What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-10 compared with 2022-08-12 · 620 added, 630 removed, 1732 unchanged (42% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

2022 December 31, 2021

12 unchanged sentences

Operating lease right-of-use assets 7,840 7,914

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

Prepaid expenses and other assets (including $ 126 and $ 929 due from related parties as of September 30, 2022 and December 31, 2021, respectively)

30,823 32,564

6 unchanged sentences

Derivative liabilities, at fair value — 13,903

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

Accounts payable and accrued expenses (including $ 333 and $ 47 due to related parties as of September 30, 2022 and December 31, 2021)

43,034 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 June 30, 2022 and December 31, 2021

3,977,144 issued and outstanding as of September 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 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

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

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 103,612,344 shares and 99,281,754 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 2,394,790 2,329,839

10 unchanged sentences

(In thousands, except share and per share data)

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

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

2022 2021 2022 2021

9 unchanged sentences

92,004 110,612 277,716 278,746

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

Operating loss before gain on sale of real estate investments ( 8,544 ) ( 28,606 ) ( 26,780 ) ( 32,144 )

Gain/(loss) on sale of real estate investments 194 — ( 109 ) 2,284

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

Operating loss ( 8,350 ) ( 28,606 ) ( 26,889 ) ( 29,860 )

Other income (expense):

7 unchanged sentences

Net loss ( 19,875 ) ( 40,465 ) ( 60,910 ) ( 66,010 )

Net loss (income) attributable to non-controlling interests 29 ( 56 ) 78 ( 102 )

Net loss attributable to non-controlling interests 22 331 100 229

Allocation for preferred stock ( 3,450 ) ( 1,834 ) ( 10,349 ) ( 4,402 )

Net loss attributable to common stockholders ( 23,303 ) ( 41,968 ) ( 71,159 ) ( 70,183 )

Other comprehensive income (loss):

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 )

Other comprehensive loss:

Unrealized gain on designated derivatives 16,948 3,139 53,384 17,190

Comprehensive loss attributable to common stockholders $ ( 6,355 ) $ ( 38,829 ) $ ( 17,775 ) $ ( 52,993 )

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

8 unchanged sentences

(In thousands, except share data)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

16 unchanged sentences

Rebalancing of ownership percentage — — — — — — ( 202 ) — — ( 202 ) 202 —

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

Balance, September 30, 2022 3,977,144 $ 40 3,630,000 $ 36 103,612,344 $ 1,036 $ 2,394,790 $ 39,043 $ ( 1,418,311 ) $ 1,016,634 $ 6,668 $ 1,023,302

Three Months Ended September 30, 2022

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

3 unchanged sentences

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

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

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

Issuance of Preferred Stock, net — — — — — — ( 28 ) — — ( 28 ) — ( 28 )

10 unchanged sentences

Rebalancing of ownership percentage — — — — — — ( 59 ) — — ( 59 ) 59 —

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

Balance, September 30, 2022 3,977,144 $ 40 3,630,000 $ 36 103,612,344 $ 1,036 $ 2,394,790 $ 39,043 $ ( 1,418,311 ) $ 1,016,634 $ 6,668 $ 1,023,302

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

3 unchanged sentences

(In thousands, except share data)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Series A Preferred Stock Common Stock Accumulated Other Comprehensive Loss

9 unchanged sentences

— — — — — — ( 4,402 ) ( 4,402 ) — ( 4,402 )

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

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

Issuance of Preferred OP Units — — — — — — — — 2,578 2,578

Net loss — — — — — — ( 65,781 ) ( 65,781 ) ( 229 ) ( 66,010 )

Unrealized gain on designated derivatives — — — — — 17,190 — 17,190 — 17,190

Rebalancing of ownership percentage — — — — ( 80 ) 5 — ( 75 ) 75 —

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

Balance, September 30, 2021 3,977,144 $ 40 97,847,313 $ 978 $ 2,222,023 $ ( 22,478 ) $ ( 1,239,361 ) $ 961,202 $ 6,765 $ 967,967

Three Months Ended September 30, 2021

Series A Preferred Stock Common Stock Accumulated Other Comprehensive Loss

2 unchanged sentences

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

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

Issuance of Preferred Stock, net 15,000 — — — 45 — — 45 — 45

5 unchanged sentences

— — — — — — ( 1,834 ) ( 1,834 ) — ( 1,834 )

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

Distributions to non-controlling interest holders

— — — — — — — — ( 46 ) ( 46 )

Issuance of Preferred OP Units — — — — — — — — 2,578 2,578

Net loss — — — — — — ( 40,134 ) ( 40,134 ) ( 331 ) ( 40,465 )

Unrealized loss on designated derivatives — — — — — 3,138 — 3,138 — 3,138

Rebalancing of ownership percentage — — — — ( 218 ) 5 — ( 213 ) 213 —

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

Balance, September 30, 2021 3,977,144 $ 40 97,847,313 $ 978 $ 2,222,023 $ ( 22,478 ) $ ( 1,239,361 ) $ 961,202 $ 6,765 $ 967,967

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

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

21 unchanged sentences

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

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

Net cash used in investing activities ( 22,747 ) ( 63,186 )

Cash flows from financing activities:

9 unchanged sentences

Distributions to non-controlling interest holders ( 138 ) —

Net cash used in financing activities ( 14,512 ) ( 79,846 )

Net cash (used in) provided by financing activities ( 19,752 ) 2,701

Net change in cash, cash equivalents and restricted cash ( 21,404 ) ( 34,481 )

5 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash, cash equivalents, end of period $ 40,120 $ 29,784

6 unchanged sentences

Common stock issued through stock dividends $ 64,280 $ 60,621

Preferred Series A Unit issuance in connection with a property acquisition (See Note 3 )

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

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

As of September 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.

3 unchanged sentences

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 June 30, 2022, the Company owned 50 seniors housing properties using the REIT Investment Diversification and Empowerment Act (“RIDEA”) structure in its SHOP segment.

As of September 30, 2022, the Company owned 50 seniors housing properties using the REIT Investment Diversification and Empowerment Act of 2007 (“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 June 30, 2022, the Company had four eligible independent contractors operating 50 SHOPs (not including two land parcels).

As of September 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 and July 2022 were equal to 0.014167 shares of common stock on each share of outstanding common stock.

The Stock Dividends paid in April 2022, July 2022 and October 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 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.

The Company has issued an aggregate of 11,084,793 shares as Stock Dividends.

No other additional shares of common stock were issued during the nine months ended September 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 aggregate increase of 0.13567 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.

On April 1, 2022, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2021.

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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 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.

The results of operations for the three and nine months ended September 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 and six months ended June 30, 2022.

Principles of Consolidation and Basis of Presentation

10 unchanged sentences

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

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

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

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

The COVID-19 pandemic has had, and another pandemic in the future could have, impacts across many sectors and areas of the global economy and financial markets, leading to significant adverse impacts on economic activity including volatility in financial markets.

The impact of the COVID-19 pandemic has evolved rapidly.

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 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 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

The COVID-19 pandemic had, and another pandemic in the future could have, impacts across many sectors and areas of the global economy and financial markets, leading to significant adverse impacts on economic activity including volatility in financial markets.

The Company’s tenants and SHOP properties operate businesses that require in-person interactions with their patients and residents, and 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 the Company’s properties, and impact the revenues generated by the Company’s tenants which may further impact the ability of the Company’s tenants to pay their rent obligations to the Company 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 September 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 of September 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.

5 unchanged sentences

Further, recent and continuing increases in inflation brought about by labor shortages, supply chain disruptions and increases in interest rates may adversely impact the Company’s results of operations.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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 the ability of the Company’s tenants to pay rent and hence the Company’s results of operations and liquidity.

4 unchanged sentences

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

The negative effects that the global pandemic has had on the economy includes the closure or reduction in occupancy activity at some of the Company’s MOBs.

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

The Company experienced delays in rent collections throughout the year ended December 31, 2020, although collections have been approximately 100 % of original cash rent for the MOB segment since the first quarter of 2021.

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.

The Company took 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 in this segment, and all amounts previously deferred under prior rent deferral agreements have been collected.

11 unchanged sentences

In the Company’s SHOP segment, occupancy trended downward from March 2020 until June 2021 and has since stabilized and begun to recover.

Government policies and implementation of infection control best practices materially limited or closed communities to new resident move-ins which affected the Company’s ability to fill vacancies.

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

However, the Company has experienced lower inquiry volumes and reduced in-person tours since the onset of the COVID-19 pandemic.

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

At the SHOPs, the Company generally bears these cost increases, which were partially offset by funds received under the Coronavirus Aid, Relief, and Economic Security Act

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

At the SHOPs, the Company generally bears 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.

See below for additional information on the CARES Act.

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.

These trends became more prominent in the first quarter of 2022, and continued into the second and third quarters 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 increased, 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.

While the development of COVID-19 vaccines may limit that effect, the effectiveness of vaccines and the willingness to receive vaccines are highly uncertain and cannot be predicted with confidence.

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 $ 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 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).

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

The Company received $ 4.3 million and $ 4.5 million under the CARES Act during the three

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

and nine months ended September 30, 2022, respectively.

The Company did no t receive any such funds during the three months ended September 30, 2021 and received $ 5.1 million during the nine months ended September 30, 2021.

For accounting purposes, the Company treats these funds as a grant contribution from the government.

The full amounts received were recognized as a reduction of property operating and maintenance expenses in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2022 and the nine months ended September 30 , 2021, to partially offset the incurred COVID-19 expenses .

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

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

As of September 30, 2022, these leases had a weighted average remaining lease term of 5.0 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.

4 unchanged sentences

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

Tenant revenue also includes operating expense reimbursements which generally increase with the increase in property operating and maintenance expenses in our MOB segment.

Tenant revenue also includes operating expense reimbursements which generally increase with any increase in property operating and maintenance expenses in our MOB segment.

In addition to base rent, dependent on the specific lease, tenants are generally required to pay either (i) their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors or (ii) their share of increases in property operating and maintenance expenses to the extent they exceed the properties’ expenses for the base year of the respective leases.

Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.

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

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

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

1 unchanged sentence

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 $ 1.3 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.

The Company recorded ancillary r evenue from non-residents of $ 3.4 million for the nine months ended September 30, 2021.

The Company did no t record material amounts of ancillary revenue from non-residents during the three months ended September 30, 2021, no r did the Company record material amounts of ancillary revenue from non-residents during the three and nine months ended September 30, 2022.

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

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

Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses related to non-SHOP assets (recorded in revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating and maintenance 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 and maintenance costs of the respective properties.

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

1 unchanged sentence

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

As of June 30, 2022:

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

As of September 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 $ 0.9 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.

The Company recorded a reduction of revenue of $ 1.7 million and $ 2.6 million for uncollectable amounts during the three and nine months ended September 30, 2022, respectively, of which $ 1.3 million in the three and nine months ended September 30, 2022 related to previously disposed properties.

During the three and nine months ended September 30, 2021, the Company recorded a reduction of revenue of $ 0.4 million and $ 0.7 million for uncollectable amounts, respectively.

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 June 30, 2022 and 2021.

No properties were presented as discontinued operations during the quarters ended September 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 June 30, 2022 or December 31, 2021.

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

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

During the construction period, the Company capitalizes interest, insurance and real estate taxes until the development has reached substantial completion.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

During the construction period, the Company capitalizes interest, insurance and real estate taxes until the development has reached substantial completion.

September 30, 2022

Purchase Price Allocation

7 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 six months ended June 30, 2022 and 2021 were asset acquisitions.

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

All acquisitions during the nine months ended September 30, 2022 and 2021 were asset acquisitions.

The Company acquired three properties during the nine months ended September 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.

12 unchanged sentences

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.

The Company did not record any intangible asset amounts related to customer relationships during the three and nine months ended September 30, 2022 or 2021.

Accounting for Leases

1 unchanged sentence

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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2022

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;

As of September 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 and maintenance 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.

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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.

These leases are reflected on the balance sheets as of September 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 nine months ended September 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.

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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 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 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.

As of September 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.

1 unchanged sentence

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

The value of customer relationship intangibles, if any, is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building.

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

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

A TRS is subject to U.S.

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

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

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

Because of the TRS's recent operating history of losses and the 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 taken a 100% valuation allowance of $ 5.5 million as of September 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).

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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 designed to reimburse providers for healthcare related expenses and

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.

The Company received $ 4.3 million and $ 4.5 million in funding from the CARES Act during the three and nine months ended September 30, 2022, respectively.

During the three months ended September 30, 2021, the Company did no t receive funding and during the nine months ended September 30, 2021, the Company received $ 5.1 million in funding from CARES Act grants.

For accounting purposes, the CARES Act funds are treated as a grant contribution from the government.

The funding the Company received was recognized as a reduction of property operating and maintenance expenses in the Company’s consolidated statements of operations to offset the negative impacts of COVID-19.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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).

September 30, 2022

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

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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 June 30, 2022:

Not yet Fully Adopted as of September 30, 2022:

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

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

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

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

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

The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through June 30, 2023 as reference rate reform activities occur.

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

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

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

2 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 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.

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

During the nine months ended September 30, 2022, the Company acquired three properties.

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,

September 30, 2022

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

Nine Months Ended September 30,

(In thousands) 2022 2021

8 unchanged sentences

Total intangible assets and liabilities 2,938 26,349

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

Issuance of Preferred OP Units (1)

Cash paid for real estate investments, including acquisitions $ 17,799 $ 146,146

Number of properties purchased 3 14

(1) See Note 8 — Stockholders’ Equity for additional information.

Significant Tenants

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.

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 June 30, 2022 and 2021:

As of September 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.

September 30,

State 2022 2021

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Pennsylvania * 11.8 %

* 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.

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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, net, for the periods presented:

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

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

(In thousands) 2022 2021 2022 2021

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$ 242 $ 1,017 $ 878 $ 740 $ 612

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

from the former triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties were leased to the Company’s TRS and operated and managed on the Company’s behalf by a third-party operator.

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

During the third quarter of 2021, the Company 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.

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 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 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 statement of operations and comprehensive loss for the nine months ended September 30, 2022.

The Company recorded a gain on sale of $ 0.2 million in the three months ended September 30, 2022 related to the settlement of a lien on formerly disposed properties.

During the second quarter of 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.

These gains are included in the Company’s consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2021.

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

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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 six months ended June 30, 2021.

The Company recorded a loss on sale of $ 0.2 million related to this transaction in the nine months ended September 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

Total $ 6,193 $ 6,081 $ 16,837 $ 6,959

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

Assets Held for Sale and Related Impairments

When assets are identified by management as held for sale, the Company reflects them separately on its balance sheet and stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets.

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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 June 30, 2022 and December 31, 2021.

Assets Held for Use and Related Impairments

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

Assets Held for Use

When circumstances indicate the carrying value of a property classified as held for use may not be recoverable, the Company reviews the property for impairment.

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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.

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.

1 unchanged sentence

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.

After considering the tenant’s offer, the terms of the existing leases, longer term prospects for these properties and potential sales prices to third parties, the Company determined that the probability weighted scenarios of projected cash flows, on an undiscounted basis over potential holding periods, may not recover the current carrying value of the properties.

Accordingly, the Company concluded that the properties were impaired and recorded $ 10.6 million of impairment charges in the three months ended March 31, 2022 to reduce the carrying value of the properties to their estimated fair value of $ 50.5 million.

Held For Use Impairments - 2021

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 six months ended June 30, 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.

September 30, 2022

Impairment Charges

The following table presents impairment charges by segment recorded during the three and nine months ended September 30, 2022 and 2021:

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

(In thousands) 2022 2021 2022 2021

Illinois skilled nursing facilities (1) (6)

$ — $ — $ 10,644 $ —

Sun City MOB (2) (6)

Total MOB impairment charges — — 10,644 6,082

SHOP Segment:

Various held for use SHOPs (3) (6)

8,949 — 15,142 —

LaSalle Properties (4) (6)

— 26,642 — 26,642

Wellington, Florida skilled nursing facility (5)

Total SHOP impairment charges 8,949 26,642 15,142 27,519

Total impairment charges $ 8,949 $ 26,642 $ 25,786 $ 33,601

(1) These seven properties were impaired after the Company received an offer by the tenant to purchase all seven properties, which caused the Company to reassess its expected holding period for these properties.

(2) This property has been actively marketed for sale since the nine months ended September 30, 2021.

(3) Consists of eight properties actively marketed for sale.

Of the eight properties, six properties were impaired in the three and nine months ended September 30, 2022.

The incremental impairment charges recorded in the three months ended September 30, 2022 resulted from a deterioration of market conditions and rising interest rates.

(4) These four properties were disposed in the nine months ended September 30, 2022.

(5) This property was disposed in the nine months ended September 30, 2021.

The Company recorded this impairment charge in the nine months ended September 30, 2021 to reduce the carrying value of the property to its estimated fair value as determined by an amendment to its purchase and sale agreement.

The Company had previously recorded $ 2.3 million of impairment charges on this property in the year ended December 31, 2020.

(6) These properties were impaired to reduce their carrying values to their estimated fair values, respectively, as determined by the Assets Held for Use approach described above.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Note 4 — Mortgage Notes Payable, Net

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

The following table reflects the Company’s mortgage notes payable as of September 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 June 30,

September 30,

2022 December 31, 2021 September 30,

2022 December 31, 2021 Interest Rate Maturity

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_____________

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

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

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

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(2) Variable rate loan, based on 30-day LIBOR, which is 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.

The Company allocated $ 378.5 million of its “pay-fixed” interest rate swaps to this mortgage consistently as of September 30, 2022 and December 31, 2021.

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

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

As of 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.

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

As of September 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

June 30, 2022

September 30, 2022

Note 5 — Credit Facilities

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

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

Outstanding Facility

1 unchanged sentence

Credit Facility Encumbered Properties (1)

2022 December 31, 2021 June 30,

September 30,

2022 December 31, 2021 September 30,

2022 December 31, 2021 Interest Rate Maturity

16 unchanged sentences

Total Credit Facilities 117 $ 500,989 $ 502,051 4.83 % (5) 3.00 % (5)

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

(1) Encumbered properties are as of September 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 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.

(3) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties located in Florida, Georgia, Iowa and Michigan as of September 30, 2022 with a carrying value of $ 347.9 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 September 30, 2022 with a carrying value of $ 259.1 million.

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

(6) Variable rate loan, based on SOFR, 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 SOFR debt, see Note 7 — Derivatives and Hedging Activities for additional details).

(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 June 30, 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 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.

Interest rate caps are not considered unless the caps, if any, are currently in effect.

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

Prior to the Fourth Amendment (as defined below) which, among other things, changed the reference rate on the Credit Facility from LIBOR to SOFR, 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.

During the three months ended September 30, 2022, the Company converted $ 150.0 million of its “pay-fixed” swaps from LIBOR to SOFR.

As of September 30, 2022, the Company allocated the $ 150.0 million SOFR-based “pay-fixed” swaps to the Term Loan, which were also allocated to the Term Loan as of December 31, 2021 when the Term Loan and swaps were LIBOR-based.

As of September 30, 2022 and December 31, 2021, $ 50.0 million of LIBOR-based “pay-fixed” swaps to the Capital One Fannie Mae Facility because there were no amounts outstanding under the Revolving Credit Facility.

As of September 30, 2022, the carrying value of the Company’s 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.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2022

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 September 30, 2022 were $ 0.1 billion, although there can be no assurance as to the amount of liquidity the Company would be able to generate from using these unencumbered assets as collateral for mortgage loans or adding them to the borrowing base of the Company’s Credit Facility.

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 Credit Facility

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”).

5 unchanged sentences

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 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.

As of September 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 $ 222.8 million based on the borrowing base as of September 30, 2022.

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, entered into the fourth amendment to the Credit Facility (the “Fourth Amendment”).

Without the Fourth Amendment, the Company would have been in default of the pre-amendment Fixed Charge Coverage Ratio covenant (defined below) for the four fiscal quarter period ended June 30, 2022.

Pursuant to 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 Events of Default through the amendment date.

The Fourth Amendment also eliminated the LIBOR-based rate option, among other changes.

The terms described below represent the terms pursuant to the Fourth Amendment.

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.

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”).

Certain other restrictions and conditions described below will no longer apply beginning in the 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 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.

The Company satisfied the conditions during the quarter ended September 30, 2022 in order to elect the quarter ending December 31, 2022 as the Commencement Quarter, but did not make the election to do so.

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.

The Company may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings.

The Company may borrow additional amounts 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.

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

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.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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.

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.

September 30, 2022

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.

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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;

The minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges (the “Fixed Charge Coverage Ratio”) 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 %.

As of September 30, 2022, the Company had a 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 the Company must satisfy 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, the borrowing base advance rate is 52.5 % until the Company elects the Commencement Quarter, after which the borrowing base advance rate will be 55 %.

In addition, as of September 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) SOFR (as defined below), 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 %.

(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 September 30, 2022, the Company had elected to use the SOFR option for all of its borrowings under the Revolving Credit Facility.

Further, as of September 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) 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 %.

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2022

“floor” on SOFR-based rates is 0.25 %.

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

As of September 30, 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

Fannie Mae Master Credit Facilities

8 unchanged sentences

Future Principal Payments

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):

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

Future Principal

13 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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2022

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.

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.

During the three months ended September 30, 2022, the Company converted $ 150.0 million of its “pay-fixed” swaps from LIBOR to SOFR, however, the Company still has mortgages, credit facilities (namely, the Capital One Facility and the KeyBank Facility) and derivative agreements that have terms that are based on LIBOR.

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

14 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 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.

However, as of September 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

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.

September 30, 2022

The following table presents information about the Company’s assets and liabilities measured at fair value as of September 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

June 30, 2022

September 30, 2022

Derivative assets, at fair value $ — $ 42,445 $ — $ 42,445

7 unchanged sentences

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 six months ended June 30, 2022.

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

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 September 30, 2022 and December 31, 2021.

As of September 30, 2022, the Company owned eight 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 values of the respective 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.

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

These properties were sold in the first quarter of 2022.

2 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 June 30, 2022 and December 31, 2021.

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

Financial Instruments not Measured at Fair Value

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

June 30, 2022 December 31, 2021

September 30, 2022

September 30, 2022 December 31, 2021

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

15 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 June 30, 2022 and December 31, 2021:

(In thousands) Balance Sheet Location June 30,

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2022 and December 31, 2021:

(In thousands) Balance Sheet Location September 30,

2022 December 31, 2021

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Cash Flow Hedges of Interest Rate Risk

The Company currently has nine interest rate swaps that are designated as cash flow hedges.

The Company currently has three interest rate swaps that are designated as cash flow hedges.

The interest rate swaps are used as part of the Company’s interest rate risk management strategy.

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 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.

During the nine months ended September 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 accumulated other comprehensive income (loss) (“AOCI”)

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 $ 0.4 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.

September 30, 2022

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, $ 0.4 million was recorded as an increase to interest expense for the nine months ended September 30, 2022, no amounts were recorded as increases to interest expense for the three months ended September 30, 2022 and $ 0.2 million and $ 0.6 million were recorded as increases to interest expense for the three and nine months ended September 30, 2021, respectively.

No amounts remained in AOCI as of September 30, 2022 related to these previously terminated swaps.

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

During the next 12 months, from October 1, 2022 through September 30, 2023, the Company estimates that $ 14.2 million will be reclassified from accumulated other comprehensive income (loss) as a decrease to interest expense.

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

September 30, 2022 December 31, 2021

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

(In thousands) (In thousands)

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

SOFR-based interest rate “pay-fixed” swaps 6 $ 150,000 — $ —

LIBOR-based interest rate “pay-fixed” swaps 3 428,500 9 578,500

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

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 June 30, Six Months Ended June 30,

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

(In thousands) 2022 2021 2022 2021

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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 $ 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.

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 June 30, 2022 and December 31, 2021:

June 30, 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 resulted in a gain of $ 1.8 million and $ 3.2 million for the three and nine months ended September 30, 2022, respectively, and a loss of $ 33,000 and $ 32,000 for the three and nine months ended September 30, 2021, respectively.

September 30, 2022 December 31, 2021

Interest Rate Derivatives Number of Instruments Notional Amount (1)

3 unchanged sentences

9 $ 355,175 9 $ 355,175

(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.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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 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 September 30, 2022 and December 31, 2021.

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

2 unchanged sentences

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

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

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

September 30, 2022 $ 42,445 $ — $ — $ 42,445 $ — $ — $ 42,445

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

As of September 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 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.

As of September 30, 2022 and December 31, 2021, the Company had 103,612,344 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 aggregate increase of 0.13567 shares for every share outstanding due to the Stock Dividends (including the October 2022 Stock Dividend), and are noted as such throughout the accompanying financial statements and notes.

See Note 1 — Organization for additional information.

On April 1, 2022, the Company published a new Estimated Per-Share NAV as of December 31, 2021, which was approved by the Board on March 28, 2022.

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

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

Share Repurchase Program

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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.

4 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 June 30, 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 September 30, 2022.

Number of Shares Repurchased Average Price per Share

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

Six months ended June 30, 2022 — —

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

Nine months ended September 30, 2022 — —

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

Distribution Reinvestment Plan

5 unchanged sentences

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.

During the nine months ended September 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.

4 unchanged sentences

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

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

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

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

In September 2020, the Board authorized the classification of 600,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with the preferred stock purchase agreement and registration rights agreement with B.

Riley Principal Capital, LLC, (the “Preferred Stock Equity Line”) and in May 2021, the Board authorized the classification of 2,530,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with the offering in May 2021 (described below).

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 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.

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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Series A Preferred Stock

10 unchanged sentences

The offering generated gross proceeds of $ 80.0 million and net proceeds of $ 77.2 million, after deducting underwriting discounts.

On October 12, 2021 the underwriters in the offering exercised their option to purchase additional shares of Series B Preferred Stock and the Company sold 430,000 shares of Series B Preferred Stock, which generated gross proceeds of $ 10.8 million and resulted in net proceeds of $ 10.4 million after deducting underwriting discounts.

On October 12, 2021, the underwriters in the offering exercised their option to purchase additional shares of Series B Preferred Stock and the Company sold an additional 430,000 shares of Series B Preferred Stock, which generated gross proceeds of $ 10.8 million and resulted in net proceeds of $ 10.4 million, after deducting underwriting discounts.

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

3 unchanged sentences

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

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.

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 COVID-19 pandemic and to comply with the Credit Facility at that time.

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 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.

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, July 2022 and October 2022.

The Board may further change the Company’s common stock distribution policy at any time, 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 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.

As of September 30, 2022 and December 31, 2021, the Special Limited Partner owned 9,952 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 June 30, 2022 and December 31, 2021, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

As of September 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

June 30, 2022

September 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 June 30, 2022.

This threshold has not been exceeded through September 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 June 30, 2022, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

As of September 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.

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

2018 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 incentive fee was incurred for the three or six months ended June 30, 2022 or 2021.

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

Property Management Fees

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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.

4 unchanged sentences

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

See the Mortgage Notes Payable table included in Note 4 - Mortgage Notes Payable, Net for additional information on the Multi-Property CMBS Loan.

Professional Fees and Other Reimbursements

1 unchanged sentence

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

During the three and 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.

During the three and nine months ended September 30, 2022, the Company incurred $ 2.4 million and $ 6.7 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

During the three and nine months ended September 30, 2021, the Company incurred $ 2.1 million and $ 6.1 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).

In September 2022, the Advisor terminated certain of its employees who provided services to the Company and for which the Company reimbursed the Advisor for salaries and benefits.

In connection with the termination, the Company recognized a compensation charge, net of adjustments for previously accrued bonuses, of $ 0.3 million in the three and nine months ended September 30, 2022.

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

6 unchanged sentences

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

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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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.

1 unchanged sentence

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, 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.

As of September 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.

2 unchanged sentences

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

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

2022 2021 2022 2021

(In thousands) Incurred Incurred Incurred

Incurred June 30,

Incurred September 30,

2022 December 31, 2021

13 unchanged sentences

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

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.

Includes $ 1.7 million and $ 4.6 million for the three and nine months ended September 30, 2022, respectively, and $ 1.6 million and $ 4.8 million for the three and nine months ended September 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

June 30, 2022

September 30, 2022

(3) Inclusive of $ 0.4 million and $ 0.3 million of leasing commissions which are included in prepaid expenses and other assets on the consolidated balance sheet as of September 30, 2022 and December 31, 2021, respectively.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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

1 unchanged sentence

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.

No such distribution was incurred during the nine months ended September 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 six months ended June 30, 2022 or 2021.

No such participation in net sales proceeds became due and payable during the nine months ended September 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.

11 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 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 June 30, 2022 and activity for the period presented:

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

Number of Shares of Common Stock Weighted Average Issue Price

1 unchanged sentence

Stock dividend 6,953 14.83

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.

Vested ( 70,397 ) 19.16

Unvested, September 30, 2022 95,983 $ 22.25

As of September 30, 2022, the Company had $ 1.8 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 1.9 years.

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.

Compensation expense related to restricted shares was approximately $ 0.3 million and $ 1.0 million for the three and nine months ended September 30, 2022, respectively, and $ 0.3 million and $ 1.0 million for the three and nine months ended September 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 six months ended June 30, 2022 or 2021.

No such shares were issued during the nine months ended September 30, 2022 or 2021.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Note 12 — Accumulated Other Comprehensive Income (Loss)

4 unchanged sentences

Amount of (gain) loss reclassified from accumulated other comprehensive gain (loss) 3,862

Balance, June 30, 2022 $ 22,095

Balance, September 30, 2022 $ 39,043

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.

2 unchanged sentences

Balance as of

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

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

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

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

During the three and nine months ended September 30, 2022, Series A Preferred Unit holders were paid $ 46,000 and $ 0.1 million, respectively.

Common OP Units

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

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.

As of September 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.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

Dur ing the nine months ended September 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 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.

The 405,998 Common OP Units outstanding as of September 30, 2022 would be redeemable for 461,081 shares of common stock, giving effect to adjustments for the impact of the Stock Dividends through October 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 June 30,

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

Property Name

(Dollar amounts in thousands)

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

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

Plaza Del Rio Medical Office Campus Portfolio (1)

1 unchanged sentence

(1) One property within the Plaza Del Rio Medical Office Campus Portfolio was pledged to secure the Multi-Property CMBS Loan.

See Note 4 - Mortgage Notes Payable for additional information.

See Note 4 - Mortgage Notes Payable, net for additional information.

Note 14 — Net Loss Per Share

The following is a summary of the basic and diluted net loss per share computation for the periods presented and has been retroactively adjusted to reflect the Stock Dividends (see Note 1 — Organization for additional details):

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

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

2022 2021 2022 2021

14 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

September 30, 2022

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

2022 2021 2022 2021

8 unchanged sentences

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

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 June 30, 2022 and 2021.

Th ere were 95,983 and 157,409 unvested restricted shares outstanding as of September 30, 2022 and 2021, respectively.

There were 405,998 Common OP Units outstanding as of September 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 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).

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

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

Note 15 — Segment Reporting

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:

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

MOBs and SHOPs.

7 unchanged sentences

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

June 30, 2022

September 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

June 30, 2022

September 30, 2022

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

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

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

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

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Net loss attributable to common stockholders $ ( 23,303 ) $ ( 41,968 )

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

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

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

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

Investments in real estate, net:

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

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

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

(In thousands) 2022 2021 2022 2021

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Note 16 — Commitments and Contingencies

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

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

The seven operating leases have durations, including assumed renewals, ranging from 20.1 years to 85.0 years, excluding an adjacent parking lot lease with a term of 2.0 years.

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.

The Company did not enter into any additional ground leases during the nine months ended September 30, 2022.

As of September 30, 2022, the Company’s balance sheet included ROU assets and liabilities of $ 7.8 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 34.5 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 Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 34.3 years and a weighted-average discount rate of 7.37 % as of September 30, 2022.

For the three and nine months ended September 30, 2022, the Company paid cash of $ 0.2 million and $ 0.7 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million and $ 0.7 million, respectively, on a straight-line basis in accordance with the current accounting guidance.

The Company paid cash of $ 0.2 million and $ 0.7 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million and $ 0.7 million, respectively, for the three and nine months ended September 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 for the next five years as of June 30, 2022:

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

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Future Base Rent Payments

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Total present value of minimum lease payments $ 8,098 $ 4,837

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

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

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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 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.

As of September 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

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Dividend Declaration

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

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.

On October 3, 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 October 17, 2022 to holders of record of the Company’s common stock at the close of business on October 13, 2022.

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

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As a result, effective December 31, 2021 we determined that we have two reportable segments, with activities related to investing in MOBs and SHOPs.

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 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.

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

Below, we have restated the prior quarterly and year-to-date periods to conform to our current segment reporting structure for comparative purposes.

As of September 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.

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

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

As of September 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.

During the quarter ended March 31, 2022, we terminated one of our independent contractors who managed 20 SHOPs and those management duties were assumed by other existing eligible independent contractors effective March 1, 2022.

Since October 2020, we have declared and paid quarterly dividends solely in shares of our common stock.

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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 and July 2022 were equal to 0.014167 shares of common stock on each share of outstanding common stock.

The Stock Dividends paid in April 2022, July 2022 and October 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 0.13567 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 six months ended June 30, 2022.

No additional shares, except for the dividends paid in the form of additional shares of common stock, were issued during the nine months ended September 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.

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Management Update on the Impacts of the COVID-19 Pandemic

The COVID-19 global pandemic has created several risks and uncertainties that have had and may continue to have an impact on our business, including our financial condition, future results of operations and our liquidity.

Negative impacts of the COVID-19 pandemic have caused some of our tenants to be unable to make rent payments to us timely, or at all.

There may be a decline in the demand for tenants to lease real estate, as well as a negative impact on rental rates.

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 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.

The COVID-19 global pandemic created several risks and uncertainties that have had and may continue to have an impact on our business, including our financial condition, future results of operations and our liquidity.

The extent to which the 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.

As of September 30, 2022, our MOB segment had an occupancy of 90.4% with a weighted-average remaining lease term of 5.0 years, (based on annualized straight-line rent as of September 30, 2022), and our SHOP segment had an occupancy of 75.8% 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 nine 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 nine months ended September 30, 2022, by $2.0 million and $6.7 million, respectively, as compared to the three and nine months ended September 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.

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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 June 30, 2022 of 1.50 to 1.00.

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).

For example, 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 June 30, 2022 of 1.50 to 1.00.

As a result, 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 the 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 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.

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.

“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

We experienced delays in rent collection in the second, third and fourth quarters of 2020 and the first quarter of 2021.

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

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.

Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic.

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

We were in direct contact with our tenants and operators when the crisis began, cultivating open dialogue and deepening the fundamental relationships that we have carefully developed through prior transactions and historic operations.

We 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.

Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we had positive results in our cash rent collections during the pandemic.

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

We collected approximately 100% of the original cash rent due for the fourth quarter of 2020 and throughout 2021 and 2022 in our MOB segment.

Cash rental payments for our 50 SHOPs are primarily paid by the residents through private payer insurance or directly, and to a lesser extent, by government reimbursement programs such as Medicaid and Medicare, therefore we have not provided the amount of quarterly cash rent collected for our SHOP segment.

therefore we have not provided the amount of quarterly cash rent collected for our SHOP segment.

“Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their original executed lease agreement at inception or as amended, prior to any rent deferral agreement.

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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 and second quarters of 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, second and third quarters of 2022.

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

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.

We offered $0.7 million and $2.7 million of rent concessions, respectively, during the three and nine months ended September 30, 2022, and $1.0 million and $1.1 million, respectively, during the three and nine months ended September 30, 2021.

Seniors Housing Properties

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.

During the nine months ended September 30, 2022, we experienced a significant increase in labor costs in our SHOP segment, largely due to, among other things, 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 in our SHOP segment.

During the three months ended September 30, 2022, our use of temporary contract labor and agencies began to decline relative to the second quarter, however, there is no assurance that this trend will continue.

In our total SHOP segment, we recorded over $2.0 million and $6.7 million in temporary contract labor and agency-related costs for care providers for the three and nine months ended September 30, 2022, respectively, as compared to almost no temporary contract labor and agency-related costs for care providers for the three and nine months ended September 30, 2021.

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

As a result of the decreased use of temporary contract labor and agencies, as well as the continuing impact of the national labor shortage, the amounts we pay for salaries, wages, overtime and bonuses to meet our labor needs in our SHOP segment continued to increase during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

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.

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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 76.3% as of June 30, 2022.

During the COVID pandemic, occupancy in our SHOP portfolio trended lower from 85.1% as of December 31, 2019 to a low of 72.0% as of March 31, 2021, and has subsequently begun to stabilize.

As of September 30, 2022, occupancy in this segment reached 75.8%.

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:

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June 30, 2022 50 4,374 76.3%

September 30, 2022 50 4,374 75.8%

(1) Exclusive of two land parcels.

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 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.

The declines in revenue we experienced during the three and nine months ended September 30, 2022 as compared to the three and nine months ended September 30, 2021, were primarily attributable to the fact that we sold SHOP properties 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, although operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies as early as March 2020, during the nine months ended September 30, 2022, these trends became more prominent as we relied more on the use of contract labor and agencies and had to increase the amounts we pay for salaries, wages, overtime 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.

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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 six months ended June 30, 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.

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.

Furthermore, as infections decline and more vaccinations and boosters are administered during the remainder of 2022, our occupancy may further increase as it did during the nine months ended September 30, 2022.

However, there can be no assurance as to when or if we will be able to approach pre-pandemic levels of occupancy.

The pandemic raises the risk of an elevated level of resident exposure to illness and restrictions on move-ins at our SHOPs, and increases the general level of frailty for our incoming residents, which has and could also continue to adversely impact resident length of stay, occupancy and revenues, as well as increase costs.

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 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 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.

During the three and nine months ended September 30, 2022, we received $4.3 million and $4.5 million in CARES Act funds.

During the three months ended September 30, 2021, we did not receive any such funds, and during the nine months ended September 30, 2021, we received $5.1 million in CARES Act funds.

We received $3.6 million in CARES Act funds during the year ended December 31, 2020.

For accounting purposes, we treat the funds as a grant contribution from the government and the full amounts were recognized as a reduction of property operating and maintenance expenses in our consolidated statements of operations during the three and nine months ended September 30, 2022

We do not anticipate that any further funds under the CARES Act will be received, and there can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs.

Significant Accounting Estimates and Critical Accounting Policies

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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 June 30, 2022:

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

Portfolio Number

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_______________

(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).

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

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

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of September 30, 2022) net of gross market lease intangible liabilities ($22.4 million total as of September 30, 2022).

Impairment charges are already reflected within gross asset value.

(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.

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

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

N/A Not applicable.

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Information based on Same Store, Acquisitions and Dispositions (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered.

As of 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.

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

There were 181 properties owned for the entire year ended December 31, 2021 and the nine months ended September 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 June 30, 2022:

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

MOB SHOP Total

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Number of properties, December 31, 2021 146 56 202

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

Acquisition activity during the nine months ended September 30, 2022 3 — 3

Disposition activity during the nine months ended September 30, 2022 — (4) (4)

Number of properties, September 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 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)

Risk Factors Sections below (as well as Part I, Item 1A “Risk Factors” in our Annual Report on From 10-K for the year ended December 31, 2021) for additional information on the risks and uncertainties associated with inflation, rising interest rates and labor shortages and costs.

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

Net loss attributable to common stockholders was $23.3 million and $42.0 million for the three months ended September 30, 2022, and 2021, respectively.

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

Three Months Ended September 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $

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Segment Results — Medical Office Buildings

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

Same Store (1)

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Segment Total (4)

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)

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

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

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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.

During the three months ended September 30, 2022, revenue from tenants increased by $2.4 million in our MOB segment as compared to the three months ended September 30, 2021, which was primarily driven by an increase in revenue from tenants of $2.6 million due to our Acquisitions and an increase in revenue from tenants of $0.7 million due to our Same Store properties, partially offset by a decrease in revenue from tenants of $1.0 million due to our Dispositions.

The increase in our Same Store properties revenue from tenants was primarily driven by an increase of operating expense reimbursement revenue of $0.7 million.

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 June 30, 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 September 30, 2022 and 2021:

Same Store (1)

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Segment Total (4)

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 $

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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.

During the three months ended September 30, 2022, revenue from tenants decreased by $0.9 million in our SHOP segment as compared to the three months ended September 30, 2021, which was primarily driven by a decrease in revenue from tenants of $3.6 million due to our Disposition properties, partially offset by an increase in revenue from tenants of $2.6 million due to our Same Store properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

Our revenue from tenants also improved in the three months ended September 30, 2022 due to higher occupancy as compared to lower occupancy in the three months ended September 30, 2021.

Additionally, we offered less rent concessions during the three months ended September 30, 2022, which amounted to $0.7 million as compared to $1.0 million of rent concessions offered during the three months ended September 30, 2021.

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 revenue was $0.2 million during the quarter ended September 30, 2021 and was not significant during the quarter ended September 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 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.

Additionally, during the three months ended September 30, 2022, we concluded that $1.3 million of legacy receivables from our Disposition properties were not recoverable, and accordingly we recorded $1.3 million of bad debt expense which is reflected as a reduction of revenue.

During the three months ended September 30, 2022, property operating and maintenance expenses decreased $0.6 million in our SHOP segment as compared to the quarter ended September 30, 2021, primarily due to a decrease in property operating and maintenance expenses of $2.3 million from our Disposition properties, partially offset by an increase in property operating and maintenance expenses of $1.7 million in our Same Store properties.

The increase to our Same Store property operating and maintenance expenses was primarily attributable to higher contract labor and agency costs of $2.0 million, and amounts we pay for overtime wages and bonuses, as well as by overall inflation on wages and supplies in the three months ended September 30, 2022.

For additional information on the risks and uncertainties associated with increases in inflation and labor costs, see the 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).

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

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

Of the $4.3 million of CARES Act funds received by us in the three months ended September 30, 2022, $3.7 million was recognized as a reduction to our Same Store properties operating and maintenance expenses in the table above and $0.6 million was attributable to our Disposition properties.

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

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

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Impairment Charges

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.

We recorded impairment charges of $8.9 million during the three months ended September 30, 2022, which related to six held for use SHOP properties of eight total properties that we are actively marketing for sale.

These impairment charges were recorded to reduce the carrying value of these six properties to their fair values, respectively, as determined by estimated discounted cash flows over our intended holding period.

The incremental impairment charges recorded in the three months ended September 30, 2022 resulted from a deterioration of market conditions and rising interest rates.

We recorded impairment charges of $26.6 million during the three months ended September 30, 2021, which related to four disposed triple-net leased properties in Texas (the “LaSalle Properties”).

These impairment charges were recorded to reduce the carrying value of the LaSalle Properties to their fair values, respectively, as determined by estimated discounted cash flows over our intended holding period.

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 $6.4 million and $5.9 million for the three months ended June 30, 2022 and 2021, respectively.

Operating fees to related parties were $6.3 million and $6.0 million for the three months ended September 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 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.

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 $5.2 million for the three months ended September 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 October of 2021 which increased the variable asset management fee in the three months ended September 30, 2022 relative to the three months ended September 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.

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

Property management fees increased to $1.1 million from $1.0 million for the three months ended September 30, 2022 and 2021, respectively.

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.

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Acquisition and Transaction Related Expenses

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.

Acquisition and transaction related expenses were approximately $0.2 million for the three months ended September 30, 2022, compared to approximately $2.2 million for the three months ended September 30, 2021.

The decrease was due to certain transactions that occurred in the three months ended September 30, 2021 which did not occur in the three months ended September 30, 2022.

The transaction costs recorded in the three months ended September 30, 2021 consisted of:

i) the write-off of offering costs relating to the Preferred Stock Equity Line of $1.2 million, ii) $0.6 million of litigation costs related to our Michigan dispositions which occurred in the first quarter of 2021 and iii) $0.2 million of settlement charges related to our Jupiter, Florida disposition which occurred in the second quarter of 2021.

The $0.2 million of transaction costs recorded in the three months ended September 30, 2022 related to dead deal costs.

General and Administrative 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.

General and administrative expenses decreased by $0.3 million to $4.5 million for the three months ended September 30, 2022 compared to $4.7 million for the three months ended September 30, 2021, which includes $2.4 million and $2.1 million for the three months ended September 30, 2022 and September 30, 2021, respectively, incurred in expense reimbursements.

The decrease in general and administrative expenses was primarily driven by $0.3 million of decreased legal fees and $0.3 million of decreased miscellaneous costs.

Depreciation and Amortization Expenses

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.

Depreciation and amortization expense increased $1.1 million to $20.9 million for the three months ended September 30, 2022 from $19.8 million for the three months ended September 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.

The increase was also partially attributable to $0.5 million of accelerated depreciation we recorded in the three months ended September 30, 2022 on one MOB property in Florida which incurred damages as a result of Hurricane Ian.

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.

We did not dispose of any properties in the three months ended September 30, 2022 and 2021, however, we recorded a gain on sale of $0.2 million in the three months ended September 30, 2022 related to the settlement of a lien on formerly disposed properties.

Interest Expense

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.

Interest expense increased by $1.5 million to $13.3 million for the three months ended September 30, 2022 from $11.8 million for the three months ended September 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 September 30, 2022 as compared to the three months ended September 30, 2021.

As of September 30, 2022, our outstanding debt obligations were $1.1 billion at a weighted average interest rate of 4.29% per year.

As of September 30, 2021, we had total borrowings of $1.2 billion, at a weighted average interest rate of 3.56% 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.

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Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.

Interest and other income was approximately $2,000 and $4,000 for the three months ended June 30, 2022 and 2021, respectively.

Interest and other income was approximately $10,000 and $4,000 for the three months ended September 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.

The gain in the three months ended September 30, 2022 and the loss in the three months ended September 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 September 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 $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 June 30, 2022.

Income taxes generally relate to our SHOPs, which are leased to our TRS.

We recorded an income tax expense of $77,000 and $55,000 for the three months ended September 30, 2022 and 2021, respectively.

Because of our TRS’s recent operating history of losses and the 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 September 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 $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.

Net loss attributable to non-controlling interests was approximately $22,000 for the three months ended September 30, 2022 and net loss attributable to non-controlling interests was approximately $0.3 million for the three months ended September 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

Comparison of the Nine Months Ended September 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)

Net loss attributable to common stockholders was $71.2 million and $70.2 million for the nine months ended September 30, 2022 and 2021, respectively.

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

Nine Months Ended September 30, Increase (Decrease)

(Dollars in thousands) 2022 2021 $

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Net (income) loss attributable to non-controlling interests 100 229 (129)

Preferred stock dividends (6,899) (2,568) (4,331)

Allocation for preferred stock (10,349) (4,402) (5,947)

Net loss attributable to common stockholders $ (71,159) $ (70,183) $ (976)

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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.

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.

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Segment Results — Medical Office Buildings

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

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

Same Store (1)

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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)

Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease)

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

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During the nine months ended September 30, 2022, revenue from tenants increased by $7.3 million in our MOB segment as compared to the nine months ended September 30, 2021, primarily as a result of increased revenue from tenants of $10.2 million generated from our Acquisitions and increased revenue from tenants of $0.2 million from our Same Store properties, partially offset by a decrease in revenue from tenants of $3.1 million from our Dispositions.

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:

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

Same Store (1)

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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 $

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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.

During the nine months ended September 30, 2022, revenue from tenants decreased by $2.9 million in our SHOP segment as compared to the nine months ended September 30, 2021, which was primarily driven by a decrease in revenue from tenants of $9.5 million due to our Disposition properties, partially offset by an increase in revenue from tenants of $6.5 million due to our Same Store properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates in the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

Our revenue from tenants also improved due to higher and recovering occupancy in the nine months ended September 30, 2022 as compared to lower and declining occupancy in the nine months ended September 30, 2021.

These increases were partially offset by an increase in rent concessions offered during the nine months ended September 30, 2022 of $2.7 million, as compared to $1.1 million in the nine months ended September 30, 2021.

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 revenue was $1.1 million during the nine months ended September 30, 2021 and was not significant during the nine months ended September 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.

Additionally, during the nine months ended September 30, 2022, we concluded that $1.3 million of legacy receivables from our Disposition properties were not recoverable, and accordingly we recorded $1.3 million of bad debt expense which is reflected as a reduction of revenue.

During the nine months ended September 30, 2022, property operating and maintenance expenses increased $4.3 million in our SHOP segment as compared to the nine months ended September 30, 2021, primarily due to an increase in property operating and maintenance expenses of $12.5 million from our Same Store properties, partially offset by a decrease in property operating and maintenance expenses of $8.2 million from our Disposition properties.

Our Same Store properties operating and maintenance expenses increased significantly and were primarily attributable to contract labor and agency costs of $6.7 million, and amounts we pay for overtime wages and bonuses, as well as by overall inflation on wages and supplies in the nine months ended September 30, 2022.

For additional information on the risks and uncertainties associated with increases in inflation and labor costs, see the 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).

The total increase in Same Store properties operating and maintenance expenses was also impacted by the receipt of $4.5 million of funds through the CARES Act in the nine months ended September 30, 2022, as compared to $5.1 million during the nine months ended September 30, 2021, which offset costs incurred from the COVID-19 pandemic.

Of the $4.5 million of CARES Act funds received by us in the nine months ended September 30, 2022, $3.9 million was recognized as a reduction to our Same Store property operating and maintenance expenses in the table above, with the remainder attributable to our Disposition properties.

Of the $5.1 million of CARES Act funds received in the nine months ended September 30, 2021, $4.5 million was attributable to our Same Store property operating and maintenance expenses with the remainder attributable to our Disposition properties.

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

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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.

We recorded impairment charges of $25.8 million during the nine months ended September 30, 2022, of which $10.6 million related to seven skilled nursing facilities in our MOB segment located in Illinois , and $15.1 million related to six held for use SHOP properties of eight total properties that we are actively marketing for sale.

The incremental impairment charge recorded in the three months ended September 30, 2022 on the held for use SHOP properties resulted from a deterioration of market conditions and rising interest rates.

All of these impairment charges were recorded to reduce the carrying value of the properties to their fair values, respectively, as determined by estimated discounted cash flows over our intended holding periods.

We recorded impairment charges of $33.6 million during the nine months ended September 30, 2021, of which (i) $26.6 million related to our disposed LaSalle Properties, (ii) $6.1 million related to our MOB property located in Sun City, Arizona (the “Sun City MOB”) and (iii) $0.9 million related to our disposed Wellington, Florida skilled nursing facility.

The LaSalle Properties and the Sun City MOB were impaired to reduce their carrying values to their estimated fair values, respectively, as determined by their estimated discounted cash flows over our intended holding periods.

The Wellington, Florida skilled nursing facility was impaired to adjust the carrying value to its fair value as determined by its amended purchase and sale agreement.

See Note 3 — Real Estate Investments to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges for the nine months ended September 30, 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.

Operating fees to related parties increased $1.2 million to $19.0 million for the nine months ended September 30, 2022 from $17.9 million for the nine months ended September 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 September 30, 2022 and 2021 for additional information).

Asset management fees were $16.4 million and $15.3 million for the nine months ended September 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 nine months ended September 30, 2022 relative to the nine months ended September 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.

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

Property management fees increased $0.2 million to $3.1 million for the nine months ended September 30, 2022 from $2.8 million for the nine months ended September 30, 2021.

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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.

Acquisition and transaction related expenses were $1.2 million for the nine months ended September 30, 2022 and $2.5 million for the nine months ended September 30, 2021.

This decrease was due to certain transactions that occurred in the nine months ended September 30, 2021 which did not occur in the nine months ended September 30, 2022.

The transaction costs recorded in the nine months ended September 30, 2021 consisted of:

These decreases were partially offset by fees from dead deal costs of $0.5 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.

General and administrative expenses increased $0.1 million to $13.4 million for the nine months ended September 30, 2022 compared to $13.3 million for the nine months ended September 30, 2021, which includes $6.7 million and $7.3 million for the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2022, partially offset by decreased legal costs of $0.6 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.

Depreciation and amortization expense increased $2.1 million to $61.5 million for the nine months ended September 30, 2022 from $59.4 million for the nine months ended September 30, 2021.

The increase was due to our acquisitions of approximately $4.5 million, partially offset by a decrease in Same Store depreciation and amortization of $0.5 million primarily due to several intangible assets becoming fully amortized and a decrease due to dispositions of $1.7 million.

The increase was also partially attributable to $0.5 million of accelerated depreciation we recorded in the nine months ended September 30, 2022 on one MOB property in Florida which incurred damages as a result of Hurricane Ian.

Gain (Loss) 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, as a result, we recorded a loss on sale of $0.3 million for the six months ended June 30, 2022.

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 nine months ended September 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.

We also recorded a gain on sale of $0.2 million in the nine months ended September 30, 2022 related to the settlement of a lien on formerly disposed properties.

During the nine months ended September 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.

As a result of these dispositions, we recorded an aggregate gain on sale of $2.3 million during the nine months ended September 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.

Interest expense increased $1.1 million to $37.1 million for the nine months ended September 30, 2022 from $36.0 million for the nine months ended September 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 nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

As of September 30, 2022, we had total borrowings of $1.1 billion, at a weighted average interest rate of 4.29% per year.

As of September 30, 2021, we had total borrowings of $1.2 billion, at a weighted average interest rate of 3.56% 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.

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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.

Interest and other income was approximately $24,000 for the nine months ended September 30, 2022 and approximately $60,000 for the nine months ended September 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.

Gain (loss) on non-designated derivative instruments for the nine months ended September 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 nine months ended September 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.

Income taxes generally relate to our SHOPs, which are leased to our TRS.

We recorded an income tax expense of approximately $0.2 million for the nine months ended September 30, 2022 and 2021.

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 September 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.

Net loss attributable to non-controlling interests was approximately $0.1 million for the nine months ended September 30, 2022 and net loss attributable to non-controlling interests was approximately $0.2 million for the nine months ended September 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 six months ended June 30, 2022, net cash provided by operating activities was $13.7 million.

During the nine months ended September 30, 2022, net cash provided by operating activities was $21.1 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.

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These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $4.9 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 $2.2 million and by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $1.2 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.

During the nine months ended September 30, 2021, net cash provided by operating activities was $26.0 million.

Cash inflows include non-cash items of $30.2 million (net loss of $66.0 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 $0.2 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $2.8 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees, a decrease of deferred rent of $0.5 million and by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.7 million.

Cash Flows from Investing Activities

Net cash used in investing activities during the six months ended June 30, 2022 was $15.1 million.

Net cash used in investing activities during the nine months ended September 30, 2022 was $22.7 million.

The cash used in investing activities included $17.8 million for the acquisition of three properties and $16.7 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.

Net cash used in investing activities during the nine months ended September 30, 2021 was $63.2 million.

The cash used in investing activities included $146.1 million for the acquisition of one property and $11.5 million in capital expenditures, partially offset by $94.5 million of proceeds from sales of real estate investments.

Cash Flows from Financing Activities

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.

Net cash used in financing activities of $19.8 million during the nine months ended September 30, 2022 was comprised of cash outflows of payments of deferred financing costs of $0.9 million, dividends paid to holders of Series A Preferred Stock of $5.5 million, dividends to paid holders of Series B Preferred Stock of $4.8 million, payments for derivative instruments of $39,000 and principal payments on mortgages of $8.3 million.

Net cash provided by financing activities of $2.7 million during the nine months ended September 30, 2021 related to cash inflows from proceeds of the sale of preferred stock of $56.9 million, partially offset by cash outflows of payments of deferred financing costs of $0.2 million, dividends paid to preferred stockholders of $3.3 million, payments for derivative instruments of $0.1 million, net payments on credit facilities of $49.1 million and principal payments on mortgages of $0.9 million.

Liquidity and Capital Resources

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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.

Our future liquidity requirements, and available liquidity, however, depend on many factors, such as the 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 ultimately 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.

For more information about the risks and uncertainties associated with inflation, the ongoing war in Ukraine and related sanctions, and labor shortages and labor costs, please see the sections Inflation and Part II – Item 1A.

Risk Factors below.

Risk Factors sections below.

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 June 30, 2022 we had $42.7 million of cash and cash equivalents, and our ability to use this cash on hand is restricted.

As of September 30, 2022 we had $40.1 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 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.

As of September 30, 2022, $222.8 million was available for future borrowings under our Revolving Credit Facility, of which $92.0 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 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 satisfied the conditions during the quarter ended September 30, 2022 in order to elect the quarter ending December 31, 2022 as the Commencement Quarter, but did not make the election to do so.

There can be no assurance as to if, or when, we will, or 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.

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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 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%.

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 September 30, 2022, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 41.0%.

Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($40.1 million).

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Impairment charges are already reflected within gross asset value.

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 September 30, 2022, we had total gross borrowings of $1.1 billion, at a weighted average interest rate of 4.29%.

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 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.

As of September 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.

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These actions may require us to add some or all of our unencumbered properties to the borrowing base under our Credit Facility.

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

Unencumbered real estate investments, at cost as of September 30, 2022 was $0.1 billion.

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.

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Mortgage Notes Payable

As of June 30, 2022, we had $585.7 million in mortgage notes payable outstanding.

As of September 30, 2022, we had $585.5 million in mortgage notes payable outstanding.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2022 and 2023 are $0.3 million and $1.1 million, respectively.

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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 over $1.0 billion.

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

As of September 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 $222.8 million based on the current borrowing base, of which $92.0 million was available for general corporate purposes and acquisitions, with the remainder available to repay other existing debt obligations.

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The applicable margin used to determine the interest rate under both the Term Loan and Revolving Credit Facility components of the Credit Facility varies based on our leverage.

As of June 30, 2022, the Term Loan had an effective interest rate per annum equal to 4.06%.

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.

As of September 30, 2022, the Term Loan had an effective interest rate per annum equal to 5.12%.

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 to the Credit Facility on August 11, 2022.

As described above, pursuant to the Fourth Amendment, the Fixed Charge Coverage Ratio we 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, we must satisfy a minimum Fixed Charge Coverage Ratio of 1.50 to 1.00.

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

However, we were in compliance with the new covenants under the Credit Facility for the four fiscal quarter period ended September 30, 2022.

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.

See Note 5 — Credit Facilities for additional information on the Fourth Amendment.

Fannie Mae Master Credit Facilities

As of June 30, 2022, $354.0 million was outstanding under the Fannie Mae Master Credit Facilities.

As of September 30, 2022, $353.1 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.

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Capital Expenditures

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 — 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.

During the nine months ended September 30, 2022, our capital expenditures were $16.7 million, of which $6.0 million related to our MOB segment and $10.7 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 — Nine Months Ended September 30, 2022

During the nine months ended September 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.

Acquisitions — Subsequent to September 30, 2022

We have not acquired any properties subsequent to September 30, 2022.

We have entered into three non-binding letters of intent to acquire six properties for an aggregate contract purchase price of $41.7 million.

There can be no assurance we will complete these acquisitions on their contemplated terms, or at all.

We anticipate primarily using cash on hand and, if necessary, proceeds from borrowings under our Revolving Credit Facility to fund the consideration required to complete this acquisitions.

Dispositions — Nine Months Ended September 30, 2022

During the nine months ended September 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 June 30, 2022

Subsequent to June 30, 2022, we did not dispose of any properties.

Dispositions — Subsequent to September 30, 2022

Subsequent to September 30, 2022, we did not dispose of any properties.

Share Repurchase Program

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The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO.

Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect our proportionate share of FFO attributable to our stockholders.

Our FFO calculation complies with NAREIT’s definition.

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The Practice Guideline defines MFFO as FFO further adjusted for acquisition fees and expenses and other items.

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.

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.

We also exclude other non-operating items in calculating MFFO, such as transaction-related fees and expenses and capitalized interest.

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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.

As of September 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.

The table below reflects the items deducted from or added to net loss attributable to stockholders in our calculation of FFO and MFFO for the periods indicated.

The table below reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of FFO and MFFO for the periods indicated.

In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests.

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

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

(In thousands) 2022 2021 2022 2021

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Straight-line rent (rent deferral agreements) (2)

Amortization of mortgage premiums and discounts, net

— (46) — (280)

Amortization of mortgage premiums and discounts, net

(Gain) loss on non-designated derivatives (1,826) 33 (3,212) 32

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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.

We use NOI to assess and compare property level performance and to make decisions concerning the operation of the properties.

We use NOI to assess and compare property level

performance and to make decisions concerning the operation of the properties.

Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).

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NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay distributions.

The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of Same Store, Acquisitions and Dispositions NOI for the three months ended June 30, 2022:

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

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Interest and other income (1) — — — — — (9) (10)

Gain on sale of real estate investments — — — — — (194) — (194)

Gain on non-designated derivative instruments — — — — — — (1,826) (1,826)

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NOI $ 21,148 $ 9,289 $ 2,660 $ — $ — $ (835) $ — $ 32,262

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 June 30, 2021:

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

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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 — — — — — — 33 33

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NOI $ 21,181 $ 8,398 $ 292 $ — $ 537 $ 380 $ — $ 30,788

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

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Interest and other income (4) (1) — — (9) — (10) (24)

Losses on sale of real estate investments — — — — — 303 — 303

Loss on sale of real estate investments — — — — — 109 — 109

Gain on non-designated derivative instruments — — — — — — (3,212) (3,212)

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NOI $ 61,877 $ 24,320 $ 9,717 $ — $ 15 $ (1,873) $ — $ 94,056

(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total

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On February 20, 2018, the Board authorized the rate at which we pay monthly distributions to stockholders, effective as of March 1, 2018, which is $0.85 per annum per share of common stock.

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.

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 COVID-19 pandemic and to comply with the Credit Facility at the time.

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 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 make any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions.

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, July 2022 and October 2022.

The Board may further change our common stock distribution policy at any time, 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 make any other cash distributions (including repurchases of shares of our 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.

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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

March 31, 2022 June 30, 2022 September 30, 2022 September 30, 2022

(In thousands) Percentage of Distributions Percentage of Distributions Percentage of Distributions Percentage of Distributions

Distributions:

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Net loss (in accordance with GAAP) $ (23,400) $ (17,635) $ (19,875) $ (60,910)

(1) Assumes the use of available cash flow from operations before any other sources.

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.

(1) Assumes the use of available cash flows from operations before any other sources.

For the nine months ended September 30, 2022, cash flows provided by operations were $21.1 million.

We had not historically generated sufficient cash flows from operations to fund the payment of dividends and other distributions at the current rate prior to switching from paying cash dividends to stock dividends on our common stock.

As shown in the table above, we funded dividends to holders of Series A Preferred Stock and Series B Preferred Stock with cash flows provided by operations.

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The payment terms of our Fannie Mae Master Credit Facilities required interest only payments through November 2021 and principal and interest payments thereafter.

Our loan agreements require us to comply with specific financial and reporting covenants.

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.

Our loan agreements

require us to comply with specific financial and reporting covenants.

Pursuant to the terms of the Fourth Amendment entered into on August 11, 2022, 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;

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

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.

See Note 5 — Credit Facilities for additional information on the Fourth Amendment.

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, to the extent there are any such amounts outstanding.

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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.

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%.

As of September 30, 2022, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 8.2%.

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.

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

What changed 10-Q

Item 1. Financial Statements