empowerment Act (“RIDEA”) structure in its SHOP segment.

As of June 30, 2022, the Company owned 50 seniors housing properties using 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.

4 unchanged sentences

In its SHOP segment, the Company invests in seniors housing properties using the RIDEA structure.

As of March 31, 2022, the Company had four eligible independent contractors operating 50 SHOPs (not including two land parcels).

As of June 30, 2022, the Company had four eligible independent contractors operating 50 SHOPs (not including two land parcels).

All of the Company’s properties across both business segments are located throughout the United States.

2 unchanged sentences

The Stock Dividends paid in April 2021, July 2021, October 2021 and January 2022 were equal to 0.014655 shares of common stock on each share of outstanding common stock.

The Stock Dividends paid in April 2022 were equal to 0.014167 shares of common stock on each share of outstanding common stock.

The Stock Dividends paid in April 2022 and July 2022 were equal to 0.014167 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 Company has issued an aggregate of 9,637,120 shares in respect to the Stock Dividends.

No other additional shares of common stock were issued during the three months ended March 31, 2022.

No other additional shares of common stock were issued during the six months ended June 30, 2022.

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 0.11981 shares for every share outstanding resulting from the Stock Dividends since October 2020, and are noted as such throughout the accompanying financial statements and notes.

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Note 2 — Summary of Significant Accounting Policies

2 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 months ended March 31, 2022 and 2021 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

The results of operations for the three and six months ended June 30, 2022 and 2021 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

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, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 18, 2022.

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 three months ended March 31, 2022.

Principles of Consolidation and Basis of Presentation

15 unchanged sentences

In many states and cities where our properties are located, measures including “shelter-in-place” or “stay-at-home” orders issued by local, state and federal authorities for much of 2020 and the early part of 2021 as well as social distancing measures resulted in closures and limitations on the operations of many businesses and organizations.

While strict “shelter-in-place” and similar orders have generally been lifted, continued limitations on indoor occupancy or other restrictions applicable to in-person operations have been and may in the future be re-instituted in some jurisdictions as rates of infection increase in those locations, including in light of the current spread of the Delta and Omicron variants and other potentially more contagious variants of the SARS-CoV-2 virus.

As the COVID-19 pandemic continues, it is highly uncertain to what extent and when any such continuing restrictions will be lifted in various jurisdictions and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against these variants and the response by governmental bodies and regulators.

While strict “shelter-in-place” and similar orders have generally been lifted, continued limitations on indoor occupancy or other restrictions applicable to in-person operations have been and may in the future be re-instituted in some jurisdictions as rates of infection increase in those locations, including in light of the spread of the Delta and Omicron variants and other potentially more contagious variants of the SARS-CoV-2 virus.

As the COVID-19 pandemic continues, it is highly uncertain to what extent and when any such restrictions will be lifted in various jurisdictions and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against these variants and the response by governmental bodies and regulators.

The Company’s tenants and SHOP properties operate businesses that require in-person interactions with their patients and residents.

Even for businesses that have not closed or have closed and reopened, concern regarding the transmission of COVID-19 has impacted, and will likely continue to impact, the willingness of persons to, among other things, live in or use facilities at our properties, and impact the revenues generated by our tenants which may further impact the ability of our tenants to pay their rent obligations to us when due.

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, 2022, however uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company’s business in particular, makes

The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of June 30, 2022, 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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

any estimates and assumptions as of March 31, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19.

June 30, 2022

of June 30, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19.

Actual results may ultimately differ from those estimates.

15 unchanged sentences

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.

Since the year ended December 31, 2020, the Company has not entered into any rent deferral agreements with any of its tenants, and all amounts previously deferred under prior rent deferral agreements have been collected.

Since the year ended December 31, 2020, the Company has not entered into any rent deferral agreements with any of its tenants in this segment, and all amounts previously deferred under prior rent deferral agreements have been collected.

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).

However, in light of the COVID-19 pandemic in which many leases are being modified, the Financial Accounting Standards Board (“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.

However, in light of the COVID-19 pandemic in which many leases have been modified, the Financial Accounting Standards Board (“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.

In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession.

14 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

(“CARES Act”), and to a lesser extent, cost recoveries for personal protective equipment from residents.

See below for additional information on the CARES Act.

These trends became more prominent in the first quarter of 2022 as inflation increased and the Company relied more on the use of temporary contract labor and agencies in response to a shortage of workers largely due to, among other things, the spread of more transmissible COVID-19 variants such as the Omicron variant, increased inflation raising the cost of labor generally and increased demand for qualified personnel.

These trends became more prominent in the first quarter of 2022, and continued into the second quarter of 2022, as inflation increased and the Company relied more on the use of temporary contract labor and agencies and, to a lesser extent, the amount it pays for overtime wages and bonuses, in response to a shortage of workers largely due to, among other things, the spread of more transmissible COVID-19 variants, increased inflation raising the cost of labor generally and a lack of qualified personnel that the Company is able to employ on a permanent basis.

Future developments in the course of the pandemic, inflation increases, labor shortages and supply chain disruptions may cause further adverse impacts to the Company’s occupancy and cost levels, and these trends may continue to impact the Company and have a material adverse effect on its revenues and income in future quarters.

1 unchanged sentence

The financial impact of the COVID-19 pandemic on the Company has been partially offset by funds received under the CARES Act.

The Company received $ 5.1 million in these funds during the three months ended March 31, 2021.

The Company received $ 0.2 million in these funds during the three and six months ended June 30, 2022.

The Company did no t receive any of these funds during the three months ended June 30, 2021 and received $ 5.1 million in these funds during the six months ended June 30, 2021.

The Company considered these 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 months ended March 31, 2021, to partially offset the incurred COVID-19 expenses.

In addition, the Company has applied for additional funds, however, those applications have not yet been approved and no funds have been received since the three months ended March 31, 2021.

There can be no assurance that the pr ogram will be extended or any further amounts received under currently effective or potential future government programs.

The full amounts received were recognized as a reduction of property operating expenses in our consolidated statements of operations for the three and six months ended June 30, 2022 and the six months ended June 30 , 2021, to partially offset the incurred COVID-19 expenses .

Subsequent to June 30, 2022, the Company received $ 4.3 million of grants from the CARES Act (see Note 17 — Subsequent Events for additional information).

There can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs.

Revenue Recognition

The Company’s revenues, which are derived primarily from lease contracts, include rent received from tenants in its MOBs.

As of March 31, 2022, these leases had a weighted average remaining lease term of 5.0 years.

As of June 30, 2022, these leases had a weighted average remaining lease term of 4.9 years.

Rent from tenants in the Company’s MOB operating segment (as discussed below) is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease.

11 unchanged sentences

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

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

During the three months ended March 31, 2022, the Company did no t record any significant amounts of ancillary revenue.

Also included in revenue from tenants is fees for ancillary revenue from non-residents of $ 1.3 million and $ 3.2 million, for the three and six months ended June 30, 2021, respectively.

During the three and six months ended June 30, 2022, the Company did no t record any significant amounts of ancillary revenue.

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

1 unchanged sentence

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, 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.

These amounts exclude tenant reimbursements and contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

exceeding certain economic indexes, among other items.

June 30, 2022

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

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

As of March 31, 2022:

As of June 30, 2022:

(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.

The Company recorded a reduction of revenue of $ 0.4 million and $ 0.2 million for uncollectable amounts for the three months ended March 31, 2022 and 2021, respectively.

The Company recorded a reduction of revenue of $ 0.4 million and $ 0.9 million for uncollectable amounts during the three and six months ended June 30, 2022, respectively.

The Company did no t record a material reduction of revenue for uncollectable amounts during the three months ended June 30, 2021.

During the six months ended June 30, 2021, the Company recorded a reduction of revenue of $ 0.2 million for uncollectable 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 March 31, 2022 and 2021.

No properties were presented as discontinued operations during the quarters ended June 30, 2022 and 2021.

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.

1 unchanged sentence

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, 2022 or December 31, 2021.

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 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

There were no real estate investments held for sale as of June 30, 2022 or December 31, 2021.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

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 months ended March 31, 2022 and the three-year period ended December 31, 2021, 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 as of March 31, 2022 and December 31, 2021, 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, 2022 and 2021.

June 30, 2022

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

9 unchanged sentences

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 months ended March 31, 2021 were asset acquisitions.

The Company did not acquire any properties during the three months ended March 31, 2022.

All acquisitions during the six months ended June 30, 2022 and 2021 were asset acquisitions.

The Company acquired three properties during the six months ended June 30, 2022.

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.

9 unchanged sentences

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 the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s 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 three and six months ended June 30, 2022 or 2021.

Accounting for Leases

Lessor Accounting

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 evaluates new leases originated after the adoption date (by the Company or by a

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

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 three months ended March 31, 2022 or 2021.

June 30, 2022

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 a major part of the remaining economic useful life of the asset (e.g., equal to or greater than 75%), 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 the asset is 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.

As of June 30, 2022 and December 31, 2021, the Company had no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.

As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component;

and (b) the lease component, if accounted for separately, would be classified as an operating lease.

Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance.

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

Lessee Accounting

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 sheets as of June 30, 2022 and December 31, 2021, 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 and six months ended June 30, 2022 and 2021.

For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.

Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease.

Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification.

Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction.

For additional information and disclosures related to the Company’s operating leases, see Note 16 — Commitments and Contingencies .

Impairment of Long-Lived Assets

2 unchanged sentences

These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statement of operations and comprehensive income to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used.

If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statements of operations and comprehensive income to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used.

For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset.

1 unchanged sentence

Reportable Segments

As of March 31, 2022 and December 31, 2021, the Company has determined that it has two reportable segments, with activities related to investing in MOBs and SHOPs.

As of June 30, 2022 and December 31, 2021, the Company has determined that it has two reportable segments, with activities related to investing in MOBs and SHOPs.

Management evaluates the operating performance of the Company’s investments in real estate and seniors housing properties on an individual property level.

2 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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

9 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

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.

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, 2021, 2020 and 2019.

7 unchanged sentences

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, 2022, the Company owned 50 seniors housing properties which are leased and operated through its TRS.

As of June 30, 2022, the Company owned 50 seniors housing properties which are leased and operated through its TRS.

A TRS is subject to U.S.

5 unchanged sentences

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 $ 4.7 million as of March 31, 2022.

thus the Company has provided a 100% valuation allowance of $ 5.3 million as of June 30, 2022.

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, 2021, the Company had a deferred tax asset of $ 4.2 million with a full valuation allowance.

Accounting for Leases

Lessor Accounting

and (b) the lease component, if accounted for separately, would be classified as an operating lease.

Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance.

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

Lessee Accounting

Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification.

For additional information and disclosures related to the Company’s operating leases, see Note 16 — Commitments and Contingencies .

CARES Act Grants

On March 27, 2020, the 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 did no t receive any funding from the CARES Act during the three months ended March 31, 2022.

During the three months ended March 31, 2021, the Company received $ 5.1 million in funding

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

from CARES Act grants.

June 30, 2022

lost revenues attributable to COVID-19.

The Company received $ 0.2 million in funding from the CARES Act during the three and six months ended June 30, 2022.

During the three months ended June 30, 2021, the Company did no t receive any of these funds and during the six months ended June 30, 2021, the Company received $ 5.1 million in funding from CARES Act grants.

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 negative impacts of COVID-19.

The Company has applied for additional funds, however, those applications have not yet been approved and no funds have been received since the three months ended March 31, 2021.

There can be no assurance that the pr ogram will be extended or any further amounts received under currently effective or potential future government programs.

Subsequent to June 30, 2022, the Company received $ 4.3 million of grants from the CARES Act (see Note 17 — Subsequent Events for additional information).

There can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs.

Recently Issued Accounting Pronouncements

7 unchanged sentences

The Company adopted the new guidance on January 1, 2022 and determined it did not have a material impact on its consolidated financial statements.

Not yet Adopted as of March 31, 2022

Not yet Adopted as of June 30, 2022:

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

7 unchanged sentences

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

The Company owned 198 properties as of March 31, 2022.

During the three months ended March 31, 2022, the Company did not acquire any properties.

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

The following table presents the allocation of real estate assets acquired and liabilities assumed during the three months ended March 31, 2021:

The Company owned 201 properties as of June 30, 2022.

During the six months ended June 30, 2022, the Company acquired three properties.

All acquisitions in the six months ended June 30, 2022 and 2021 were considered asset acquisitions for accounting purposes.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

Three Months Ended March 31,

June 30, 2022

The following table presents the allocation of real estate assets acquired and liabilities assumed during the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

(In thousands) 2022 2021

Real estate investments, at cost:

Land $ 4,199 $ 5,547

Buildings, fixtures and improvements 10,662 31,438

5 unchanged sentences

Total intangible assets and liabilities 2,938 7,209

Other assets acquired and liabilities assumed in the Asset Acquisition, net — 55

Cash paid for real estate investments, including acquisitions $ 17,799 $ 44,249

1 unchanged sentence

Significant Tenants

As of March 31, 2022 and 2021, 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 March 31, 2022 and 2021:

As of June 30, 2022 and 2021, 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 2022 2021

18.2 % 20.5 %

Florida 18.5 % 17.2 %

Iowa * 10.2 %

1 unchanged sentence

* 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 May 2021, the Company’s skilled nursing facility in Wellington, Florida, and the Company’s development property in Jupiter, Florida were sold.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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 March 31,

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, net, for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

4 unchanged sentences

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

$ 40 $ 53 $ 80 $ 108

(1) Reflected within depreciation and amortization expense.

1 unchanged sentence

(3) Reflected within property operating and maintenance expense .

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

The following table provides the projected amortization expense and adjustments to revenues for the next five years:

7 unchanged sentences

$ 475 $ 1,037 $ 899 $ 786 $ 657

Three Months Ended March 31, 2022

On July 1, 2020, the Company transitioned four triple-net leased properties in Texas (collectively, the “LaSalle Properties”)

2 unchanged sentences

The Company had previously recorded $ 34.0 million of impairment charges on the LaSalle Properties in the year ended December 31, 2021.

The Company completed the sale of the LaSalle Properties in the first quarter of 2022 and recorded a loss on sale of $ 0.3 million.

Three Months Ended March 31, 2021

During the first quarter of 2021, the Company transferred four SHOP properties located in Michigan to the buyer at a second closing, and $ 0.8 million held in escrow was released to the buyer.

The Company completed the sale of the LaSalle Properties in the first quarter of 2022 and recorded a loss on sale of $ 0.3 million in the first quarter of 2022, wh ich is presented in the Company’s consolidated statements of operations and comprehensive loss for the six months ended June 30, 2022.

During the three months ended June 30, 2021, the Company sold its skilled nursing facility in Wellington, Florida and its

development property in Jupiter, Florida, which resulted in gains on sale of $ 0.1 million and $ 2.4 million, respectively.

gains are included in the Company’s consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2021.

The Company had previously recorded $ 13.1 million and $ 34.4 million of impairment charges on the Wellington and Jupiter properties, respectively.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

During the first quarter of 2021, the Company transferred four SHOP properties located in Michigan to a buyer at a second closing, and $ 0.8 million held in escrow was released to the buyer.

This amount had been placed in escrow at the first closing of the transaction during the year ended December 31, 2020 when the purchase price for all 11 properties sold in the transaction was received from the buyer.

The Company recorded a loss on sale of $ 0.2 million related to this transaction in the three months ended March 31, 2021.

The following table presents impairments recorded during the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

The Company recorded a loss on sale of $ 0.2 million related to this transaction in the six months ended June 30, 2021.

The Company had previously recorded $ 42.2 million of impairment charges on the 11 Michigan SHOPs.

The following table presents impairments recorded during the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

Assets held for sale $ — $ — $ — $ —

Assets held for use 6,193 6,081 16,837 6,959

5 unchanged sentences

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

There were no assets held for sale as of March 31, 2022 and December 31, 2021.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

There were no assets held for sale as of June 30, 2022 and December 31, 2021.

Assets Held for Use and Related Impairments

6 unchanged sentences

If the undiscounted cash flows over the expected hold period are less than the carrying value, the Company reflects an impairment charge to write the asset down to its fair value.

The Company owns held for use properties for which the Company may from time to time reconsider the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period.

The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values.

Where more than one possible scenario exists, the Company uses a probability weighted approach.

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.

Held For Use Impairments - 2022

During the three months ended June 30, 2022, the Company began to reconsider its intended holding period for eight SHOP properties.

In July 2022, the Company began to actively market these properties for sale.

As a result of changes to the Company’s intended holding period, the Company assessed these properties for impairment and determined that the projected cash flows for two properties, on an undiscounted basis, over the intended holding periods did not recover their carrying values, and concluded that these two properties were impaired.

The fair value measurement was determined by estimating discounted cash flows using significant inputs such as (i) the performance of each property in the six months ended June 30, 2022, (ii) cash flow discount rates and (iii) terminal capitalization rates.

The Company also considered a broker’s opinion of value received in connection with the marketing of these properties.

The Company recorded impairment charges of $ 6.2 million on these two properties during the three months ended June 30, 2022, which is included in the consolidated statement of operations for the

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

three and six months ended June 30, 2022.

There can be no assurance that the sale of these properties will close on favorable terms, or at all.

In April 2022, a tenant who operates seven of the Company’s MOB skilled nursing facilities in Illinois offered to purchase the properties for $ 50.5 million, which caused the Company to reassess its expected holding period for these properties.

3 unchanged sentences

On April 30, 2021, the parties to a purchase and sale agreement for a skilled nursing facility in Wellington, Florida agreed to amend the agreement to reduce the sales price of the facility to $ 30.7 million.

In connection with this amendment, 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 in the consolidated statement of operations and comprehensive loss for the three months ended March 31, 2021.

This property was disposed in May 2021.

During the three months ended June 30, 2021, the Company actively considered plans to sell a MOB property located in Sun City, Arizona.

As a result of changes to the Company’s expected holding period, the Company determined that projected cash flows did not recover the carrying value of the property on an undiscounted basis over its intended holding period.

During July 2021, the Company entered into a non-binding letter of intent to sell the property and as a result, the Company determined that the fair market value of the property had declined and recorded an impairment charge of $ 6.1 million during the

three months ended June 30, 2021, which is included in the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Note 4 — Mortgage Notes Payable, Net

The following table reflects the Company’s mortgage notes payable as of March 31, 2022 and December 31, 2021:

The following table reflects the Company’s mortgage notes payable as of June 30, 2022 and December 31, 2021:

Outstanding Loan Amount as of Effective Interest Rate (1) as of

Portfolio Encumbered Properties (1)

2022 December 31, 2021 March 31,

2022 December 31, 2021 June 30,

2022 December 31, 2021 Interest Rate Maturity

(In thousands) (In thousands)

Palm Valley Medical Plaza - Goodyear, AZ (4)

1 $ 2,848 $ 2,879 4.15 % 4.15 % Fixed Jun.

Palm Valley Medical Plaza - Goodyear, AZ — $ — $ 2,879 — % 4.15 % Fixed Jun.

Medical Center V - Peoria, AZ — — 2,684 — % 4.75 % Fixed Sep.

13 unchanged sentences

_____________

(1) Calculated on a weighted average basis for all mortgages outstanding as of March 31, 2022 and December 31, 2021.

(1) Calculated on a weighted average basis for all mortgages outstanding as of June 30, 2022 and December 31, 2021.

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

7 unchanged sentences

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.

(4) This mortgage was repaid in full subsequent to March 31, 2022, for additional information see Note 17 — Subsequent Events.

As of March 31, 2022, 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 June 30, 2022, 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.

1 unchanged sentence

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

As of March 31, 2022, the Company was in compliance with these financial covenants.

As of June 30, 2022, the Company was in compliance with these financial covenants.

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

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Note 5 — Credit Facilities

The Company had the following credit facilities outstanding as of March 31, 2022 and December 31, 2021:

The Company had the following credit facilities outstanding as of June 30, 2022 and December 31, 2021:

Outstanding Facility

1 unchanged sentence

Credit Facility Encumbered Properties (1)

2022 December 31, 2021 March 31,

2022 December 31, 2021 June 30,

2022 December 31, 2021 Interest Rate Maturity

16 unchanged sentences

Total Credit Facilities 117 $ 501,624 $ 502,051 3.70 % (5) 3.00 % (5)

(1) Encumbered properties are as of March 31, 2022.

(1) Encumbered properties are as of June 30, 2022.

(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.

(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, 2022 with a carrying value of $ 345.4 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, 2022 with a carrying value of $ 254.5 million.

(5) Calculated on a weighted average basis for all credit facilities outstanding as of March 31, 2022 and December 31, 2021.

(3) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties located in Florida, Georgia, Iowa and Michigan as of June 30, 2022 with a carrying value of $ 346.8 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 June 30, 2022 with a carrying value of $ 257.4 million.

(5) Calculated on a weighted average basis for all credit facilities outstanding as of June 30, 2022 and December 31, 2021.

(6) Variable rate loan, based on LIBOR, all of which was economically fixed as a result of entering into “pay-fixed” interest rate swap agreements (the Company designates its “pay-fixed” interest rate swaps against all 30-day LIBOR debt, see Note 7 — Derivatives and Hedging Activities for additional details).

The Company plans to transition these swaps to a SOFR-based rate in the third quarter of 2022, see Note 17 — Subsequent Events for additional information.

(7) Variable rate loan which is capped as a result of entering into interest rate cap agreements ( see Note 7 — Derivatives and Hedging Activities for additional details).

1 unchanged sentence

(9) Effective interest rate below for variable rate debt gives effect to any “pay-fixed” swap entered into by the Company allocated to the loan for presentation purposes.

If no “pay-fixed” swaps are allocated, the effective interest rate below represents the variable rate (or contractual floor if appropriate) and the applicable margin in effect as of March 31, 2022 and December 31, 2021.

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

(10) The Company has interest “pay-fixed” swaps which are designated as cash flow hedges on outstanding combined borrowings.

To present average rates in the table above, the Company historically allocated the $ 50.0 million notional amount of a “pay-fixed” swap to its Revolving Credit Facility with any remaining notional amounts applied to its Capital One Fannie Mae Facility.

As of March 31, 2022 and December 31, 2021, all $ 50.0 million of the “pay-fixed” swap was allocated to the Capital One Fannie Mae Facility because there were no outstanding borrowings under the Revolving Credit Facility.

All other “pay-fixed” swaps were allocated to the Capital One MOB mortgage loan and the Term Loan consistently for both March 31, 2022 and December 31, 2021.

As of March 31, 2022, 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, 2022 was $ 103.9 million, 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.

Pursuant to the August

(10) The Company has interest “pay-fixed” swaps which are designated as cash flow hedges on LIBOR-based outstanding combined borrowings.

To present average rates in the table above, the Company historically allocated the notional amount of a “pay-fixed” swap to the outstanding amounts of its Credit Facility (both the Revolving Credit Facility and the Term Loan) with any remaining notional amounts applied to its Capital One Fannie Mae Facility.

As of June 30, 2022 and December 31, 2021, all of the $ 50.0 million of the “pay-fixed” swap was allocated to the Capital One Fannie Mae Facility because there were no outstanding borrowings under the Revolving Credit Facility.

All other “pay-fixed” swaps were allocated to the Capital One MOB mortgage loan and the Term Loan consistently for both June 30, 2022 and December 31, 2021.

As of June 30, 2022, 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.

All of the real estate assets pledged to secure debt or comprising the borrowing base 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.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

10, 2020 amendment to the Credit Facility, any acquired properties must be added to the borrowing base of the Credit Facility, and any net proceeds from the dispositions of any unencumbered properties must be used to repay amounts outstanding under the Revolving 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 “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.

June 30, 2022

Unencumbered real estate investments, at cost as of June 30, 2022 were $ 104.2 million, 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.

Currently, any properties that the Company acquires must be added to the borrowing base of the Credit Facility, and any net proceeds from the dispositions of any unencumbered properties must be used to repay amounts outstanding under the Revolving Credit Facility (as defined below).

The amended and restated senior secured credit facility (the “Credit Facility”), consists of two components, a revolving credit facility (the “Revolving Credit Facility”) and a term loan (the “Term Loan”).

The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to a one-year extension at the Company’s option.

1 unchanged sentence

The total commitments under the Credit Facility are $ 655.0 million, including $ 505.0 million under the Revolving Credit Facility.

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.

The amount available for future borrowings under the Revolving Credit Facility is based on either the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, or satisfying a minimum debt service coverage ratio with respect to the borrowing base.

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 March 31, 2022, $ 150.0 million was outstanding under the Term Loan, and no amounts were outstanding under the Revolving Credit Facility.

The unused borrowing availability under the Revolving Credit Facility was $ 227.5 million.

As of June 30, 2022, $ 150.0 million was outstanding under the Term Loan and no amounts were outstanding under the Revolving Credit Facility.

The unused borrowing availability under the Revolving Credit Facility was $ 212.5 million based on the current borrowing base.

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 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 % and the Covenant Relief Period (as defined below) has terminated (the “Commencement Quarter”).

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, the Company’s ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5 % and the Company’s Fixed Charge Coverage Ratio (as defined below) for the most recently ended four fiscal quarters is not less than 1.50 to 1.00 (the “Commencement Quarter”).

The fiscal quarter ended June 30, 2021 was the first quarter that could have been the Commencement Quarter.

The Company satisfied the conditions during the quarter ended March 31, 2022 in order to elect the quarter ending June 30, 2022 as the Commencement Quarter, but chose not to do so.

The Company did not satisfy the conditions during the quarter ended June 30, 2022 in order to elect the quarter ending September 30, 2022 as the Commencement Quarter.

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 repay amounts outstanding under the Revolving Credit Facility, to the extent there are any such amounts outstanding.

1 unchanged sentence

There can be no assurance these conditions will be met at the time of any particular borrowing.

In addition, until the Commencement Quarter, the Company has the option to have amounts outstanding under the Revolving Credit Facility bear interest at an annual rate equal to either:

(i) LIBOR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.85 % to 2.60 %;

or (ii) the Base Rate (as defined in the Credit Facility), plus an applicable margin that ranges, depending on the Company’s leverage, from 0.60 % to 1.35 %.

In addition, as of June 30, 2022, the Company had the option to have amounts outstanding under the Revolving Credit Facility bear interest at an annual rate equal to either:

(i) LIBOR, plus an applicable margin that ranged, depending on the Company’s leverage, from 1.85 % to 2.60 %;

or (ii) the Base Rate (as defined in the Credit Facility), plus an applicable margin that ranged, depending on the Company’s leverage, from 0.60 % to 1.35 %.

Pursuant to the Fourth Amendment (as defined below), the Credit Agreement was updated to transition the Credit Facility from LIBOR to SOFR (as defined below) and, until the Commencement Quarter, the Revolving Credit Facility now bears interest at an annual rate equal to either:

(i) SOFR, plus an applicable margin that ranges, depending on the Company’s leverage, from 2.10 % to 2.85 % or (ii) the Base Rate (as defined in the Credit Facility), plus an applicable margin that ranges, depending on the Company’s leverage, from 0.85 % to 1.60 % (see Note 17 — Subsequent Events for additional information).

Commencing on the first day of the Commencement Quarter, the Company will have the option to have amounts outstanding under the Revolving Credit Facility bear interest at an annual rate equal to either:

(a) LIBOR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.60 % to 2.35 %;

(a) SOFR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.60 % to 2.35 %, plus an additional spread adjustment depending on the length of the interest period;

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, 2022 the Company had elected to use the LIBOR option for all of its borrowings under the Credit Facility.

Further, 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:

(i) LIBOR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.80 % to 2.55 %;

or (ii) the Base Rate, plus an applicable margin that ranges, depending on the Company’s leverage, from 0.55 % to 1.30 %.

Commencing on the first day of the Commencement Quarter, the Company will have the option to have amounts outstanding under the Term Loan bear interest at an annual rate equal to either:

(a) LIBOR, plus an

As of June 30, 2022 the Company had elected to use the LIBOR option for all of its borrowings under the Revolving Credit Facility.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

applicable margin that ranges, depending on the Company’s leverage, from 1.55 % to 2.30 %;

June 30, 2022

Further, as of June 30, 2022, the Company had the option to have amounts outstanding under the Term Loan bear interest at an annual rate equal to either:

(i) LIBOR, plus an applicable margin that ranged, depending on the Company’s leverage, from 1.80 % to 2.55 %;

or (ii) the Base Rate, plus an applicable margin that ranged, depending on the Company’s leverage, from 0.55 % to 1.30 %.

Pursuant to the Fourth Amendment, the Credit Agreement was updated to transition the Credit Facility from LIBOR to SOFR and, until the Commencement Quarter, the Term Loan now bears interest at an annual rate equal to either:

(i) SOFR, plus an applicable margin that ranges, depending on the Company’s leverage, from 2.05 % to 2.80 %;

or (ii) the Base Rate, plus an applicable margin that ranges, depending on the Company’s leverage, from 0.80 % to 1.55 %.

(see Note 17 — Subsequent Events for additional information).

Commencing on the first day of the Commencement Quarter, the Company will have the option to have amounts outstanding under the Term Loan bear interest at an annual rate equal to either:

(a) SOFR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.55 % to 2.30 %, plus an additional spread adjustment depending on the length of the interest period;

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

As of March 31, 2022, the Company had elected to use the LIBOR option for all its borrowings under the Credit Facility.

As of March 31, 2022, the Term Loan had an effective interest rate per annum equal to 3.98 %.

Pursuant to the terms of the amendment to the Company’s Credit Facility, the “floor” on SOFR-based rates is 0.25 %, consistent with the previous “floor” on LIBOR which was also 0.25 %.

As of June 30, 2022, the Company had elected to use the LIBOR option for all its borrowings under the Term Loan.

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 value per share (“Series A Preferred Stock”) and the 7.125 % Series B Cumulative Redeemable Perpetual Preferred Stock, $ 0.01 par value per share (“Series B 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 or Series B 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.

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 or Series B 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.

These exceptions include paying dividends on the 7.375 % Series A Cumulative Redeemable Perpetual Preferred Stock, $ 0.01 par value per share (“Series A Preferred Stock”), the 7.125 % Series B Cumulative Redeemable Perpetual Preferred Stock, $ 0.01 par value per share (“Series B Preferred Stock”) or any other class of preferred stock that 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, Series B Preferred Stock or any other 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 and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock, Series B Preferred Stock or any other class of preferred stock that may be issued) 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.

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 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 was 67.5 % for the period from July 1, 2020 through June 30, 2021 and is 65 % thereafter unless and until the Commencement Quarter, following which that ratio will be 62.5 %.

The minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges (the “Fixed Charge Coverage Ratio”) was 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, provided that from November 12, 2021 until the earlier of December 31, 2022 and such earlier date as the Company elects to terminate this relief (such period, the “Covenant Relief Period”), the Fixed Charge Coverage Ratio that the Company must satisfy based on the four most recently ended fiscal quarters will be reduced to 1.50 to 1.00 (see below for waiver issued on November 12, 2021).

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, 2022, the Company had a minimum consolidated tangible net worth of $ 1.5 million.

The Company would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended September 30, 2021.

Pursuant to the terms of the third amendment entered into on November 12, 2021 by the Company, the agent and the requisite lenders under the Credit Facility, the lenders waived any defaults or event of defaults under the covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and any further defaults of Events of Default (as described in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant.

In addition, as described above, the Fixed Charge Coverage Ratio the Company is required to maintain was amended from 1.60 to 1.00 to 1.50 to 1.00 for the Covenant Relief Period.

There can be no assurance the Company’s lenders will consent to any amendments or waivers that may become necessary to comply with the terms of the Credit Facility in the future.

As of March 31, 2022, the Company was in compliance with the financial covenants under the Credit Facility.

Based upon the Company’s current expectations, the Company believes it will be able to comply with these covenants during the next 12 months.

Under the Credit Facility, the Company must comply with covenants governing the maximum ratio of consolidated total indebtedness to consolidated total asset value, and requiring the Company to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges, a minimum consolidated tangible net worth and a minimum debt service coverage ratio.

Specifically, the maximum ratio of consolidated total indebtedness to consolidated total asset value is presently 65 % unless and until the Commencement Quarter, following which the ratio will be 62.5 %.

The minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges (the “Fixed Charge Coverage Ratio”), based on the Fourth Amendment, that the Company must satisfy based on the four most recently ended fiscal quarters is (a) 1.20 to 1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.35 to 1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.45 to 1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter;

provided, however, that from and after the Commencement Quarter, the Company must satisfy a minimum Fixed Charge Coverage Ratio of 1.50 to 1.00.

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

As of June 30, 2022, the Company had a minimum consolidated tangible net worth of $ 1.5 billion.

The minimum debt service coverage ratio (calculated similar to the calculation of the Fixed Charge Coverage Ratio but excluding dividends on Series A Preferred Stock, Series B Preferred Stock or any other class of preferred stock that may be issued) that was added to the Credit Facility pursuant to the Fourth Amendment based on the four most recently ended fiscal quarters is (a) 1.50 :1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.65 :1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.75 :1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter until the Company elects the Commencement Quarter, after which the debt service coverage ratio covenant will no longer apply.

Additionally, pursuant to the Fourth Amendment, the borrowing base advance rate was reduced from 55 % to 52.5 % until the Company elects the Commencement Quarter, after which the borrowing base advance rate will revert back to 55 %.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Without the Fourth Amendment, the Company would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended June 30, 2022.

Pursuant to the terms of the fourth amendment entered into on August 11, 2022 by the Company, the agent and the requisite lenders under the Credit Facility (the “Fourth Amendment”), the Fixed Charge Coverage Ratio covenant was amended to permit the Company to avoid any defaults or Events of Default (as described in the Credit Facility) resulting from the breach of the existing Fixed Charge Coverage Ratio covenant.

The prior covenant had required the Company to maintain a Fixed Charge Coverage Ratio of 1.50 to 1.00 for the quarter ended June 30, 2022.

There can be no assurance the Company’s lenders will consent to any further amendments that may become necessary in order to comply with the terms of the Credit Facility in the future.

See Note 17 — Subsequent Events for additional information on the Fourth Amendment.

Fannie Mae Master Credit Facilities

5 unchanged sentences

Currently, the Company has nine interest rate cap agreements with an aggregate current effective notional amount of $ 355.2 million which caps LIBOR at 3.50 % with terms through April 2024.

The Company does not apply hedge accounting to these agreements and changes in value are reflected in earnings.

(S ee Note 7 — Derivatives and Hedging Activities for additional disclosure regarding the Company’s derivatives).

The Company does not apply hedge accounting to these agreements and changes in value are reflected in earnings (see Note 7 — Derivatives and Hedging Activities for additional disclosure regarding the Company’s derivatives).

The Company may request future advances under the Fannie Mae Master Credit Facilities 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.

Future Principal Payments

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to March 31, 2022 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 June 30, 2022 and thereafter, on all of the Company’s outstanding debt (mortgage notes payable and credit facilities):

Future Principal

7 unchanged sentences

Total $ 585,734 $ 503,954 $ 1,089,688

_____________

(1) Includes the Palm Valley mortgage loan of $ 2.8 million which was repaid in full subsequent to March 31, 2022 prior to its maturity in June 2023, for additional information see Note 17 — Subsequent Events.

LIBOR Transition

4 unchanged sentences

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 currently expects LIBOR to be available in substantially its current form until at least through June 30, 2023 for the USD LIBOR rates currently relevant to the Company, 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), a SOFR-based rate as a benchmark rate as determined by the agent in

The Company is monitoring and evaluating the risks related to changes in LIBOR availability, which include

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

accordance with the terms of the Credit Facility, or an alternative benchmark otherwise established by the agent in accordance with the terms of the Credit Facility, which will be determined with due consideration to any evolving or then prevailing market practices for determining and implementing a rate of interest for U.S.

dollar-denominated syndicated credit facilities.

June 30, 2022

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.

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

Pursuant to the Fourth Amendment, the Credit Agreement was updated and provisions were added to transition the Credit Facility from using a benchmark rate of LIBOR to using a benchmark rate of SOFR, and the Company will either utilize the Base Rate (as defined in the Credit Facility) or the updated SOFR-based rates.

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

15 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 March 31, 2022, 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 June 30, 2022, 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.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

The following table presents information about the Company’s assets and liabilities measured at fair value as of March 31, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those instruments fall.

June 30, 2022

The following table presents information about the Company’s assets and liabilities measured at fair value as of June 30, 2022 and December 31, 2021, 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

March 31, 2022

June 30, 2022

Derivative assets, at fair value $ — $ 23,668 $ — $ 23,668

2 unchanged sentences

December 31, 2021

Derivative assets, at fair value $ — $ 174 $ — $ 174

Derivative liabilities, at fair value — ( 13,903 ) — ( 13,903 )

Derivative assets, at fair value (non-designated) $ — $ 174 $ — $ 174

Derivative liabilities, at fair value (designated) — ( 13,903 ) — ( 13,903 )

Total $ — $ ( 13,729 ) $ — $ ( 13,729 )

1 unchanged sentence

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 three months ended March 31, 2022.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2022.

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 March 31, 2022 and December 31, 2021.

As of December 31, 2021, the Company owned four held for use properties in Texas for which the Company had reconsidered its expected holding period and which were marketed for sale.

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 sheets as of June 30, 2022 and December 31, 2021.

As of June 30, 2022, the Company owned nine held for use properties for which the Company had reconsidered their expected holding periods and which were marketed for sale.

As a result, the Company evaluated the impact on its ability to recover the carrying value of the properties and recorded impairment charges to reduce the carrying values to their estimated fair values during 2022.

As of December 31, 2021, the Company owned four held for use properties in Texas for which the Company had reconsidered their expected holding periods and which were marketed for sale.

As a result, the Company evaluated the impact on its ability to recover the carrying value of the properties and recorded impairment charges to write these properties down to their estimated fair values during 2021.

3 unchanged sentences

Real estate investments held for sale are carried at net realizable value on a non-recurring basis and are generally classified in Level 3 of the fair value hierarchy.

The Company did not have any real estate investments classified as held for sale as of March 31, 2022 and December 31, 2021.

The Company did not have any real estate investments classified as held for sale as of June 30, 2022 and December 31, 2021.

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:

March 31, 2022 December 31, 2021

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

June 30, 2022 December 31, 2021

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

5 unchanged sentences

3 $ 353,954 $ 348,271 $ 355,045 $ 350,710

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

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.

8 unchanged sentences

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 March 31, 2022 and December 31, 2021:

(In thousands) Balance Sheet Location March 31,

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 June 30, 2022 and December 31, 2021:

(In thousands) Balance Sheet Location June 30,

2022 December 31, 2021

8 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 the three months ended March 31, 2022 and the year ended December 31, 2021, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

During the six months ended June 30, 2022 and the year ended December 31, 2021, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

The interest rate “pay-fixed” swaps have base interest rates between 1.39 % and 2.32 % with expirations varying through December 2026.

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

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 $ 0.2 million was recorded as an increase to interest expense for the three months ended March 31, 2022 and 2021, respectively, and approximately $ 0.2 million remained in AOCI as of March 31, 2022.

Amounts reported in accumulated other comprehensive income (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 April 1, 2022 through March 31, 2023, the Company estimates that $ 0.5 million will be reclassified from other comprehensive income (loss) as an increase to interest expense.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

As of March 31, 2022 and December 31, 2021, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:

March 31, 2022 December 31, 2021

June 30, 2022

terminated two interest rate swaps with an aggregate notional amount of $ 250.0 million for a payment of approximately $ 2.2 million.

Of the amount recorded in AOCI following these terminations, $ 0.2 million and $ 0.4 million were recorded as increases to interest expense for the three and six months ended June 30, 2022 and 2021, respectively.

No amounts remained in AOCI as of June 30, 2022.

Amounts reported in accumulated other comprehensive income (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, 2022 through June 30, 2023, the Company estimates that $ 7.4 million will be reclassified from accumulated other comprehensive income (loss) as a decrease to interest expense.

As of June 30, 2022 and December 31, 2021, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:

June 30, 2022 December 31, 2021

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

2 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

5 unchanged sentences

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.

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 $ 1.0 million for the three months ended March 31, 2022, and a gain of $ 14,000 for the three months ended March 31, 2021.

This includes both the currently effective and future starting derivatives described below.

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 with current effective notional amounts that were not designated as hedges in qualified hedging relationships as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

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 $ 0.4 million and $ 1.4 million for the three and six months ended June 30, 2022 respectively, and a loss of $ 13,000 and a gain of $ 1,000 for the three and six months ended June 30, 2021, respectively.

June 30, 2022 December 31, 2021

Interest Rate Derivatives Number of Instruments Notional Amount (1)

4 unchanged sentences

(1) Notional amount excludes three interest rate cap agreements with aggregate notional amounts of $ 140.8 million which have effective dates which begin in November 2022 and April 2023, upon expiration of similar interest rate caps included above.

(2) These agreements cap LIBOR at 3.50 % with terms through April 2024.

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2022 and December 31, 2021.

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

The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheet.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

(2) These agreements cap LIBOR at 3.50 % with terms through April 2024.

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives (both designated and non-designated) as of June 30, 2022 and December 31, 2021.

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

The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.

Gross Amounts Not Offset in the Consolidated Balance Sheet

(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

March 31, 2022 $ 13,321 $ — $ — $ 13,321 $ — $ — $ 13,321

March 31, 2022 $ — $ — $ — $ — $ — $ — $ —

June 30, 2022 $ 23,668 $ — $ — $ 23,668 $ — $ — $ 23,668

June 30, 2022 $ — $ — $ — $ — $ — $ — $ —

December 31, 2021 $ 174 $ — $ — $ 174 $ — $ — $ 174

2 unchanged sentences

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 March 31, 2022, the fair value of derivatives in a net asset position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $ 12.5 million.

As of March 31, 2022, 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 redeem its position under the agreements at their aggregate termination value of $ 12.5 million at March 31, 2022.

As of June 30, 2022, there were no derivatives in a net liability position.

The Company is not required to post any collateral related to these agreements and was not in breach of any agreement provisions.

Note 8 — Stockholders’ Equity

As of March 31, 2022 and December 31, 2021, the Company had 100,737,224 and 99,281,754 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.

These include shares issued as Stock Dividends since October 2020.

References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive income have been retroactively adjusted to reflect the increase of 0.10416 shares for every share outstanding due to the Stock Dividends (including the April 2022 Stock Dividend), and are noted as such throughout the accompanying financial statements and notes.

As of June 30, 2022 and December 31, 2021, the Company had 102,164,671 and 99,281,754 shares of common stock outstanding, respectively, including unvested restricted shares, shares issued pursuant to the Company’s distribution reinvestment plan (“DRIP”), net of share repurchases and shares issued as Stock Dividends since October 2020.

References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive income have been retroactively adjusted to reflect the increase of 0.11981 shares for every share outstanding due to the Stock Dividends (including the July 2022 Stock Dividend), and are noted as such throughout the accompanying financial statements and notes.

See Note 1 — Organization for additional information.

7 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.

On August 10, 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 — Credit Facilities , which restricts the Company from repurchasing shares until no earlier than the Commencement Quarter (which has not yet occurred), the Board determined that, effective on August 14, 2020, repurchases under the SRP would be suspended.

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

On August 10, 2020, in order to strategically maintain the Company’s liquidity in light of the continued impact of the COVID-19 pandemic and to comply with an amendment to the Credit Facility described in Note 5 — Credit Facilities , which restricts the Company from repurchasing shares until no earlier than the Commencement Quarter (which has not yet occurred), the Board determined that, effective on August 14, 2020, repurchases under the SRP would be suspended.

The Board 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.

2 unchanged sentences

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, under the SRP and does not include any repurchases under tender offers, cumulatively through March 31, 2022.

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, cumulatively through June 30, 2022.

Number of Shares Repurchased Average Price per Share

Cumulative repurchases as of December 31, 2021 4,896,620 $ 20.60

Three months ended March 31, 2022 — —

Cumulative repurchases as of March 31, 2022 4,896,620 20.60

Six months ended June 30, 2022 — —

Cumulative repurchases as of June 30, 2022 4,896,620 20.60

Distribution Reinvestment Plan

4 unchanged sentences

The Company has the right to amend the DRIP or terminate the DRIP with ten days ’ notice to participants.

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

During the three months ended March 31, 2022 and the year ended December 31, 2021, the Company did no t issue any shares of common stock pursuant to the DRIP.

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

During the six months ended June 30, 2022 and the year ended December 31, 2021, the Company did no t issue any shares of common stock pursuant to the DRIP.

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 the Company pays distributions in stock instead of cash.

1 unchanged sentence

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

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.

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 in its discretion.

Preferred Stock

3 unchanged sentences

Also, in connection with an underwritten offering in October 2021 (see details below), the Company classified and designated 3,680,000 shares of its authorized preferred stock on October 4, 2021 as authorized shares of its Series B Preferred Stock.

• The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of March 31, 2022 and December 31, 2021.

• The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of March 31, 2022 and December 31, 2021.

• The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of June 30, 2022 and December 31, 2021.

• The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of June 30, 2022 and December 31, 2021.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Series A Preferred Stock

12 unchanged sentences

Pursuant to the terms of the Credit Facility, all proceeds were used to repay amounts outstanding under the Credit Facility.

Subject to the terms and conditions set forth in the Credit Facility, we may then draw on the Credit Facility to borrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings.

Subject to the terms and conditions set forth in the Credit Facility, the Company may draw on the Credit Facility to borrow 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 at the time of any particular borrowing.

2 unchanged sentences

Also, 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 above.

Under this distribution policy, distributions authorized by the Board on shares of the Company’s 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 estimated per share asset value effect on the applicable date, based on a single record date to be specified at the beginning of each quarter.

Under this distribution policy, distributions authorized by the Board on shares of the Company’s 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 estimated per share asset value 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 issued Stock Dividends of 0.01349 shares of the Company’s common stock on each share of the Company’s outstanding common stock in 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, July 2021, October 2021 and January 2022.

The Company declared and issued Stock Dividends of 0.014167 shares of the Company’s common stock on each share of the Company’s outstanding common stock in April 2022.

The Company declared and issued Stock Dividends of 0.014167 shares of the Company’s common stock on each share of the Company’s outstanding common stock in April 2022 and July 2022.

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.

Note 9 — Related Party Transactions and Arrangements

As of March 31, 2022 and December 31, 2021, the Special Limited Partner owned 9,676 and 9,537 shares, respectively, of the Company’s outstanding common stock.

As of June 30, 2022 and December 31, 2021, the Special Limited Partner owned 9,813 and 9,537 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 March 31, 2022 and December 31, 2021, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

As of June 30, 2022 and December 31, 2021, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

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.

11 unchanged sentences

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 March 31, 2022.

This threshold has not been exceeded through June 30, 2022.

Asset Management Fees and Variable Management/Incentive Fees

14 unchanged sentences

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 March 31, 2022, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

As of June 30, 2022, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

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.

These cash 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.

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

Stock Dividends do not cause the OP to issue additional Class B Units, rather, the redemption ratio to common stock is adjusted.

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

that the Economic Hurdle had been satisfied, however none of the events have occurred, including a listing of the Company’s common stock on a national securities exchange, which would have satisfied the other vesting requirement of the Class B Units.

7 unchanged sentences

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 three months ended March 31, 2022 or 2021.

No incentive fee was incurred for the three or six months ended June 30, 2022 or 2021.

Property Management Fees

1 unchanged sentence

The Company also reimburses the Property Manager for property level expenses incurred by the Property Manager.

The Property Manager may charge a separate fee for the one-time initial rent-up or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s length transactions by others rendering similar services in the same geographic area for similar properties, and the Property Manager is allowed to receive a higher property management fee in certain cases if approved by our Board of Directors (including a majority of the independent directors).

The Property Manager may charge a separate fee for the one-time initial rent-up or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s length transactions by others rendering similar services in the same geographic area for similar properties, and the Property Manager is allowed to receive a higher property management fee in certain cases if approved by our Board (including a majority of the independent directors).

If the Company contracts directly with third parties for such services, the Company will pay the third party customary market fees and will pay the Property Manager an oversight fee of 1.0 % of the gross revenues of the property managed by the third party.

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

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.

The A&R Property Management Agreement automatically renews for successive one-year terms unless any party provides written notice of its intention to terminate the A&R Property Management Agreement at least 90 days prior to the end of the term.

Neither party provided notice of intent to terminate.

Neither party has provided notice of intent to terminate.

The current term of the A&R Property Management Agreement expires February 17, 2023.

4 unchanged sentences

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 months ended March 31, 2022 the Company incurred $ 1.8 million of reimbursement expenses from the Advisor for providing administrative services.

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 and six months ended June 30, 2022, the Company incurred $ 2.1 million and $ 4.3 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

During the three and six months ended June 30, 2021, the Company incurred $ 1.9 million and $ 4.1 million, respectively, 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).

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

During the second quarter of 2021, the Advisor finalized the amounts and form of the 2020 bonuses previously estimated (the “2020 Bonus Awards”) to be paid to the 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 2020 Bonus Awards are paid over a ten-month period from June 2021 to April 2022.

The final amounts exceeded the amounts previously paid by the Company to the Advisor for estimated 2020 bonuses by approximately $ 1.0 million for the following reasons (i) forfeitures of bonuses related to employees of the Advisor or its affiliates who were terminated or resigned prior to payment (including the Company’s former chief financial officer) and (ii) a general reduction in final bonuses for remaining personnel due to on-going negative impacts of the COVID-19 pandemic.

The 2020 Bonus Awards were paid by the Advisor over a ten-month period from June 2021 to April 2022.

The final amounts exceeded the amounts previously paid by the Company to the Advisor for estimated 2020 bonuses by approximately $ 1.0 million for the following reasons:

(i) forfeitures of bonuses related to employees of the Advisor or its affiliates who were terminated or resigned prior to payment (including the Company’s former chief financial officer) and (ii) a general reduction in final bonuses for remaining personnel due to on-going negative impacts of the COVID-19 pandemic.

As a result, during the second quarter of 2021, the Company recorded a receivable from the Advisor of $ 1.0 million, which was recorded in prepaid expenses and other assets on the consolidated balance sheet and a corresponding reduction in general administrative expenses.

Pursuant to authorization by the independent members of the Company’s board of directors, the $ 1.0 million receivable was required to be repaid to the Company on a pro rata basis over a six-month period from November 2021 through April 2022.

As of March 31, 2022, $ 0.8 million had been repaid by the Advisor and the remainder was repaid in April 2022.

Reimbursements for the cash portion of 2021 bonuses paid by the Advisor to employees of the Advisor or its affiliates were expensed and reimbursed on a monthly basis during 2021, and 2022 bonuses continue to be expensed and reimbursed on a monthly basis during 2022 in accordance with estimates provided by the Advisor.

Generally, prior to the 2019 bonuses paid by the Advisor to employees of the Advisor or its affiliates in September 2020, 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.

Pursuant to authorization by the independent members of the Company’s Board, the $ 1.0 million receivable was required to be repaid to the Company on a pro rata basis over a six-month period from November 2021 through April 2022.

As of June 30, 2022, the entire amount had been repaid by the Advisor.

Reimbursements for the cash portion of 2021 bonuses paid by the Advisor to employees of t he Advisor or its affiliates were expensed and reimbursed on a monthly basis during 2021, and 2022 bonuses continue to be expensed and reimbursed on a monthly basis during 2022 in accordance with estimates provided by the Advisor.

Generally, prior to the 2019 bonuses paid by the Advisor to employees of the Advisor or its affiliates in September 2020, employee bonuses had 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.

Summary of fees, expenses and related payables

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 March 31, Payable (Receivable) as of

(In thousands) Incurred Incurred March 31,

Three Months Ended June 30, Six Months Ended June 30, Payable (Receivable) as of

2022 2021 2022 2021

(In thousands) Incurred Incurred Incurred

Incurred June 30,

2022 December 31, 2021

13 unchanged sentences

(1) Included in general and administrative expenses in the consolidated statements of operations.

Includes $ 1.5 million and $ 1.7 million subject to the Capped Reimbursement for the three months ended March 31, 2022 and 2021, respectively.

(2) Balance includes a receivable of $ 0.2 million and $ 0.9 million as of March 31, 2022 and December 31, 2021, respectively, from the Advisor related to the overpayment of 2020 Bonus Awards, which, pursuant to authorization by the independent members of the Company’s board of directors, was required to be repaid to the Company over a pro-rata basis over a six -month period from November 2021 through April 2022.

(3) Inclusive of $ 0.2 million and $ 0.3 million of leasing commissions which are included in prepaid expenses and other assets on the consolidated balance sheet as of March 31, 2022 and December 31, 2021, respectively.

Includes $ 1.4 million and $ 2.9 million for the three and six months ended June 30, 2022, respectively, and $ 1.5 million and $ 3.2 million for the three and six months ended June 30, 2021, respectively, subject to the Capped Reimbursement.

(2) Balance includes a receivable of $ 0.9 million as of December 31, 2021 from the Advisor related to the overpayment of 2020 Bonus Awards, which, pursuant to authorization by the independent members of the Company’s Board was required to be repaid to the Company over a pro-rata basis over a six -month period from November 2021 through April 2022.

(3) Inclusive of $ 0.2 million and $ 0.3 million of leasing commissions which are included in prepaid expenses and other assets on the consolidated balance sheet as of June 30, 2022 and December 31, 2021, respectively.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Fees and Participations Incurred in Connection with a Listing or the Liquidation of the Company’s Real Estate Assets

Fees Incurred in Connection with a Listing

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 three months ended March 31, 2022 or 2021.

If the common stock of the Company is listed on a national securities 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 six months ended June 30, 2022 or 2021.

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.

1 unchanged sentence

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 three months ended March 31, 2022 or 2021.

No such participation in net sales proceeds became due and payable during the six months ended June 30, 2022 or 2021.

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.

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 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.

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 a 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.

1 unchanged sentence

Under the Advisory Agreement Amendment, upon the termination or non-renewal of the agreement, the Advisor will be entitled to receive from the Company all amounts due to the Advisor, including any change of control fee and transition fee (both described below), as well as the then-present fair market value of the Advisor’s interest in the Company.

All fees will be due within 30 days after the effective date of the termination of the Advisory Agreement Amendment.

Upon a termination by either party in connection with a change of control (as defined in the Advisory Agreement Amendment), the Company would pay the Advisor a change of control fee equal to the product of four and the “Subject Fees” described below.

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.

All fees will be due within 30 days after the effective date of the termination or non-renewal of the Advisory Agreement Amendment.

Upon a termination by either party in connection with a change of control (as defined in the Advisory Agreement Amendment), the Company would be required to pay the Advisor a change of control fee equal to the product of four and the “Subject Fees” described below.

Upon a termination by the Company in connection with a transition to self-management, the Company would be required to 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.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Note 10 — Economic Dependency

9 unchanged sentences

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 March 31, 2022 and activity for the period presented:

The following table reflects the amount of restricted shares outstanding as of June 30, 2022 and activity for the period presented:

Number of Shares of Common Stock Weighted Average Issue Price

1 unchanged sentence

Stock dividend 4,628 14.75

Unvested, March 31, 2022 161,754 $ 21.11

As of March 31, 2022, the Company had $ 2.4 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

Unvested, June 30, 2022 164,055 $ 21.03

As of June 30, 2022, the Company had $ 2.1 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 1.8 years.

Compensation expense related to restricted shares was approximately $ 0.3 million for the three months ended March 31, 2022, and $ 0.3 million for the three months ended March 31, 2021 .

Compensation expense related to restricted shares was approximately $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2022, respectively, and $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2021, 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 three months ended March 31, 2022 or 2021.

No such shares were issued during the six months ended June 30, 2022 or 2021.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

Note 12 — Accumulated Other Comprehensive Loss

The following table illustrates the changes in accumulated other comprehensive loss as of and for the period presented:

June 30, 2022

Note 12 — Accumulated Other Comprehensive Income (Loss)

The following table illustrates the changes in accumulated other comprehensive income (loss) as of and for the period presented:

(In thousands) Unrealized Gain (loss) on Designated Derivative

Balance, December 31, 2021 $ ( 14,341 )

Other comprehensive gain (loss), before reclassifications 23,613

Other comprehensive gain, before reclassifications 32,009

Amount of gain (loss) reclassified from accumulated other comprehensive gain (loss) 4,427

Balance, March 31, 2022 $ 11,925

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 $ 0.2 million as of March 31, 2022.

Balance, June 30, 2022 $ 22,095

Accumulated other comprehensive 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.

Note 13 — Non-controlling Interests

Non-controlling interests on the Company’s consolidated balance sheet is comprised of the following:

Non-controlling interests on the Company’s consolidated balance sheets is comprised of the following:

Balance as of

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

Series A Preferred Units held by third parties $ 2,578 $ 2,578

Common OP Units held by third parties 3,720 3,758

Total Non-controlling Interests in the Operating Partnership 6,541 6,336

Total Non-controlling Interests in the OP 6,298 6,336

Non-controlling Interests in property owning subsidiaries 379 368

Total Non-controlling interests $ 6,677 $ 6,704

Non-Controlling Interests in the Operating Partnership

For preferred and common shares issued by the Company, the Company typically issues mirror securities with substantially equivalent economic rights between the Company and the Operating Partnership.

Non-Controlling Interests in the OP

For preferred and common shares issued by the Company, the Company typically issues mirror securities with substantially equivalent economic rights between the Company and the OP.

The securities held by the Company are eliminated in consolidation.

5 unchanged sentences

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.

During the three months ended March 31, 2022, Series A Preferred Unit holders were paid $ 46,000 .

During the three and six months ended June 30, 2022, Series A Preferred Unit holders were paid $ 46,000 and $ 92,000 , respectively.

Common OP Units

The Company is the sole general partner and holds substantially all of the Common OP Units.

As of March 31, 2022 and December 31, 2021, the Advisor held 90 Common 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 Common OP Units, with a value of $ 10.1 million, or $ 25.00 per unit, to the unaffiliated third party.

As of June 30, 2022 and December 31, 2021, the Advisor held 90 Common OP Units, which represents a nominal percentage of the aggregate ownership in the OP.

In November 2014, the Company partially funded the purchase of an MOB from an unaffiliated third party by causing the OP to issue 405,908 Common OP Units, with a value of $ 10.1 million, or $ 25.00 per unit, to the unaffiliated third party.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

A holder of Common 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 Dividends, other stock dividends and other similar events.

1 unchanged sentence

Dur ing the three months ended March 31, 2021, Common OP Unit non-controlling interest holders were not paid any cash distribu tions.

No cash distributions were paid to non-controlling interest holders during the three months ended March 31, 2022.

Dur ing the six months ended June 30, 2022 and 2021, Common OP Unit non-controlling interest holders were no t paid any cash distribu tions.

Stock Dividends do not cause the OP to issue additional Common OP Units, rather, the redemption ratio to common stock is adjusted.

The 405,998 Common OP Units outstanding as of March 31, 2022 would be redeemable for 448,287 shares of common stock, giving effect to adjustments for the impact of the Stock Dividends through April 2022.

The 405,998 Common OP Units outstanding as of June 30, 2022 would be redeemable for 454,639 shares of common stock, giving effect to adjustments for the impact of the Stock Dividends through July 2022.

Non-Controlling Interests in Property Owning Subsidiaries

6 unchanged sentences

Distributions

Third Party Net Investment Amount Non-Controlling Ownership Percentage Net Real Estate Assets Subject to Investment Arrangement Three Months Ended March 31,

Third Party Net Investment Amount Non-Controlling Ownership Percentage Net Real Estate Assets Subject to Investment Arrangement Three Months Ended June 30,

Property Name

(Dollar amounts in thousands)

Investment Date March 31, 2022 March 31, 2022 March 31, 2022 As of December 31, 2021 2022 2021

Investment Date June 30, 2022 June 30, 2022 June 30, 2022 As of December 31, 2021 2022 2021

Plaza Del Rio Medical Office Campus Portfolio (1)

4 unchanged sentences

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,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net loss attributable to common stockholders (in thousands)

13 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

Three Months Ended March 31,

June 30, 2022

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Unvested restricted shares (1)

7 unchanged sentences

(1) Weighted average number of antidilutive unvested restricted shares outstanding for the periods presented.

Th ere were 161,754 and 218,290 unvested restricted shares outstanding as of March 31, 2022 and 2021, respectively.

Th ere were 164,055 and 221,490 unvested restricted shares outstanding as of June 30, 2022 and 2021, respectively.

(2) Weighted average number of antidilutive Common 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 Common OP Units outstanding as of March 31, 2022 and 2021.

There were 405,998 Common OP Units outstanding as of June 30, 2022 and 2021.

The securities held by the Company are eliminated in consolidation.

(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, 2022 and 2021.

These Class B Units are unvested as of March 31, 2022 and 2021 (see Note 9 — Related Party Transactions for additional information).

There were 359,250 Class B Units outstanding as of June 30, 2022 and 2021.

These Class B Units were unvested as of June 30, 2022 and 2021 (see Note 9 — Related Party Transactions for additional information).

Note 15 — Segment Reporting

The disclosures below for the three months ended March 31, 2022 and 2021 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

The disclosures below for the three and six months ended June 30, 2022 and 2021 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

Prior to December 31, 2021, the Company had three reportable segments 1) medical office and outpatient buildings (“Former MOBs”), 2) triple-net lease healthcare properties (“Former NNN”) and 3) SHOPs.

Prior to December 31, 2021, the Company had three reportable segments:

1) medical office and outpatient buildings (“Former MOBs”), 2) triple-net leased healthcare properties (“Former NNN”) and 3) SHOPs.

Culminating in the year ended December 31, 2021, the Company had completed several strategic property divestitures from the Company’s Former NNN segment and transitioned certain properties previously reported in the Company’s Former NNN segment into the Company’s SHOP segment.

3 unchanged sentences

Upon concluding that a change in its reporting segments has occurred, the Company retroactively restated the historical segment reporting presentation for the three years ended December 31, 2021 as presented in its Annual Report on Form 10-K for the year ended December 31, 2021.

Below, the Company has restated the prior quarterly period to conform to its current segment reporting structure for comparative purposes.

Hereafter, the Company will restate other prior quarterly periods for 2021 when they are subsequently reported in later filings for comparative purposes.

Below, the Company has restated the prior quarterly and year-to-date periods to conform to its current segment reporting structure for comparative purposes.

Hereafter, the Company will restate other prior quarterly and year-to-date periods for 2021 when they are subsequently reported in later filings for comparative purposes.

The Company evaluates performance and makes resource allocations based on its two business segments.

10 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property’s results of operations.

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

The following tables reconcile the segment activity to consolidated net loss for the periods presented:

Three Months Ended March 31,

(In thousands) Medical Office Buildings Seniors Housing — Operating Properties Consolidated

Three Months Ended June 30, Three Months Ended June 30,

(In thousands) Medical Office Buildings Seniors Housing — Operating Properties Consolidated Medical Office Buildings Seniors Housing — Operating Properties Consolidated

Revenue from tenants

4 unchanged sentences

Impairment charges

( 6,193 ) ( 6,081 )

Operating fees to related parties

( 6,352 ) ( 5,923 )

Acquisition and transaction related

( 375 ) ( 123 )

General and administrative

( 3,999 ) ( 2,543 )

Depreciation and amortization

( 20,251 ) ( 19,502 )

Interest expense

( 12,050 ) ( 11,919 )

Interest and other income

Loss on sale of real estate investments ( 303 )

Gain on non-designated derivatives 994

Gain on sale of real estate investments — 2,456

Gain (loss) on non-designated derivatives 392 ( 13 )

Income tax expense ( 43 ) ( 59 )

Net loss attributable to non-controlling interests 49

Net loss (income) attributable to non-controlling interests 29 ( 56 )

Allocation for preferred stock ( 3,449 ) ( 1,826 )

Net loss attributable to common stockholders $ ( 21,055 ) $ ( 15,985 )

Three Months Ended March 31,

(In thousands) Medical Office Buildings Seniors Housing — Operating Properties Consolidated

Six Months Ended June 30, Six Months Ended June 30,

(In thousands) Medical Office Buildings Seniors Housing — Operating Properties Consolidated Medical Office Buildings Seniors Housing — Operating Properties Consolidated

Revenue from tenants

4 unchanged sentences

Impairment charges

( 16,837 ) ( 6,959 )

Operating fees to related parties

( 12,670 ) ( 11,806 )

Acquisition and transaction related

( 954 ) ( 255 )

General and administrative

( 8,898 ) ( 8,595 )

Depreciation and amortization

( 40,671 ) ( 39,604 )

Interest expense

( 23,814 ) ( 24,241 )

Interest and other income

Loss on sale of real estate investments ( 172 )

(Loss) gain on sale of real estate investments ( 303 ) 2,284

Gain on non-designated derivatives 1,386 1

Income tax benefit (expense)

Net income attributable to non-controlling interests ( 46 )

Income tax expense ( 82 ) ( 107 )

Net loss (income) attributable to non-controlling interests 78 ( 102 )

Allocation for preferred stock ( 6,899 ) ( 2,568 )

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

The following table reconciles the segment activity to consolidated total assets as of the periods presented:

(In thousands) March 31, 2022 December 31, 2021

(In thousands) June 30, 2022 December 31, 2021

Investments in real estate, net:

13 unchanged sentences

The following table reconciles capital expenditures by reportable business segment, excluding corporate non-real estate expenditures, for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

3 unchanged sentences

Note 16 — Commitments and Contingencies

As of March 31, 2022, the Company had seven operating and six direct financing lease agreements.

As of June 30, 2022, the Company had seven operating and six direct financing lease agreements.

The seven operating leases have durations, including assumed renewals, ranging from 20.4 years to 85.2 years, excluding an adjacent parking lot lease with a term of 2.3 years.

The Company did not enter into any additional ground leases during the three months ended March 31, 2022.

As of March 31, 2022, the Company’s balance sheet included ROU assets and liabilities of $ 7.9 million and $ 8.1 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 six months ended June 30, 2022.

As of June 30, 2022, the Company’s balance sheet included ROU assets and liabilities of $ 7.9 million and $ 8.1 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 lease guidance issued in 2019, 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.

Because 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 34.7 years and a weighted-average discount rate of 7.37 % as of March 31, 2022.

For the three months ended March 31, 2022, 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 current accounting guidance.

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, 2021.

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 34.5 years and a weighted-average discount rate of 7.37 % as of June 30, 2022.

For the three and six months ended June 30, 2022, the Company paid cash of $ 0.2 million and $ 0.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million and $ 0.4 million, respectively, on a straight-line basis in accordance with the current accounting guidance.

The Company paid cash of $ 0.2 million and $ 0.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million and $ 0.4 million, respectively, for the three and six months ended June 30, 2021.

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 March 31, 2022:

The following table reflects the base cash rental payments due from the Company for the next five years as of June 30, 2022:

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Future Base Rent Payments

5 unchanged sentences

Total present value of minimum lease payments $ 8,109 $ 4,837

(1) The Direct Finance Lease liability is included in Accounts Payable and accrued expenses on the balance sheet as of March 31, 2022.

(1) The Direct Finance Lease liability is included in Accounts Payable and accrued expenses on the balance sheet as of June 30, 2022.

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 March 31, 2022, 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 June 30, 2022, 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.

Note 17 — Subsequent Events

1 unchanged sentence

Dividend Declaration

On April 1, 2022, the Company announced the declaration of the Stock Dividend of 0.014167 shares of the Company’s common stock, on each share of the Company’s outstanding common stock.

The Stock Dividend was issued on April 18, 2022 to holders of record of the Company’s common stock at the close of business on April 11, 2022.

Mortgage Repayment

In April 2022, the Company repaid all amounts outstanding under its Palm Valley mortgage note.

The mortgage had a balance of $ 2.8 million, bore interest at a fixed rate of 4.15 % and would have matured in June 2023.

On July 1, 2022, the Company announced the declaration of the Stock Dividend of 0.014167 shares of the Company’s common stock, on each share of the Company’s outstanding common stock.

The Stock Dividend was issued on July 15, 2022 to holders of record of the Company’s common stock at the close of business on July 11, 2022.

CARES Act Grants

Subsequent to June 30, 2022, the Company received $ 4.3 million of grants from the CARES Act.

Credit Facility Amendment

On August 11, 2022, the Company, the OP, KeyBank National Association individually and as agent for the lenders and the lenders from time to time a party under the Credit Facility, among others, agreed to enter into the Fourth Amendment.

Prior to the Fourth Amendment, the Company would not have satisfied the required Fixed Charge Coverage Ratio covenant during the quarter ended June 30, 2022.

As part of the Fourth Amendment, the lenders agreed to reduce the minimum required Fixed Charge Coverage Ratio covenant to permit the Company to avoid any Default or Event of Default.

Specifically, under the amendment, the Fixed Charge Coverage Ratio that the Company must satisfy based on the four most recently ended fiscal quarters was reduced from 1.50 :1.00 to (a) 1.20 :1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.35 :1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.45 :1.00 for the period commencing with the quarter ending March 31, 2024 and thereafter.

Additionally, the amendment included the following updated terms:

(i) the Company must now comply with a debt service coverage ratio based on the four most recently ended fiscal quarters of (a) 1.50 :1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.65 :1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.75 :1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter until the Company elects the Commencement

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

Quarter, after which the debt service coverage ratio covenant will no longer apply;

(ii) the borrowing base advance rate was reduced from 55 % to 52.5 % until the Company elects the Commencement Quarter, after which the borrowing base advance rate will revert back to 55 %, (iii) the Company must now satisfy a Fixed Charge Coverage Ratio of 1.50 to 1.00 before it may pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock);

and (iv) provisions were added to transition the Credit Facility from LIBOR to SOFR.

There can be no assurance the Company’s lenders will consent to any further amendments that may become necessary in order to comply with the terms of the Credit Facility in the future.

Derivatives and Hedging Instruments

The Company has interest rate swaps which hedge the interest rate exposure on its variable-rate debt.

As a result of the Fourth Amendment and the transition of the Credit Facility to a SOFR-based rate, the Company plans on similarly transitioning the “pay-fixed” interest rate swaps which are collateralized by the Credit Facility to SOFR-based rates as soon as practicable within the third quarter of 2022.

In the interim, the Company has made elections afforded under ASC-848 Reference Rate Reform to qualify for uninterrupted cash flow hedge accounting.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

15 unchanged sentences

We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on medical office and other healthcare-related buildings and senior housing operating properties.

Prior to December 31, 2021, we had three reportable segments 1) Former MOBs, 2) Former NNN and 3) SHOPs.

Prior to December 31, 2021, we had three reportable segments:

1) Former MOBs, 2) Former NNN and 3) SHOPs.

As a result of strategic property divestitures in our Former NNN segment, and transitions of certain properties reported in our Former NNN segment into our SHOP segment, we have combined the properties in our Former NNN segment with the properties in our Former MOB segment to form a single set of MOBs.

1 unchanged sentence

Below, the Company has restated the prior quarterly period to conform to its current segment reporting structure for comparative purposes.

Hereafter, the Company will restate other prior quarterly periods for 2021 when they are subsequently reported in later filings for comparative purposes.

As of March 31, 2022, we owned 198 properties located in 33 states and comprised of 9.0 million rentable square feet.

Below, the Company has restated the prior quarterly and year-to-date periods to conform to its current segment reporting structure for comparative purposes.

Hereafter, the Company will restate other prior quarterly and year-to-date periods for 2021 when they are subsequently reported in later filings for comparative purposes.

As of June 30, 2022, we owned 201 properties located in 33 states and comprised of 9.1 million rentable square feet.

Substantially all of our business is conducted through the OP, a Delaware limited partnership, and its wholly owned subsidiaries.

8 unchanged sentences

In our SHOP segment, we invest in seniors housing properties using the RIDEA structure.

As of March 31, 2022, we had four eligible independent contractors operating 50 SHOPs (not including two land parcels).

As of June 30, 2022, we had four eligible independent contractors operating 50 SHOPs (not including two land parcels).

All of our properties across both business segments are located throughout the United States.

3 unchanged sentences

The Stock Dividends paid in April 2021, July 2021, October 2021 and January 2022 were equal to 0.014655 shares of common stock on each share of outstanding common stock.

The Stock Dividends paid in April 2022 were equal to 0.014167 shares of common stock on each share of outstanding common stock.

The Stock Dividends paid in April 2022 and July 2022 were equal to 0.014167 shares of common stock on each share of outstanding common stock.

Dividends payable entirely in shares of our 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 these Stock Dividends was an increase of 0.11981 shares, cumulatively, for every one share of common stock.

No additional shares, except for the dividends paid in the form of additional shares of common stock, were issued during the quarter ended March 31, 2022.

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.

No additional shares, except for the dividends paid in the form of additional shares of common stock, were issued during the six months ended June 30, 2022.

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 this Quarterly Report on Form 10-Q.

On April 1, 2022, we published a new Estimated Per-Share NAV equal to $15.00 as of December 31, 2021.

9 unchanged sentences

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, 2022, our MOB segment had an occupancy of 91.3% with a weighted-average remaining lease term of 5.0 years, (based on annualized straight-line rent as of March 31, 2022), and our SHOP segment had an occupancy of 75.9% weighted by unit count.

Since the second quarter of 2021, we experienced relative stability in occupancy and operating costs in our SHOP portfolio, however, during the first quarter of 2022, we needed to increase our use of temporary contract labor and agencies in response to a shortage of workers, largely due to, among other things, the spread of more transmissible COVID-19 variants such as the Omicron variant, increased inflation raising the cost of labor generally and increased demand for qualified personnel.

Doing so increased operating costs in our SHOP segment for the three months ended March 31, 2022 by $2.2 million as compared to the three months ended March 31, 2021.

As of June 30, 2022, 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 June 30, 2022), and our SHOP segment had an occupancy of 76.3% weighted by unit count.

Since the second quarter of 2021, we have experienced relative stability in occupancy and operating costs in our SHOP portfolio, however, during the first six months of 2022, we needed to increase our use of temporary contract labor and agencies, and to a lesser extent, the amount we pay for overtime wages and bonuses, in response to a shortage of workers, largely due to, among other things, the spread of more transmissible COVID-19 variants, increased inflation raising the cost of labor generally and lack of qualified personnel that we are able to employ on a permanent basis.

Utilization of contract labor and agencies for care providers increased operating costs in our SHOP segment for the three and six months ended June 30, 2022, by $2.7 million and $4.7 million, respectively, as compared to the three and six months ended June 30, 2021.

Future developments in the course of the pandemic, inflation increases, labor shortages and supply chain disruptions may cause further adverse impacts on our occupancy and cost levels.

Occupancy and operating costs in our MOB segment was relatively stable during these quarters.

Occupancy and operating costs in our MOB segment were relatively stable during these quarters.

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 Credit Facility, and the amount available for future borrowings thereunder.

We would have been in default of a covenant contained in the Credit Facility requiring us to maintain a certain minimum fixed charge coverage ratio for the four fiscal quarter period ended September 30, 2021.

We entered into an amendment to our Credit Facility on November 12, 2021, in which the lenders waived any defaults or event of defaults under the covenant requiring us to maintain a fixed charge coverage ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and reduced this covenant to 1.50 to 1.00 until the earlier of December 31, 2022 and the date on which we elect to terminate this relief, among other changes (see Liquidity and Capital Resources section below and see Note 5 — Credit Facilities to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information).

There can be no assurance our lenders will consent to any further amendments or waivers that may become necessary to comply with the terms of the Credit Facility.

We entered into the Fourth Amendment on August 11, 2022, in which the lenders agreed to reduce this covenant to permit us to avoid any Default or Event of Default.

Specifically, this covenant was reduced to (a) 1.20 to 1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.35 to 1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.45 to 1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter, among other changes (see Liquidity and Capital Resources section below and see Note 5 — Credit Facilities and N ote 17 — Subsequent Events to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information).

There can be no assurance our lenders will consent to any further amendments that may become necessary in order to comply with the terms of the Credit Facility.

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” included in our Annual Report on Form 10-K for the year ended December 31, 2021

filed with the SEC on February 24, 2022 and all other filings with the SEC after that date, as such risks and uncertainties may be updated from time to time in our subsequent reports.

Rent Collections

1 unchanged sentence

We have taken several steps to mitigate the impact of the pandemic on our business.

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 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 MOB tenants and in some cases, during the year ended December 31, 2020, we executed lease amendments wherein we agreed to defer payment.

6 unchanged sentences

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 each quarter of 2021 and the first quarter of 2022.

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 year ended December 31, 2021 or during the three months ended March 31 2022.

Eliminating the impact of deferred rent paid, we collected nearly 100% of original cash rent due for each quarter of 2021 and the first and second quarters of 2022.

We have also granted rent concessions which serve to reduce revenue in our SHOP segment.

We offered $0.1 million and $0.4 million of rent concessions during the three months ended March 31, 2022 and 2021, respectively.

We offered $0.7 million and $2.0 million of rent concessions during the three and six months ended June 30, 2022, and $0.1 million during the three and six months ended June 30, 2021.

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 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 testing services.

During the quarter ended March 31, 2022, we experienced a significant increase in labor costs in our SHOP segment, largely due to, among other things, the spread of more transmissible COVID-19 variants such as the Omicron variant, increased inflation raising the cost of labor generally and increased demand for qualified personnel.

As a result, we were forced to turn to temporary contract labor and agencies to supply us with the appropriate personnel numbers we need in order to successfully run our SHOPs.

At our Same Store SHOPs, we recorded over $2.2 million in temporary contract labor and agency-related costs for the three months ended March 31, 2022 as compared to almost zero temporary contract labor and agency-related costs for the three months ended March 31, 2021.

Using temporary contract labor and agencies is more costly to us than our normal staffing procedures, and therefore our cost for labor at our Same Store SHOPs increased $2.0 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Temporary contract labor and agency costs accounted for over 100% of this increase.

Because occupancy levels have not yet recovered to their pre-pandemic rates (as noted in the table below), our results of operations in our SHOP segment have been significantly adversely affected by the increase in our labor costs.

There is no guarantee our occupancy levels in our SHOP segment will increase and return to their pre-pandemic levels or that we will be able to raise resident fee levels at a rate that is commensurate with these increases in labor costs.

During the six months ended June 30, 2022, we experienced a significant increase in labor costs in our SHOP segment, largely due to, among other things, the spread of more transmissible COVID-19 variants, increased inflation raising the cost of labor generally and a lack of qualified personnel that we are able to employ on a permanent basis.

As a result, we were forced to increase our use of temporary contract labor and agencies and, to a lesser extent, the amount we pay for overtime wages and bonuses, to meet our needs for labor in our SHOP segment.

In our total SHOP segment, we recorded over $2.7 million and $4.7 million in temporary contract labor and agency-related costs for care providers for the three and six months ended June 30, 2022, respectively, as compared to almost no temporary contract labor and agency-related costs for care providers for the three and six months ended June 30, 2021.

Using temporary contract labor and agencies is more costly to us than our internal staffing.

Because occupancy levels have not yet recovered to their pre-pandemic rates (as noted in the table below) and resident fees have not increased enough to counteract these lower occupancy rates, our results of operations in our SHOP segment have been significantly adversely affected by the increase in our labor costs.

There is no guarantee the occupancy levels in our SHOP segment will increase and return to their pre-pandemic levels, that we will be able to raise resident fee levels at rates that are commensurate with these increases in labor costs or that we will reduce our reliance on contract labor.

Therefore, our results of operations and financial condition in our SHOP segment could continue to be negatively impacted if the national labor shortage continues.

Occupancy in our SHOP portfolio trended lower from 85.1% in December 31, 2019 to a low of 72.0% as of March 31, 2021, and has subsequently begun to recover, reaching 75.9% as of March 31, 2022.

Occupancy in our SHOP portfolio trended lower from 85.1% in December 31, 2019 to a low of 72.0% as of March 31, 2021, and has subsequently begun to recover, reaching 76.3% as of June 30, 2022.

The below table presents SHOP occupancy since the onset of our downward occupancy trends, which was exacerbated by the COVID-19 pandemic in March 2020:

11 unchanged sentences

March 31, 2022 50 4,378 75.9%

June 30, 2022 50 4,374 76.3%

(1) Exclusive of two land parcels.

The declines in revenue we experienced during the quarter ended March 31, 2022 as compared to March 31, 2021, were primarily attributable to our SHOP disposals which reduced the average number of rentable units over the periods, partially offset by an increase in occupancy and rental rate increases on some of the properties effective in January 2022.

The declines in revenue we experienced during the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021, were primarily attributable to our SHOP disposals which reduced the average number of rentable units over the periods, partially offset by an increase in occupancy and rental rate increases on some of the properties effective in January 2022.

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.

During the first quarter of 2022, these trends became more prominent as we relied more on the use of contract labor and agencies as noted above.

At the SHOP facilities, we generally bear these cost increases, which were partially offset by funds received under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and to a lesser extent, cost recoveries for personal protective equipment from residents.

During the six months ended June 30, 2022, these trends became more prominent as we relied more on the use of contract labor and agencies, and, to a lesser extent, the amount we pay for overtime wages and bonuses, as noted above.

At the SHOP facilities, we generally bear these cost increases, some of which were partially offset by funds received under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and to a lesser extent, cost recoveries for personal protective equipment from residents.

See below for additional information on the CARES Act.

There can be no assurance, however, that future developments in the course of the pandemic, inflation increases, labor shortages and supply chain disruptions will not cause further adverse impacts to our occupancy and cost levels, and these trends may continue to impact us and have a material adverse effect on our revenues and income in future quarters.

There can be no assurance, however, that future developments in the course of the pandemic, inflation increases, labor shortages and supply chain disruptions will not cause further adverse impacts to our occupancy, revenues and cost levels, and these trends may continue to impact us and have a material adverse effect on our revenues and income in future quarters.

We believe that our vaccination participation achieved in 2021 for both residents and staff populations mitigated certain adverse impacts of COVID-19.

Furthermore, as infections decline and more vaccinations and boosters are administered during 2022, our occupancy may further increase as it has begun to do during the first quarter of 2022.

However, there can be no assurance as to when or if we will be able to approach pre-pandemic levels of occupancy due to, among other factors, the ongoing vaccine hesitancy and resistance in certain segments of the population and the recent spread of more transmissible COVID-19 variants such as the Delta and Omicron variants.

Furthermore, as infections decline and more vaccinations and boosters are administered during 2022, our occupancy may further increase as it has begun to do during the six months ended June 30, 2022.

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.

We believe that the actions we have taken help reduce the incidences of COVID-19 at our properties, but there can be no assurance in this regard.

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 reputational harm to us and our tenants, managers and operators.

We believe that the actions we have taken help reduce (but not eliminate) the incidences of COVID-19 at our properties.

Any 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.

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 pandemic or treat its impact, among others, which are highly uncertain and cannot be predicted with confidence, but could be material.

On March 27, 2020, the 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 quarter ended March 31, 2021 we received $5.1 million from CARES Act grants.

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

During the three and six months ended June 30, 2022, we received $0.2 million in CARES Act grants.

During the six months ended June 30, 2021, we received $5.1 million in CARES Act grants.

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

We have applied for additional funds under the CARES Act, however, there can be no assurance that any funds requested will actually be received.

We consider the funds to be a grant contribution from the government and the full amount was recognized as a reduction of property operating expenses in our consolidated statement of operations during the years ended December 31, 2021 and 2020.

We consider the funds to be a grant contribution from the government and the full amounts was recognized as a reduction of property operating expenses in our consolidated statements of operations during the three and six months ended June 30, 2022 and 2021.

Subsequent to June 30, 2022, we

received $4.3 million of grants from the CARES Act.

There can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs.

4 unchanged sentences

Please see Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

The following table presents certain additional information about the properties we owned as of March 31, 2022:

The following table presents certain additional information about the properties we owned as of June 30, 2022:

Portfolio Number

10 unchanged sentences

_______________

(1) Inclusive of leases signed but not yet commenced as of March 31, 2022.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of March 31, 2022.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of March 31, 2022) net of gross market lease intangible liabilities ($23.5 million total as of March 31, 2022).

(1) Inclusive of leases signed but not yet commenced as of June 30, 2022.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of June 30, 2022.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of June 30, 2022) net of gross market lease intangible liabilities ($62.8 million total as of June 30, 2022).

Impairment charges are already reflected within gross asset value.

(4) Weighted by unit count as of March 31, 2022.

As of March 31, 2022, we had 4,378 rentable units in our SHOP segment.

(4) Weighted by unit count as of June 30, 2022.

As of June 30, 2022, we had 4,374 rentable units in our SHOP segment.

N/A Not applicable.

2 unchanged sentences

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 March 31, 2022, we owned 198 properties.

There were 181 properties owned for the entire year ended December 31, 2021 and the three months ended March 31, 2022 (our “Same Store” properties), including two vacant land parcels.

As of June 30, 2022, we owned 201 properties.

There were 181 properties owned for the entire year ended December 31, 2021 and the six months ended June 30, 2022 (our “Same Store” properties), including two vacant land parcels.

Since January 1, 2021, we acquired 20 properties (our “Acquisitions”) and disposed of 12 properties (our “Dispositions”).

The following table presents a roll-forward of our properties owned from January 1, 2021 to March 31, 2022:

The following table presents a roll-forward of our properties owned from January 1, 2021 to June 30, 2022:

MOB SHOP Total

3 unchanged sentences

Number of properties, December 31, 2021 146 56 202

Acquisition activity during the three months ended March 31, 2022 — — —

Disposition activity during the three months ended March 31, 2022 — (4) (4)

Number of properties, March 31, 2022 146 52 198

Acquisition activity during the six months ended June 30, 2022 3 — 3

Disposition activity during the six months ended June 30, 2022 — (4) (4)

Number of properties, June 30, 2022 149 52 201

Number of Same Store Properties 129 52 181

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 March 31, 2022 and 2021

Net loss attributable to common stockholders was $26.8 million and $12.2 million for the three months ended March 31, 2022 and 2021, respectively.

The following table shows our results of operations for the three months ended March 31, 2022 and 2021 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended March 31, Increase (Decrease)

Comparison of the Three Months Ended June 30, 2022 and 2021

Net loss attributable to common stockholders was $21.1 million and $16.0 million for the three months ended June 30, 2022 and 2021, respectively.

The following table shows our results of operations for the three months ended June 30, 2022 and 2021 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $

9 unchanged sentences

89,762 85,732 4,030

Operating income (loss) before gain on sale of real estate investments (12,300) 1,034 (13,334)

Loss on sale of real estate investments (303) (172) (131)

Operating loss (income) (12,603) 862 (13,465)

Operating loss before gain on sale of real estate investments (5,936) (4,572) (1,364)

Gain on sale of real estate investments — 2,456 (2,456)

Operating loss (5,936) (2,116) (3,820)

Other income (expense):

1 unchanged sentence

Interest and other income 2 4 (2)

Gain on non-designated derivatives 994 14 980

Gain (loss) on non-designated derivatives 392 (13) 405

Total other expenses

6 unchanged sentences

Net loss attributable to common stockholders $ (21,055) $ (15,985) $ (5,070)

NM — Not Meaningful

Net Operating Income

5 unchanged sentences

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 March 31, 2022 and 2021:

The following table presents the components of NOI and the period to period change within our MOB segment for the three months ended June 30, 2022 and 2021:

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)

Three Months Ended June 30, Increase (Decrease) Three Months Ended June 30, Increase (Decrease) Three Months Ended June 30, Increase (Decrease) Three Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $ 2022 2021 $ 2022 2021 $ 2022 2021 $

8 unchanged sentences

(4) Our MOB segment included 149 properties.

NM — Not Meaningful

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.

Revenue from tenants primarily reflects contractual rent received from tenants in our MOBs and operating expense reimbursements.

These reimbursements 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 expenses relate 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 March 31, 2022, the MOB segment contributed a $2.2 million increase in NOI as compared to the three months ended March 31, 2021 primarily as a result of our 17 MOB acquisitions during the period from January 1, 2021 through March 31, 2022, partially offset by a $0.5 million decrease in NOI from our Same Store properties and by a $0.4 million decrease in NOI from our Dispositions.

Property operating and maintenance expenses reflect 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 June 30, 2022, the MOB segment contributed a $2.9 million increase in NOI as compared to the three months ended June 30, 2021 primarily as a result of revenue generated by our 20 MOB Acquisitions during the period from January 1, 2021 through June 30, 2022, partially offset by a $0.1 million decrease in NOI from our Same Store properties and by a $0.1 million decrease in NOI from our Dispositions.

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 three months ended March 31, 2022 and 2021:

The following table presents the components of NOI and the period to period change within our SHOP segment for the three months ended June 30, 2022 and 2021:

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)

Three Months Ended June 30, Increase (Decrease) Three Months Ended June 30, Increase (Decrease) Three Months Ended June 30, Increase (Decrease) Three Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $ 2022 2021 $ 2022 2021 $ 2022 2021 $

8 unchanged sentences

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 March 31, 2022, revenues from tenants decreased by $1.8 million in our SHOP segment as compared to the three months ended March 31, 2021 which was primarily driven by a decrease in revenue of $3.3 million due to our Disposition properties, partially offset by an increase in revenue of $1.5 million due to our Same Store properties.

The increase to our Same Store revenue was primarily driven by higher and recovering occupancy in the three months ended March 31, 2022 as compared to lower, declining occupancy in the three months ended March 31, 2021.

Our revenues also improved in the three months ended March 31, 2022 from higher leasing rates.

We also generated a portion of our SHOP revenue from skilled nursing facilities (“SNFs”) (which include ancillary revenue from non-residents) at two of our Same Store SHOPs and one of our Disposition SHOPs.

This revenue was $1.8 million during the quarter ended March 31, 2021 and was not significant during the quarter ended March 31, 2022 as a result of transitioning our SNF units to other types of units at our Same Store properties, as well as from disposing of our SNF in Wellington, Florida in May 2021.

Property operating and maintenance expenses relate 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 June 30, 2022, revenue from tenants decreased by $0.2 million in our SHOP segment as compared to the three months ended June 30, 2021, which was primarily driven by a decrease in revenue of $2.6 million due to our Disposition properties, partially offset by an increase in revenue of $2.4 million due to our Same Store properties.

The increase to our Same Store revenue was primarily driven by higher and recovering occupancy in the three months ended June 30, 2022 as compared to lower, declining occupancy in the three months ended June 30, 2021.

Our revenues also improved in the three months ended June 30, 2022 from higher leasing rates.

We also previously generated a portion of our SHOP revenue from skilled nursing facilities (“SNFs”) (which include ancillary revenue from non-residents) at two of our Same Store SHOPs and one of our Disposition SHOPs.

This revenue was $0.4 million during the quarter ended June 30, 2021 and was not significant during the quarter ended June 30, 2022 as a result of transitioning our SNF units to other types of units at our Same Store properties, as well as from disposing of our SNF in Wellington, Florida in May 2021.

This property’s results are presented in Disposition properties in the table above.

As a result of these unit transitions and dispositions, we do not expect ancillary revenue to be a significant source of revenue in future periods.

During the three months ended March 31, 2022, property operating and maintenance expenses increased $3.9 million in our SHOP segment as compared to the quarter ended March 31, 2021, primarily due to an increase of $6.9 million in our Same Store properties, partially offset by a decrease of $3.0 million from our Dispositions.

The total increase in Same Store operating costs mainly related to the non-recurrence in 2022 of 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.

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.

Additionally, we were impacted by labor cost increases due to contract labor and agency costs of $2.2 million , as well as by overall inflation on wages and supplies in the three months ended March 31, 2022.

During the three months ended June 30, 2022, property operating and maintenance expenses increased $1.0 million in our SHOP segment as compared to the quarter ended June 30, 2021, primarily due to an increase of $3.8 million in our Same Store properties, partially offset by a decrease of $2.8 million from our Disposition properties.

The increase to our Same Store property operating and maintenance expenses was primarily attributable to higher contract labor and agency costs of $2.7 million, and, to a lesser extent, the amount we pay for overtime wages and bonuses, as well as by overall inflation on wages and supplies in the three months ended June 30, 2022.

For additional information on the risks and uncertainties associated with increases in inflation and labor costs, see Inflation and Part II — Item 1A.

Risk Factors sections below.

The total increase in Same Store property operating and maintenance expenses was partially offset by funds received through the CARES Act of $0.2 million in the three months ended June 30, 2022.

No amounts were received in the three months ended June 30, 2021.

These funds are reflected as offsets to costs incurred from the ongoing COVID-19 pandemic when they are received.

The full amount of the CARES Act funds was recognized as a reduction to our Same Store property operating and maintenance expenses in the table above.

Subsequent to June 30, 2022, the Company received $4.3 million of grants from the CARES Act (see Note 17 — Subsequent Events for additional information).

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

Other Results of Operations

Impairment Charges

During the three months ended March 31, 2022, we incurred $10.6 million of impairment charges to reduce the carrying value of seven SNF properties located in Illinois in our MOB segment to their estimated fair value as determined by a $50.5 million offer to purchase these properties made by the tenant.

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.

During the three months ended June 30, 2022, we reconsidered our intended holding period for eight SHOPs and in July 2022, we began to actively market these properties for sale.

As a result of changes to our intended holding period, we assessed these properties for impairment and determined that the projected cash flows for two properties, on an undiscounted basis over the intended holding periods did not recover their respective carrying values, and therefore concluded that these two properties were impaired.

We recorded impairment charges of $6.2 million on these two properties during the three months ended June 30, 2022, which is included in the consolidated statements of operations for the three and six months ended June 30, 2022.

There can be no assurance that the sale of any of these properties will be sold on favorable terms, or at all.

We incurred $6.1 million of impairment charges for the three months ended June 30, 2021.

We had actively been considering plans to sell an MOB property located in Sun City, Arizona.

As a result of changes to our expected holding period, we determined that projected cash flows did not recover the carrying value of the property on an undiscounted basis over its intended holding period.

Subsequently, during July 2021, we entered into a non-binding letter of intent and as a result, we determined that the fair market value of the property had declined and recorded an impairment charge of $6.1 million, which is included in the consolidated statement of operations and comprehensive loss.

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.

Operating Fees to Related Parties

Operating fees to related parties were $6.3 million and $5.9 million for the three months ended March 31, 2022 and March 31, 2021, respectively.

Operating fees to related parties were $6.4 million and $5.9 million for the three months ended June 30, 2022 and 2021, 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 $5.5 million and $5.0 million in the three months ended March 31, 2022 and 2021, respectively.

The increase in asset management fees was due to an increase in variable asset management fees from equity offerings in the fourth quarter of 2021 which were incurred in the first quarter of 2022.

Variable asset management fees will further increase with additional equity offerings, if any.

There were no incentive fees incurred in either of the three months ended March 31, 2022 or 2021.

Property management fees were $1.0 million for the three months ended March 31, 2022 and $1.0 million for the three months ended March 31, 2021.

We pay a fixed 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 of 1.25% of the cumulative net proceeds of any equity raised subsequent to February 17, 2017.

Asset management fees were $5.5 million and $5.1 million for the three months ended June 30, 2022 and 2021, respectively.

The increase in asset management fees was due to an increase in variable asset

management fees resulting from equity offerings completed in May and October of 2021 which increased the variable asset management fee in the three months ended June 30, 2022 relative to the three months ended June 30, 2021.

Variable asset management fees will further increase if we issue additional equity securities in the future.

There were no incentive fees incurred in either of the three months ended June 30, 2022 or 2021.

Property management fees were consistent at $0.9 million for the three months ended June 30, 2022 and 2021.

Property management fees increase or decrease in direct correlation with gross revenues of the properties managed and depending on the mix of properties managed, as the fee payable for different types of properties varies.

1 unchanged sentence

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses were $0.6 million for the three months ended March 31, 2022, compared to approximately $0.1 million for the three months ended March 31, 2021.

The increase was due to $0.1 million of prepayment

penalties on our mortgage repayments, $0.1 million of termination fees paid to former SHOP operators, and $0.3 million of fees due to dead deal costs.

Acquisition and transaction related expenses were $0.4 million for the three months ended June 30, 2022, compared to approximately $0.1 million for the three months ended June 30, 2021.

The increase was due to $0.2 million of fees due to dead deal costs and $0.1 million of legal fees related to terminated SHOP operators.

General and Administrative Expenses

General and administrative expenses decreased by $1.2 million to $4.9 million for the three months ended March 31, 2022 compared to $6.1 million for the three months ended March 31, 2021, which includes $2.2 million and $2.6 million (before professional fees described below) for the three months ended March 31, 2022 and March 31, 2021, respectively, incurred in expense reimbursements.

The decrease in general and administrative expenses was primarily driven by $0.5 million of decreased audit fees, $0.3 million of decreased legal fees, and $0.4 million of decreased miscellaneous expenses.

General and administrative expenses increased by $1.5 million to $4.0 million for the three months ended June 30, 2022 compared to $2.5 million for the three months ended June 30, 2021, which includes $2.1 million and $2.7 million for the three months ended June 30, 2022 and June 30, 2021, respectively, incurred in expense reimbursements.

The increase in general and administrative expenses was primarily driven by a professional fee credit of $1.0 million during the three months ended June 30, 2021 related to an adjustment for bonuses (see Note 9 — Related Party Transactions and Arrangements for additional information) which did not recur in the three months ended June 30, 2022 as well as $0.5 million of increased accounting fees.

Depreciation and Amortization Expenses

Depreciation and amortization expense decreased $0.3 million to $20.4 million for the three months ended March 31, 2022 from $20.1 million for the three months ended March 31, 2021.

The decrease was primarily due to reduced depreciation and amortization as a result of our dispositions partially offset by additional depreciation from our recent acquisitions.

Losses on Sale of Real Estate Investments

During the third quarter of 2021, we began to actively market the LaSalle Properties for sale, and a non-binding letter of intent was signed in the fourth quarter of 2021 for an aggregate contract sales price of $12.4 million.

We completed the sale of the LaSalle Properties in the first quarter of 2022 and recorded a loss on sale of $0.3 million.

We had previously recorded $34.0 million of impairment charges on the LaSalle Properties in the year ended December 31, 2021.

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.

Depreciation and amortization expense increased $0.7 million to $20.3 million for the three months ended June 30, 2022 from $19.5 million for the three months ended June 30, 2021.

The increase was primarily due to additional depreciation from our recent acquisitions partially offset by reduced depreciation and amortization as a result of our dispositions.

Gains on Sale of Real Estate Investments

We did not dispose of any properties in the three months ended June 30, 2022.

We sold our skilled nursing facility in Wellington, Florida and our development property in Jupiter, Florida in the three months ended June 30, 2021, which resulted in gains on sale of $0.1 million and $2.4 million, respectively.

These gains are included in the consolidated statement of operations for the three months ended June 30, 2021.

We had previously recorded $13.1 million and $34.4 million of impairment charges on the Wellington and Jupiter properties, respectively.

Interest Expense

Interest expense decreased by $0.6 million to $11.8 million for the three months ended March 31, 2022 from $12.3 million for the three months ended March 31, 2021.

The decrease in interest expense resulted from lower average balances of amounts outstanding under our Revolving Credit Facility during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

As of March 31, 2022 our outstanding debt obligations were $1.1 billion at a weighted average interest rate of 3.47% per year.

As of March 31, 2021, we had total borrowings of $1.2 billion, at a weighted average interest rate of 3.55% per year.

Interest expense increased by $0.2 million to $12.1 million for the three months ended June 30, 2022 from $11.9 million for the three months ended June 30, 2021.

The increase in interest expense resulted from higher average rates partially offset by lower average balances of amounts outstanding under our Revolving Credit Facility during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

As of June 30, 2022 our outstanding debt obligations were $1.1 billion at a weighted average interest rate of 3.76% per year.

As of June 30, 2021, we had total borrowings of $1.1 billion, at a weighted average interest rate of 3.59% 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.

2 unchanged sentences

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 $12,000 and $52,000 for the three months ended March 31, 2022 and 2021, respectively.

Gains on Non-Designated Derivatives

The gain in the three months ended March 31, 2022 and the three months ended March 31, 2021 on non-designated derivative instruments 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.

Interest and other income was approximately $2,000 and $4,000 for the three months ended June 30, 2022 and 2021, respectively.

Gains (Losses) on Non-Designated Derivatives

The gain in the three months ended June 30, 2022 and the loss in the three months ended June 30, 2021 on non-designated derivative instruments 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 recorded in the three months ended June 30, 2022 was due to significant increases in interest rates during the period.

Income Tax Expense

Income taxes generally relate to our SHOPs, which are leased by our TRS.

We recorded an income tax expense of $0.0 million for the three months ended March 31, 2022 and 2021.

We recorded an income tax expense of $43,000 and $59,000 for the three months ended June 30, 2022 and 2021, respectively.

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, in the third quarter of 2020, we were not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets and recorded a full valuation allowance.

Since that time, our TRS’s operating performance has not significantly improved and thus we have recorded a 100% valuation allowance on our net deferred tax assets as of March 31, 2022.

Since that time, our TRS’s operating performance has not significantly improved and thus we have recorded a 100% valuation allowance on our net deferred tax assets as of June 30, 2022.

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 (Income) Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $49,000 for the three months ended March 31, 2022 and net income attributable to non-controlling interests was $46,000 for the three months ended March 31, 2021.

Net loss attributable to non-controlling interests was approximately $29,000 for the three months ended June 30, 2022 and net income attributable to non-controlling interests was $56,000 for the three months ended June 30, 2021.

These amounts represent the portion of our net loss that is related to the Series A Preferred Units held by third parties (issued in connection with a property acquisition in September, 2021), Common OP Units held by third parties, and non-controlling interest holders in our subsidiaries that own certain properties.

Comparison of the Six Months Ended June 30, 2022 and 2021

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 $47.9 million and $28.2 million for the six months ended June 30, 2022 and 2021, respectively.

The following table shows our results of operations for the six months ended June 30, 2022 and 2021 and the period to period change by line item of the consolidated statements of operations:

Six Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $

Revenue from tenants $ 167,476 $ 164,596 $ 2,880

Operating expenses:

Property operating and maintenance 105,682 100,915 4,767

Impairment charges 16,837 6,959 9,878

Operating fees to related parties 12,670 11,806 864

Acquisition and transaction related 954 255 699

General and administrative 8,898 8,595 303

Depreciation and amortization 40,671 39,604 1,067

Total expenses

185,712 168,134 17,578

Operating loss before gain on sale of real estate investments (18,236) (3,538) (14,698)

Gain (loss) on sale of real estate investments (303) 2,284 (2,587)

Operating loss (18,539) (1,254) (17,285)

Other income (expense):

Interest expense (23,814) (24,241) 427

Interest and other income

Gain on non-designated derivatives 1,386 1 1,385

Total other expenses

(22,414) (24,184) 1,770

Loss before income taxes (40,953) (25,438) (15,515)

Income tax expense (82) (107) 25

Net loss (41,035) (25,545) (15,490)

Net (income) loss attributable to non-controlling interests 78 (102) 180

Preferred stock dividends (6,899) (2,568) (4,331)

Net loss attributable to common stockholders $ (47,856) $ (28,215) $ (19,641)

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 expenses.

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 six months ended June 30, 2022 and 2021:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

Six Months Ended June 30, Increase (Decrease) Six Months Ended June 30, Increase (Decrease) Six Months Ended June 30, Increase (Decrease) Six Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $ 2022 2021 $ 2022 2021 $ 2022 2021 $

Revenue from tenants

$ 56,880 $ 57,392 $ (512) $ 7,952 $ 473 $ 7,479 $ 9 $ 2,074 $ (2,065) $ 64,841 $ 59,939 $ 4,902

Property operating and maintenance 15,406 15,364 42 1,641 166 1,475 (6) 1,641 (1,647) 17,041 17,171 (130)

NOI $ 41,474 $ 42,028 $ (554) $ 6,311 $ 307 $ 6,004 $ 15 $ 433 $ (418) $ 47,800 $ 42,768 $ 5,032

_______________

(1) Our MOB segment included 129 Same Store properties.

(2) Our MOB segment included 20 Acquisition properties.

(3) Our MOB segment included three Disposition properties.

(4) Our MOB segment included 149 properties.

Revenue from tenants primarily reflects contractual rent received from tenants in our MOBs and operating expense reimbursements.

These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses in our MOB segment.

During the six months ended June 30, 2022, the MOB segment contributed a $5.0 million increase in NOI as compared to the six months ended June 30, 2021 primarily as a result of revenue generated from our 20 MOB Acquisitions during the period from January 1, 2021 through June 30, 2022, partially offset by a $0.6 million decrease in NOI from our Same Store properties and by a $0.4 million decrease in NOI from our Dispositions.

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 six months ended June 30, 2022 and 2021:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

Six Months Ended June 30, Increase (Decrease) Six Months Ended June 30, Increase (Decrease) Six Months Ended June 30, Increase (Decrease) Six Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $ 2022 2021 $ 2022 2021 $ 2022 2021 $

Revenue from tenants

$ 101,303 $ 97,405 $ 3,898 $ — $ — $ — $ 1,332 $ 7,252 $ (5,920) $ 102,635 $ 104,657 $ (2,022)

Property operating and maintenance 86,271 75,531 10,740 — — — 2,370 8,213 (5,843) 88,641 83,744 4,897

$ 15,032 $ 21,874 $ (6,842) $ — $ — $ — $ (1,038) $ (961) $ (77) $ 13,994 $ 20,913 $ (6,919)

_______________

(1) Our SHOP segment included 52 Same Store properties, including two land parcels.

(2) Our SHOP segment included zero Acquisition properties.

(3) Our SHOP segment included nine Disposition property.

(4) Our SHOP segment included 52 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.

During the six months ended June 30, 2022, revenues from tenants decreased by $2.0 million in our SHOP segment as compared to the six months ended June 30, 2021, which was primarily driven by a decrease in revenue of $5.9 million due to our Disposition properties, partially offset by an increase in revenue of $3.9 million due to our Same Store properties.

The increase to our Same Store revenue was primarily driven by higher and recovering occupancy in the six months ended June 30, 2022 as compared to lower, declining occupancy in the six months ended June 30, 2021.

Our revenues also improved in the six months ended June 30, 2022 from higher leasing rates.

We also previously generated a portion of our SHOP revenue from SNFs (which include ancillary revenue from non-residents) at two of our Same Store SHOPs and one of our Disposition SHOPs.

This revenue was $1.0 million during the six months ended June 30, 2021 and was not significant during the six months ended June 30, 2022 as a result of transitioning our SNF units to other types of units at our Same Store properties, as well as from disposing of our SNF in Wellington, Florida in May 2021.

This property’s results are presented in Disposition properties in the table above.

As a result of these unit transitions and dispositions, we do not expect ancillary revenue to be a significant source of revenue in future periods.

During the six months ended June 30, 2022, property operating and maintenance expenses increased $4.9 million in our SHOP segment as compared to the six months ended June 30, 2021, primarily due to an increase of $10.7 million from our Same Store properties, partially offset by a decrease of $5.8 million from our Disposition properties.

Our Same Store property operating and maintenance expenses increased significantly and were primarily attributable to contract labor and agency costs of $4.7 million, and, to a lesser extent, the amount we pay for overtime wages and bonuses, as well as by overall inflation on wages and supplies in the six months ended June 30, 2022.

For additional information on the risks and uncertainties associated with increases in inflation and labor costs, see Inflation and Part II — Item 1A.

Risk Factors sections below.

The total increase in Same Store property operating and maintenance expenses was also impacted by receiving $0.2 million of funds through the CARES Act in the six months ended June 30, 2022, as compared to $5.1 million during the six months ended June 30, 2021, which offset costs incurred from the ongoing COVID-19 pandemic.

The full amount of the CARES Act funds was recognized as a reduction to our Same Store property operating and maintenance expenses in the table above for the six months ended June 30, 2022 and 2021.

Subsequent to June 30, 2022, the Company received $4.3 million of grants from the CARES Act (see Note 17 — Subsequent Events for additional information).

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.

Other Results of Operations

Impairment Charges

We recorded $16.8 million and $7.0 million of impairment charges for the six months ended June 30, 2022 and 2021, respectively.

The impairment charges recorded during the six months ended June 30, 2022 related to (i) two SHOP properties for which we reconsidered our holding period and recorded impairment charges of $6.2 million and (ii) seven SNF properties in our MOB segment located in Illinois for which we reduced the carrying values on these properties to their estimated fair values as determined by a tenant’s $50.5 million offer to purchase these properties and recorded impairment charges of $10.6 million.

The impairment charges recorded during the six months ended June 30, 2021 related to (i) $0.9 million of impairment charges on our Wellington property which was recorded to adjust the carrying value to its fair value as determined by its purchase and sale agreement, and (ii) $6.1 million of impairment charges related to an MOB property located in Sun City, Arizona for which we reconsidered our expected holding period and reduced its carrying value to its estimated fair value as determined by a non-binding letter of intent.

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 six months ended June 30, 2022 and 2021.

Operating Fees to Related Parties

Operating fees to related parties increased $0.9 million to $12.7 million for the six months ended June 30, 2022 from $11.8 million for the six months ended June 30, 2021.

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 June 30, 2022 and 2021 for additional information).

Asset management fees were $10.9 million and $10.1 million for the six months ended June 30, 2022 and 2021, respectively.

The increase in asset management fees was due to an increase in variable asset management fees resulting from equity offerings completed in May and October 2021 which increased the variable asset management fee in the six months ended June 30, 2022 relative to the six months ended June 30, 2021.

Variable asset management fees will further increase if we issue additional equity securities in the future.

There were no incentive fees incurred in either of the six months ended June 30, 2022 or 2021.

Property management fees increased $0.2 million to $2.0 million for the six months ended June 30, 2022 from $1.8 million for the six months ended June 30, 2021.

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 $1.0 million for the six months ended June 30, 2022 and $0.3 million for the six months ended June 30, 2021.

This increase was due to fees from dead deal costs of $0.4 million, $0.2 million of legal fees related to terminated SHOP operators and $0.1 million of penalties on our mortgage repayments.

General and Administrative Expenses

General and administrative expenses increased $0.3 million to $8.9 million for the six months ended June 30, 2022 compared to $8.6 million for the six months ended June 30, 2021, which includes $4.4 million and $5.3 million for the six months ended June 30, 2022 and 2021, respectively, incurred in expense reimbursements.

The increase in general and administrative expenses was primarily driven by a professional fee credit of $1.0 million during the six months ended June 30, 2021 related to an adjustment for bonuses (see Note 9 — Related Party Transactions and Arrangements for additional information) which did not recur in the six months ended June 30, 2022, partially offset by decreased legal costs of $0.3 million.

Depreciation and Amortization Expenses

Depreciation and amortization expense increased $1.1 million to $40.7 million for the six months ended June 30, 2022 from $39.6 million for the six months ended June 30, 2021.

The increase was due to our acquisitions of approximately $3.4 million partially offset by a decrease in Same Store depreciation and amortization of $0.7 million primarily due to several intangible assets becoming fully amortized and a decrease due to dispositions of $1.5 million.

Gain (Loss) on Sale of Real Estate Investments

We completed the sale of the LaSalle Properties in the first quarter of 2022 and, as a result, we recorded a loss on sale of $0.3 million for the six months ended June 30, 2022.

We had previously recorded $34.0 million of impairment charges on the LaSalle Properties in the year ended December 31, 2021.

During the six months ended June 30, 2021, we transferred the remaining four SHOPs in Michigan 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.

The first closing of the transaction occurred during the year ended December 31, 2020 when the purchase price for all 11 properties subject to the transaction was actually received from the buyer.

We also sold our skilled nursing facility in Wellington, Florida and our development property in Jupiter, Florida, which resulted in gains on sale of $0.1 million and $2.4 million, respectively.

As a result of these dispositions, we recorded an aggregate gain on sale of $2.3 million during the six months ended June 30, 2021.

We previously recorded impairments of $42.2 million, $13.1 million and $34.4 million related to the 11 Michigan SHOPs, Wellington property, and Jupiter property, respectively.

Interest Expense

Interest expense decreased $0.4 million to $23.8 million for the six months ended June 30, 2022 from $24.2 million for the six months ended June 30, 2021.

The decrease in interest expense resulted from lower average balances of amounts outstanding under our Revolving Credit Facility during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, partially offset by higher average rates.

As of June 30, 2022, we had total borrowings of $1.1 billion, at a weighted average interest rate of 3.76% per year.

As of June 30, 2021 we had total borrowings of $1.1 billion, at a weighted average interest rate of 3.59% 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 $14,000 for the six months ended June 30, 2022 and approximately $56,000 for the six months ended June 30, 2021.

Gain (Loss) on Non-Designated Derivatives

Gain (loss) on non-designated derivative instruments for the six months ended June 30, 2022 and 2021 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.

The gain recorded in the six months ended June 30, 2022 was due to significant increases in interest rates during the period.

Income Tax Benefit (Expense)

Income taxes generally relate to our SHOPs, which are leased by our TRS.

We recorded an income tax expense of $0.1 million and $0.1 million for the six months ended June 30, 2022 and 2021, respectively.

Since that time, our TRS’s operating performance has not significantly improved and thus we have recorded a 100% valuation allowance on our net deferred tax assets through June 30, 2022.

Net Loss (Income) Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $0.1 million for the six months ended June 30, 2022 and net income attributable to non-controlling interests was approximately $0.1 million for the six months ended June 30, 2021, which represents the portion of our net income that is related to the Series A Preferred Units held by third parties (issued in connection with a property acquisition in September, 2021), Common OP Units held by third parties, and other non-controlling interest holders in our subsidiaries that own certain properties.

Cash Flows from Operating Activities

During the three months ended March 31, 2022, net cash provided by operating activities was $5.9 million.

During the six months ended June 30, 2022, net cash provided by operating activities was $13.7 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 $9.1 million (net loss of $23.4 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), a decrease in prepaid expenses and other assets of $1.0 million and an increase in deferred rent and other liabilities of $1.8 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $2.0 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees and by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.4 million.

During the three months ended March 31, 2021, net cash provided by operating activities was $14.0 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), a decrease in prepaid expenses and other assets of $2.7 million and an increase in deferred rent and other liabilities of $1.2 million.

These cash inflows were partially offset by 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.

Cash inflows included non-cash items of $19.4 million (net loss of $41.0 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, equity-based compensation, gain on non-designated derivatives and impairment charges) and a decrease in prepaid expenses and other assets of $1.9 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $4.7 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees, a decrease in deferred rent and other liabilities of $1.8 million and by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $1.1 million.

During the six months ended June 30, 2021, net cash provided by operating activities was $17.6 million.

Cash inflows included non-cash items of $22.2 million (net loss of $25.5 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) and a decrease in prepaid expenses and other assets of $2.5 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $5.4 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees, a decrease in deferred rent and other liabilities of $1.2 million and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.5 million.

Cash Flows from Investing Activities

Net cash used in investing activities during the three months ended March 31, 2022 was $8.4 million.

The cash used in investing activities included $11.8 million from the sale of the four LaSalle Properties and $3.3 million in capital expenditures.

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 six months ended June 30, 2022 was $15.1 million.

The cash used in investing activities included $17.8 million for the acquisition of three properties and $9.1 million in capital expenditures, partially offset by $11.8 million from the sale of the four LaSalle Properties.

Net cash provided by investing activities during the six months ended June 30, 2021 was $43.1 million.

The cash provided by investing activities included $94.5 million from the sale of six properties, partially offset by $44.2 million for the acquisition of one property and $7.2 million in capital expenditures.

Cash Flows from Financing Activities

Net cash used in financing activities of $6.9 million during the three months ended March 31, 2022 related to cash outflows of payments of deferred financing costs of $40,000 and dividends paid to preferred stockholders of $1.8 million, payments for derivative instruments of $39,000 and principal payments on mortgages of $3.4 million.

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 $14.5 million during the six months ended June 30, 2022 was comprised of cash outflows of payments of deferred financing costs of $0.3 million, dividends paid to holders of Series A Preferred Stock of $3.7 million, dividends to holders of Series B Preferred Stock of $3.2 million, payments for derivative instruments of $39,000 and principal payments on mortgages of $7.2 million.

Net cash used in financing activities of $79.8 million during the six months ended June 30, 2021 was comprised of cash outflows of payments of deferred financing costs of $0.1 million, dividends paid to holders of Series A Preferred Stock of $1.5 million, payments for derivative instruments of $0.1 million and principal payments on mortgages of $0.6 million.

Liquidity and Capital Resources

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 and holders of our Series B Preferred Stock.

Our existing principal demands for cash are to fund 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 and holders of our Series B 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.

Further, recent and continuing increases in inflation brought about by labor shortages, supply chain disruptions and increases in interest rates may adversely impact our results of operations and thus our liquidity.

Moreover, these increases in the rate of inflation, the ongoing war in Ukraine and related sanctions, supply chain disruptions and increases in interest rates, may also impact our tenants’ ability to pay rent and hence our results of operations and liquidity.

2 unchanged sentences

We expect to fund our future short-term operating liquidity requirements, including dividends to holders of Series A Preferred Stock and holders of Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our property operations and draws on the Revolving Credit Facility, which may include amounts reborrowed following the repayments we were or are required to make thereunder.

As of March 31, 2022 and December 31, 2021, we had $66.4 million and $59.7 million of ca sh and cash equivalents, respectively.

Our ability to use this cash on hand is restricted.

As of June 30, 2022 we had $42.7 million of cash and cash equivalents, and our ability to use this cash on hand is restricted.

Under our Credit Facility, we are required to maintain a combination of cash, cash equivalents and availability for future borrowings under our Revolving Credit Facility totaling at least $50.0 million.

As of March 31, 2022, $227.5 million was available for future borrowings under our Revolving Credit Facility.

Certain other restrictions and conditions described below, including those on paying cash dividends, 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%, and the Covenant Relief Period has terminated.

As of June 30, 2022, $212.5 million was available for future borrowings under our Revolving Credit Facility, of which $89.0 million was available for general corporate purposes and acquisitions, with the remainder available to repay other existing debt obligations.

Certain other restrictions and conditions described below, including those on paying cash dividends, 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, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and our Fixed Charge Coverage Ratio is not less than 1.50 to 1.00 for the most recently ended four fiscal quarters.

The fiscal quarter ended June 30, 2021 was the first quarter that could have been the Commencement Quarter.

We satisfied the conditions during the quarter ended March 31, 2022 in order to elect the quarter ending June 30, 2022 as the Commencement Quarter, but chose not to do so.

There can be no assurance as to if, or when, we will elect to do so, including to the extent we may be unable to satisfy these conditions in future periods.

We did not satisfy the conditions during the quarter ended June 30, 2022 in order to elect the quarter ending September 30, 2022 as the Commencement Quarter.

There can be no assurance as to if, or when, we will be able to elect the Commencement Quarter, including to the extent we may be unable to satisfy these conditions in future periods.

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 and Series B 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.

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, Series B Preferred Stock or any other class of preferred stock that may be issued) 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 Credit Facility also restricts our uses of liquidity.

2 unchanged sentences

There can be no assurance these conditions will be met.

The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and availability has been, and may continue to be, adversely affected by the decreases in cash rent collected from our tenants and income from our operators that have resulted from the effects of the COVID-19 pandemic and may persist for some time.

As of March 31, 2022, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 40.3%.

The availability for future borrowings under the Credit Facility is calculated using the adjusted net

operating income of the real estate assets comprising the borrowing base, and availability has been, and may continue to be, adversely affected by the increases in operating costs, primarily costs arising from the use of contract labor for care providers and, to a lesser extent, the amount we pay in overtime wages and bonuses, that have resulted from the effects of the COVID-19 pandemic and may persist for some time.

As of June 30, 2022, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 40.8%.

Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($42.7 million).

1 unchanged sentence

Impairment charges are already reflected within gross asset value.

As of March 31, 2022, we had total gross borrowings of $1.1 billion, at a weighted average interest rate of 3.5%.

As of June 30, 2022, we had total gross borrowings of $1.1 billion, at a weighted average interest rate of 3.76%.

As of December 31, 2021, we had total gross borrowings of $1.1 billion at a weighted average interest rate of 3.44%.

As of March 31, 2022, 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.

As of June 30, 2022, 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.

1 unchanged sentence

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 March 31, 2022 was $103.9 million.

Unencumbered real estate investments, at cost as of June 30, 2022 was $104.2 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 dispositions prior to the Commencement Quarter must be used to prepay amounts outstanding under the Revolving Credit Facility, to the extent there are any such amounts outstanding.

Pursuant to the Credit Facility, any resulting net proceeds from dispositions prior to the Commencement Quarter must be used to repay amounts outstanding under the Revolving Credit Facility, to the extent there are any such amounts outstanding.

Mortgage Notes Payable

As of March 31, 2022, we had $588.9 million in mortgage notes payable outstanding.

In April 2022, we repaid all amounts outstanding under our Palm Valley mortgage note.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2022 are $0.8 million.

As of June 30, 2022, we had $585.7 million in mortgage notes payable outstanding.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2022 and 2023 are $0.6 million and $1.1 million, respectively.

Credit Facility

5 unchanged sentences

The total commitments under the Credit Facility are $655.0 million including $505.0 million under the Revolving Credit Facility.

The Credit Facility includes an uncommitted “accordion feature” that may, subject to conditions, 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 March 31, 2022, $150.0 million was outstanding under our Term Loan, and no amounts were outstanding under the Revolving Credit Facility.

The unused borrowing availability under the Credit Facility was $227.5 million as of March 31, 2022.

As of June 30, 2022, $150.0 million was outstanding under our Term Loan, and no amounts were outstanding under the Revolving Credit Facility.

The unused borrowing availability under the Credit Facility was $212.5 million based on the current borrowing base, of which $89.0 million was available for general corporate purposes and acquisitions, with the remainder available to repay other existing debt obligations.

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.

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 increases in operating costs, primarily costs arising from the use of contract labor for care providers and, to a lesser extent, the amount we pay in overtime wages and bonuses, due to the effects of the COVID-19 pandemic, and may continue to be adversely affected.

See also the discussion above regarding the need to maintain certain levels of liquidity until the Commencement Quarter.

2 unchanged sentences

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 March 31, 2022, the Term Loan had an effective interest rate per annum equal to 3.98%.

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 (the “Fixed Charge Coverage Ratio”) on a quarterly basis and a minimum consolidated tangible net worth.

We entered into an amendment to our Credit Facility on November 12, 2021.

We would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended September 30, 2021.

Pursuant to the terms of a third amendment entered into on November 12, 2021 by us, the agent and the requisite lenders under the Credit Facility, the lenders waived any defaults or event of defaults under the covenant requiring us to maintain a Fixed Charge Coverage Ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and any further defaults or Events of Default (as defined in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant.

In addition, as described above, the Fixed Charge Coverage Ratio we are required to maintain was reduced from 1.60 to 1.00 to 1.50 to 1.00 until the earlier of December 31, 2022, and such earlier date as we elect to terminate this relief.

There can be no assurance our lenders will consent to any amendments or waivers that may become necessary to comply with the terms of the Credit Facility in the future.

As of March 31, 2022, we were in compliance with the financial covenants under the Credit Facility.

Based upon our current expectations, we believe we will be able to comply with these covenants during the next 12 months.

As of June 30, 2022, the Term Loan had an effective interest rate per annum equal to 4.06%.

Under the Credit Facility, we must comply with covenants governing the maximum ratio of consolidated total indebtedness to consolidated total asset value, and requiring us to maintain a minimum ratio of adjusted consolidated EBITDA

to consolidated fixed charges (the “Fixed Charge Coverage Ratio”) on a quarterly basis, a minimum consolidated tangible net worth and a minimum debt service coverage ratio.

We entered into the Fourth Amendment on August 11, 2022.

Without the Fourth Amendment, we would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended June 30, 2022.

Pursuant to the terms of the Fourth Amendment entered into on August 11, 2022 by us, the agent and the requisite lenders under the Credit Facility, the lenders agreed to amend the Fixed Charge Coverage Ratio to permit us to avoid any defaults or event of defaults under the Fixed Charge Coverage Ratio covenant as it existed prior to the Fourth Amendment and any further potential defaults or Events of Default (as defined in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant.

As described above, the prior Fixed Charge Coverage Ratio, based on the four most recently ended fiscal quarters, of 1.50 to 1.00 was reduced to (a) 1.20 to 1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.35 to 1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.45 to 1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter.

There can be no assurance our lenders will consent to any further amendments that may become necessary in order to comply with the terms of the Credit Facility in the future.

See Note 17 — Subsequent Events for additional information on the Fourth Amendment.

Fannie Mae Master Credit Facilities

As of March 31, 2022, $354.7 million was outstanding under the Fannie Mae Master Credit Facilities.

As of June 30, 2022, $354.0 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 subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

3 unchanged sentences

The Fannie Mae Master Credit Facilities mature on November 1, 2026.

Future scheduled principal payments on our Fannie Mae Master Credit Facilities for 2022 are $2.5 million.

Future scheduled principal payments on our Fannie Mae Master Credit Facilities for the remainder of 2022 and 2023 are $1.9 million and $5.8 million, respectively.

Capital Expenditures

During the three months ended March 31, 2022, our capital expenditures were $3.3 million, of which $0.5 million related to our MOB segment and $3.5 million related to our SHOP segment.

During the six months ended June 30, 2022, our capital expenditures were $9.1 million, of which $3.7 million related to our MOB segment and $5.4 million related to our SHOP segment.

We anticipate this rate of capital expenditures for the MOB and SHOP segments throughout 2022, however, 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 — Three Months Ended March 31, 2022

During the three months ended March 31, 2022, we did not acquire any properties.

Acquisitions — Subsequent to March 31, 2022

We have not acquired any properties subsequent to March 31, 2022.

Dispositions — Three Months Ended March 31, 2022

During the three months ended March 31, 2022, we completed the sale of the LaSalle Properties for a contract sales price of $12.4 million.

Acquisitions — Six Months Ended June 30, 2022

During the six months ended June 30, 2022, we acquired one multi-tenant MOB and two single-tenant MOBs for an aggregate contract purchase price of $17.7 million.

These acquisitions were funded with cash on hand.

Acquisitions — Subsequent to June 30, 2022

We have not acquired any properties subsequent to June 30, 2022.

Dispositions — Six Months Ended June 30, 2022

During the six months ended June 30, 2022, we completed the sale of the LaSalle Properties for an aggregate contract sales price of $12.4 million.

We had previously recorded $34.0 million of impairment charges on the LaSalle Properties in the year ended December 31, 2021.

Dispositions — Subsequent to March 31, 2022

Subsequent to March 31, 2022 we did not dispose of any properties.

Dispositions — Subsequent to June 30, 2022

Subsequent to June 30, 2022, we did not dispose of any properties.

Share Repurchase Program

30 unchanged sentences

The Practice Guideline defines MFFO as FFO further adjusted for acquisition fees and expenses and other items.

In calculating MFFO, we follow the Practice Guideline (with the added adjustment for deferred tax asset allowances based on management’s determination as noted above) and exclude acquisition fees and expenses, amortization of above and below market and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

We also exclude other non-operating items in calculating MFFO, such as transaction-related fees and expenses and capitalized interest.

12 unchanged sentences

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.

As of March 31, 2022, all deferred amounts have been collected and we have not deferred any additional amounts since the year ended December 31, 2020.

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.

As of June 30, 2022, all deferred amounts have been collected and we have not deferred any additional amounts since the year ended December 31, 2020.

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 this Quarterly Report on Form 10-Q.

1 unchanged sentence

In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2022 2021 2022 2021

4 unchanged sentences

Impairment charges 6,193 6,081 16,837 6,959

Gain on sale of real estate investment

(Gains) losses on sale of real estate investment — (2,456) 303 (2,284)

Adjustments for non-controlling interests (3)

(117) (105) (262) (201)

FFO (as defined by NAREIT) attributable to stockholders

4,917 6,573 8,969 14,985

Acquisition and transaction related 375 123 954 255

(Accretion) amortization of market lease and other intangibles, net

Accretion of market lease and other intangibles, net (123) (5) (245) (39)

Straight-line rent adjustments

(664) (321) (1,053) (545)

Straight-line rent (rent deferral agreements) (2)

Amortization of mortgage premiums and discounts, net

(102) 14 5 28

(Gain) loss on non-designated derivatives (392) 13 (1,386) (1)

Deferred tax asset allowance (3)

Deferred tax asset valuation allowance (3)

587 (686) 1,142 (1,026)

Adjustments for non-controlling interests (4)

3 unchanged sentences

(2) Represents amounts related to 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 earned revenue attributed to the current period for rent that was deferred, for purposes of MFFO, as they are expected to be collected.

These amounts are included in the straight-line rent receivable on our balance sheets but are considered to be earned revenue attributed to the current period for rent that was deferred, for purposes of MFFO, as they are expected to be collected.

Accordingly, when the deferred amounts are collected, the amounts reduce MFFO.

1 unchanged sentence

(3) This is a non-cash item and is added back as it is not considered a part of operating performance.

(4) Represents the portion of the adjustments allocable to non-controlling interest.

(4) Represents the portion of the adjustments allocable to non-controlling interests.

Net Operating Income

9 unchanged sentences

NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently.

We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our

consolidated financial statements.

We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements.

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 March 31, 2022:

The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of Same Store, Acquisitions and Dispositions NOI for the three months ended June 30, 2022:

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

8 unchanged sentences

Interest and other income (1) — — — — — (1) (2)

Losses on sale of real estate investments — — — — — 303 — 303

Gain on non-designated derivative instruments — — — — — — (392) (392)

3 unchanged sentences

NOI $ 21,095 $ 7,643 $ 3,047 $ — $ (1) $ (550) $ — $ 31,234

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 March 31, 2021:

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

8 unchanged sentences

Interest and other income (2) — — — — — (2) (4)

Gains on sale of real estate investments — — — — (2,342) (114) — (2,456)

Loss on non-designated derivative instruments — — — — — — 13 13

Income tax (benefit) expense — — — — — — 59 59

Allocation for preferred stock — — — — — — 1,826 1,826

Net income attributable to non-controlling interests — — — — — — 56 56

NOI $ 21,169 $ 9,053 $ 43 $ — $ 60 $ (725) $ — $ 29,600

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 9,396 $ (7,417) $ 2,631 $ — $ 24 $ (1,682) $ (50,808) $ (47,856)

Impairment charges 10,644 6,193 — — — — — 16,837

Operating fees to related parties — — — — — — 12,670 12,670

Acquisition and transaction related 211 — — — — — 743 954

General and administrative 42 3 — — — — 8,853 8,898

Depreciation and amortization 21,109 15,541 3,680 — — 341 — 40,671

Interest expense 74 712 — — — — 23,028 23,814

Interest and other income (2) — — — (9) — (3) (14)

Losses on sale of real estate investments — — — — — 303 — 303

2 unchanged sentences

Allocation for preferred stock — — — — — — 6,899 6,899

Net income attributable to non-controlling interests — — — — — — 46 46

Net loss attributable to non-controlling interests — — — — — — (78) (78)

NOI $ 41,474 $ 15,032 $ 6,311 $ — $ 15 $ (1,038) $ — $ 61,794

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 13,946 $ 6,053 $ 30 $ — $ 1,288 $ (2,837) $ (46,695) $ (28,215)

Impairment charges 6,082 — — — — 877 — 6,959

Operating fees to related parties — — — — — — 11,806 11,806

Acquisition and transaction related — 3 — — — — 252 255

General and administrative 45 10 — — — — 8,540 8,595

Depreciation and amortization 21,809 15,090 277 — 1,487 941 — 39,604

Interest expense 162 718 — — — — 23,361 24,241

Interest and other income (16) — — — — — (40) (56)

Gains (losses) on sale of real estate investments — — — — (2,342) 58 — (2,284)

Gain on non-designated derivative instruments — — — — — — (1) (1)

Income tax (benefit) expense — — — — — — 107 107

Allocation for preferred stock — — — — — — 2,568 2,568

Net loss attributable to non-controlling interests — — — — — — 102 102

NOI $ 42,028 $ 21,874 $ 307 $ — $ 433 $ (961) $ — $ 63,681

Dividends and Other Distributions

6 unchanged sentences

Also, 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 an amendment to the Credit Facility described above.

Under this distribution 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 asset value effect on the applicable date, based on a single record date to be specified at the beginning of each quarter.

Under this distribution 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 asset value in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter.

We declared and issued Stock Dividends of 0.01349 shares of our common stock on each share of our outstanding common stock in October 2020 and January 2021 and 0.014655 shares of our common stock on each share of our outstanding common stock in April 2021, July 2021, October 2021 and January 2022.

We declared and issued Stock Dividends of 0.014167 shares of our common stock on each share of our outstanding common stock in April 2022.

We declared and issued Stock Dividends of 0.014167 shares of our common stock on each share of our outstanding common stock in April 2022 and July 2022.

The Board may further change our 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.

Under our 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.

Under our Credit Facility we may not pay distributions to holders of common stock in cash or make 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 and the Series B Preferred Stock or any other preferred stock we may issue and paying any cash distributions necessary to maintain our status as a REIT.

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

The restrictions on paying cash distributions will no longer apply starting in the 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, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and the Covenant Relief Period has ended.

There can be no assurance as to if, or when, we will be able to satisfy these conditions.

We may only pay cash distributions on our common stock beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock and Series B 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, our ability to pay cash distributions may be limited by financial covenants in the Credit Facility, including our requirement to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges.

We may only pay cash distributions on our common stock beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock, Series B Preferred Stock or any other class of preferred stock that may be issued) 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 the 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.

3 unchanged sentences

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

The following table shows the sources for the payment of distributions to preferred stockholders, including distributions on unvested restricted shares and Common 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, 2022

(In thousands) Percentage of Distributions

The following table shows the sources for the payment of distributions to preferred stockholders, including distributions on unvested restricted shares and Common OP Units, but excluding distributions related to Class B Units as these distributions are recorded as an expense in our consolidated statements of operations and comprehensive loss, for the periods indicated:

Three Months Ended Year-To-Date

March 31, 2022 June 30, 2022 June 30, 2022

(In thousands) Percentage of Distributions Percentage of Distributions Percentage of Distributions

Distributions:

8 unchanged sentences

Cash flows provided by operations (in accordance with GAAP)

$ 5,882 $ 7,855 $ 13,737

Net loss (in accordance with GAAP) $ (23,400) $ (17,635) $ (41,035)

(1) Assumes the use of available cash flow from operations before any other sources.

For the three months ended March 31, 2022, cash flows provided by operations were $5.9 million.

For the six months ended June 30, 2022, cash flows provided by operations were $13.7 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.

10 unchanged sentences

Our loan agreements require us to comply with specific financial and reporting covenants.

As of March 31, 2022, we were in compliance with the financial and reporting covenants under our loan agreements.

Under our 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 repay amounts outstanding under the Revolving Credit Facility.

As of June 30, 2022, we would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended June 30, 2022.

Pursuant to the terms of the Fourth Amendment entered into on August 11, 2022, the lenders agreed to amend the Fixed Charge Coverage Ratio to permit us to avoid any defaults or event of defaults under the Fixed Charge Coverage Ratio covenant as it existed prior to the Fourth Amendment and any further potential defaults or Events of Default (as defined in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant.

As described above, the prior Fixed Charge Coverage Ratio, based on the four

most recently ended fiscal quarters, of 1.50 to 1.00 was reduced to (a) 1.20 to 1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.35 to 1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.45 to 1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter.

There can be no assurance our lenders will consent to any further amendments that may become necessary in order to comply with the terms of the Credit Facility in the future.

See Note 17 — Subsequent Events for additional information on the Fourth Amendment.

We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings.

10 unchanged sentences

We may be adversely impacted by inflation on the leases with tenants in our MOB segment that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates.

For the year ended March 31, 2022, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 8.5%.

To help mitigate the adverse impact of inflation, approximately 87% of our leases with our tenants in our MOB segment contain rent escalation provisions which average 1.8% per year.

As of June 30, 2022, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 9.1%.

To help mitigate the adverse impact of inflation, approximately 90% of our leases with our tenants in our MOB segment contain rent escalation provisions which increase the cash that is due under these leases over time by an average of 2.3% per year.

These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures).

11 unchanged sentences

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