What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-12 compared with 2022-11-10 · 695 added, 1054 removed, 1298 unchanged (57% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

2023 December 31, 2022

12 unchanged sentences

Operating lease right-of-use assets 7,789 7,814

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

Prepaid expenses and other assets (including $ 12 due to related parties as of March 31, 2023)

41,200 34,554

5 unchanged sentences

Market lease intangible liabilities, net 9,060 9,407

Derivative liabilities, at fair value — 13,903

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

Accounts payable and accrued expenses (including $ 123 and $ 47 due to related parties as of March 31, 2023 and December 31, 2022, respectively)

40,574 45,247

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 September 30, 2022 and December 31, 2021

3,977,144 issued and outstanding as of March 31, 2023 and December 31, 2022

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 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

3,630,000 issued and outstanding as of March 31, 2023 and December 31, 2022

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 106,668,245 shares and 105,080,531 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,439,662 2,417,059

Accumulated other comprehensive income (loss) 39,043 ( 14,341 )

Accumulated other comprehensive income 29,479 36,910

Distributions in excess of accumulated earnings ( 1,502,299 ) ( 1,462,457 )

6 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

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

2022 2021 2022 2021

Three Months Ended March 31,

Revenue from tenants $ 87,355 $ 83,650

8 unchanged sentences

85,530 95,950

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

Operating income (loss) before gain (loss) on sale of real estate investments 1,825 ( 12,300 )

Gain (loss) on sale of real estate investments 115 ( 303 )

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

Operating income (loss) 1,940 ( 12,603 )

Other income (expense):

1 unchanged sentence

Interest and other income

Gains (losses) on non-designated derivatives 1,826 ( 33 ) 3,212 ( 32 )

(Loss) gain on non-designated derivatives ( 182 ) 994

Total other expenses

6 unchanged sentences

Net loss attributable to common stockholders ( 17,509 ) ( 26,801 )

Other comprehensive loss:

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

Other comprehensive (loss) income:

Unrealized (loss) gain on designated derivatives ( 7,431 ) 26,266

Comprehensive loss attributable to common stockholders $ ( 24,940 ) $ ( 535 )

9 unchanged sentences

(In thousands, except share data)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

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

14 unchanged sentences

Net loss — — — — — — — — ( 14,059 ) ( 14,059 ) ( 9 ) ( 14,068 )

Unrealized gain on designated derivatives — — — — — — — 53,384 — 53,384 — 53,384

Unrealized loss on designated derivatives — — — — — — — ( 7,431 ) — ( 7,431 ) — ( 7,431 )

Rebalancing of ownership percentage — — — — — — 55 — — 55 ( 55 ) —

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

Balance, March 31, 2023 3,977,144 $ 40 3,630,000 $ 36 106,668,245 $ 1,066 $ 2,439,662 $ 29,479 $ ( 1,502,299 ) $ 967,984 $ 6,441 $ 974,425

Three Months Ended March 31, 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, 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, December 31, 2021 3,977,144 $ 40 3,630,000 $ 36 99,281,754 $ 993 $ 2,329,839 $ ( 14,341 ) $ ( 1,282,871 ) $ 1,033,696 $ 6,704 $ 1,040,400

Issuance of Preferred Stock, net — — — — — — ( 54 ) — — ( 54 ) — ( 54 )

10 unchanged sentences

Rebalancing of ownership percentage — — — — — — ( 305 ) — — ( 305 ) 305 —

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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Nine Months Ended September 30, 2021

Series A Preferred Stock Common Stock Accumulated Other Comprehensive Loss

Shares Par Value Number of

Shares Par Value Additional

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

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

Issuance of Preferred Stock, net 2,367,144 24 — — 56,265 — — 56,289 — 56,289

Share-based compensation, net — — — — 996 — — 996 — 996

Distributions declared in common stock, $ 0.63 per share

— — 4,071,567 40 60,581 — ( 60,621 ) — — —

Distributions declared on preferred stock, $ 1.38 per share

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

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, 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

Shares Par Value Number of

Shares Par Value Additional

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

Balance, 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

Share-based compensation, net

— — — — 334 — — 334 — 334

Distributions declared in common stock, $ 0.21 per share

— — 1,413,233 14 20,479 — ( 20,493 ) — — —

Distributions declared on preferred stock, $ 0.46 per share

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

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, 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

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

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

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

3 unchanged sentences

Amortization of deferred financing costs 1,382 1,181

Amortization of terminated swap 423 634

(Accretion) amortization of terminated swap ( 257 ) 211

Amortization of mortgage premiums and discounts, net 23 107

2 unchanged sentences

Equity-based compensation 230 332

Losses (gains) on sale of real estate investments, net 109 ( 2,284 )

Gains on non-designated derivative instruments ( 3,212 ) 32

(Gain) loss on sale of real estate investments, net ( 115 ) 303

Cash received from non-designated derivative instruments 926 —

Loss (gain) on non-designated derivative instruments 182 ( 994 )

Impairment charges — 10,644

4 unchanged sentences

Deferred rent 524 ( 1,768 )

Net cash provided by operating activities 21,095 26,004

Net cash (used in) provided by operating activities 4,989 5,882

Cash flows from investing activities:

Property acquisitions and development costs ( 17,799 ) ( 146,146 )

Capital expenditures and other assets acquired ( 16,707 ) ( 11,501 )

Property acquisitions ( 25,443 ) —

Capital expenditures ( 3,634 ) ( 3,311 )

Proceeds from sales of real estate investments — 11,759

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

Net cash (used in) provided by investing activities ( 29,077 ) 8,448

Cash flows from financing activities:

2 unchanged sentences

Payments on mortgage notes payable ( 283 ) ( 3,374 )

Payments for derivative instruments ( 39 ) ( 85 )

Proceeds from (payments for) derivative instruments 1,946 ( 39 )

Payments of deferred financing costs ( 44 ) ( 40 )

Proceeds from sale of preferred stock, net — 56,901

Payments of deposits for financings ( 7,783 ) —

Preferred stock issuance costs ( 2 ) ( 6 )

2 unchanged sentences

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

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

Net cash provided by (used in) financing activities 8,898 ( 6,865 )

Net change in cash, cash equivalents and restricted cash ( 15,190 ) 7,465

5 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash, cash equivalents, end of period $ 35,794 $ 66,424

6 unchanged sentences

Common stock issued through stock dividends $ 22,335 $ 21,104

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

September 30, 2022

March 31, 2023

Note 1 — Organization

4 unchanged sentences

The Company acquires, owns and manages a diversified portfolio of healthcare-related real estate, focused on medical office and other healthcare-related buildings (“MOBs”) and senior housing operating properties (“SHOPs”).

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

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

As of March 31, 2023, the Company owned 207 properties located in 34 states and comprised of 9.2 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 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.

As of March 31, 2023, 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 September 30, 2022, the Company had four eligible independent contractors operating 50 SHOPs (not including two land parcels).

As of March 31, 2023, the Company had four eligible independent contractors operating 50 SHOPs.

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

Since October 2020, the Company has declared and paid quarterly dividends solely in shares of its common stock during the periods described in more detail below (the “Stock Dividends”).

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

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

The Company has declared quarterly dividends entirely in shares of its common stock since October 2020.

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 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.

The Company’s previous Estimated Per-Share NAV was as of December 31, 2020.

The Estimated Per-Share NAV published on April 1, 2022 has not been adjusted since publication and will not be adjusted until the board of directors (the “Board”) determines a new Estimated Per-Share NAV.

Since October 2020, the Company has issued an aggregate of approximately 14.0 million shares as stock dividends.

No other additional shares of common stock have been issued since October 2020.

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 cumulative increase in shares outstanding resulting from the stock dividends since October 2020 and through April 2023, and are noted as such throughout the accompanying financial statements and notes.

Any future issuances of stock dividends will also result in retroactive adjustments.

Please see Note 8 — Stockholder’s Equity for additional information on the stock dividends.

On March 31, 2023, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2022.

The Estimated Per-Share NAV published on March 31, 2023 has not been adjusted since publication and will not be adjusted until the board of directors (the “Board”) determines a new Estimated Per-Share NAV.

Issuing dividends in additional shares of common stock will, all things equal, cause the value of each share to decline because the number of shares outstanding increases when shares of common stock are issued in respect of a Stock Dividend;

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

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 nine months ended September 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 months ended March 31, 2023 and 2022 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, 2022, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2023.

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 nine months ended September 30, 2022.

Principles of Consolidation and Basis of Presentation

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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 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 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.

The pandemic, and its aftermath, 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 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 impacted, and may 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’s ability to lease space and negotiate and maintain favorable rents and the results of operations at its SHOPs could also continue to be negatively impacted by a prolonged recession in the U.S.

4 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.

AND SUBSIDIARIES

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.

1 unchanged sentence

Risk Factors below.

Starting in March 2020, the COVID-19 pandemic and measures to prevent its spread began to affect the Company in a number of ways that vary by operating segment:

Beginning in March 2020, the COVID-19 pandemic and measures to prevent its spread began to affect the Company in a number of ways that vary by operating segment:

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

COVID-19 Impact — MOB Segment

6 unchanged sentences

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

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

For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief:

(i) as if the changes were originally contemplated in the lease contract or (ii) as if the deferred payments are variable lease payments contained in the lease contract.

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

4 unchanged sentences

COVID-19 Impact — SHOP Segment

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

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.

In the Company’s SHOP segment, occupancy trended downward from March 2020 until June 2021 and then stabilized until June 2022.

Since then, occupancy has trended downward.

The Company has also experienced lower inquiry volumes and reduced in-person tours since the onset of the COVID-19 pandemic compared to prior periods.

In addition, beginning 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 (“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 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 by the Company under the CARES Act.

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

These trends became more prominent in the year ended December 31, 2022 as inflation increased and the Company relied more on the use of temporary contract labor and agencies.

In addition, the amount it pays for overtime wages and bonuses has increased, in response to a shortage of workers largely due to, among other things, 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.

The persistence of high inflation, labor shortages and supply chain disruptions may cause prolonged 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 operations in future periods.

The adverse financial impacts 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 $ 4.5 million, $ 5.1 million and $ 3.6 million under the CARES Act during the years ended December 31, 2022, 2021, and 2020, respectively.

The Company did no t receive any such funds during the three months ended March 31, 2022.

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

The full amounts received were recognized as reductions of property operating and maintenance expenses in the Company’s consolidated statements of operations and comprehensive loss for the periods in which the funds were received, to partially offset the incurred COVID-19 expenses.

The Company does 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.

HEALTHCARE TRUST, INC.

1 unchanged sentence

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.

March 31, 2023

Revenue Recognition

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.

As of March 31, 2023, these leases had a weighted average remaining lease term of 4.9 years.

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

7 unchanged sentences

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 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.

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.

3 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

As of September 30, 2022:

As of March 31, 2023:

(In thousands) Future

3 unchanged sentences

Total $ 656,970

The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.

The Company continually reviews receivables related to rent and unbilled rent and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.

Under the leasing standards, the Company is required to assess, based on credit risk only, if it is probable that the Company will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant.

Partial reserves, or the ability to assume partial recovery are no longer permitted.

If the Company determines that it is probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e., straight-line).

If the Company determines that it is probable it will collect virtually all of the lease payments (rent and common area

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

maintenance), the lease will continue to be accounted for on an accrual basis (i.e., straight-line).

However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and a full reserve would be recorded on previously accrued amounts in cases where it was subsequently concluded that collection was not probable.

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 $ 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.

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 loss in the period the related costs are incurred, as applicable.

The Company recorded reductions in revenue of $ 0.3 million and $ 0.4 million for uncollectable amounts during the three months ended March 31, 2023 and 2022, 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 September 30, 2022 and 2021.

No properties were presented as discontinued operations during the three months ended March 31, 2023 and 2022.

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 September 30, 2022 or December 31, 2021.

There were no real estate investments held for sale as of March 31, 2023 or December 31, 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.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

All acquisitions during the three months ended March 31, 2023 were asset acquisitions.

The Company acquired five properties during the three months ended March 31, 2023.

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.

1 unchanged sentence

The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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

9 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 nine months ended September 30, 2022 or 2021.

The Company did not record any intangible asset amounts related to customer relationships during the three months ended March 31, 2023 or 2022.

Accounting for Leases

2 unchanged sentences

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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

As of 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.

As of March 31, 2023 and December 31, 2022, 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 (i) the non-lease components have the same timing and pattern of transfer as the associated lease component;

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

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

2 unchanged sentences

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 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.

These leases are reflected on the balance sheets as of March 31, 2023 and December 31, 2022, and the rent expense is reflected on a straight-line basis over the lease term in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022.

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

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

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

Also, lessees must recognize a

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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

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

8 unchanged sentences

Reportable Segments

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.

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.

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

Construction in progress is not depreciated until the project has reached substantial completion.

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

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

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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.

1 unchanged sentence

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

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

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

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

8 unchanged sentences

federal income and excise taxes on its undistributed income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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

2 unchanged sentences

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

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

As of March 31, 2023, the Company owned 50 seniors housing properties which are leased and operated through its TRS.

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

A TRS is subject to U.S.

4 unchanged sentences

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.

Significant components of the deferred tax assets and liabilities as of March 31, 2023 and December 31, 2022 consisted of deferred rent and net operating loss carryforwards.

During the year ended December 31, 2020, the Company modified 25 intercompany leases with the TRS which abated intercompany rent due to the ongoing COVID-19 pandemic.

These abatements were extended through March 31, 2023 and may continue to be extended for future periods.

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).

thus the Company has provided a 100 % valuation allowance of $ 7.6 million as of March 31, 2023.

As of December 31, 2022, the Company had a deferred tax asset of $ 6.9 million with a full valuation allowance.

2 unchanged sentences

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.

The Company did not receive any funding from the CARES Act during the three months ended March 31, 2023 or 2022.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

Any funding that the Company would receive is 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.

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

8 unchanged sentences

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

Not yet Fully Adopted as of September 30, 2022:

Not yet Fully Adopted as of March 31, 2023:

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

1 unchanged sentence

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.

During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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.

3 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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,

The Company owned 207 properties as of March 31, 2023.

During the three months ended March 31, 2023, the Company acquired five properties.

All acquisitions in the three months ended March 31, 2023 were considered asset acquisitions for accounting purposes.

No properties were acquired in the three months ended March 31, 2022.

The following table presents the allocation of real estate assets acquired and liabilities assumed during the three months ended March 31, 2023:

Three Months Ended March 31,

(In thousands) 2023

Real estate investments, at cost:

Land $ 4,199 $ 9,131

Buildings, fixtures and improvements 19,440

5 unchanged sentences

Total intangible assets and liabilities 3,918

Issuance of Preferred OP Units (1)

Cash paid for real estate investments, including acquisitions $ 25,443

Number of properties purchased 5

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

Significant Tenants

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.

The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of September 30, 2022 and 2021:

September 30,

As of March 31, 2023 and 2022, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis.

State 2023 2022

Florida 19.4 % 18.2 %

Iowa * 10.2 %

Pennsylvania 10.2 % *

* 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.

* The 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

September 30, 2022

March 31, 2023

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2023 2022

4 unchanged sentences

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

$ 40 $ 53 $ 120 $ 161

(1) Reflected within depreciation and amortization expense.

10 unchanged sentences

$ 761 $ 875 $ 737 $ 610 $ 380

Three Months Ended March 31, 2023

The Company did not dispose of any properties during the three months ended March 31, 2023.

Three Months Ended March 31, 2022

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.

1 unchanged sentence

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 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 nine months ended September 30, 2021.

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

Assets Held for Sale

2 unchanged sentences

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

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

There were no assets held for sale as of March 31, 2023 and December 31, 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Assets Held for Use

6 unchanged sentences

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,

There were no impairment charges recorded in the three months ended March 31, 2023.

The following table presents impairment charges by segment recorded during the three months ended March 31, 2022:

Three Months Ended March 31,

(In thousands) 2022

Illinois skilled nursing facilities (1)

$ — $ — $ 10,644 $ —

Sun City MOB (2) (6)

Total MOB impairment charges 10,644

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 $ 10,644

(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.

As of March 31, 2023, these properties were not disposed nor were under contract for disposal.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

Note 4 — Mortgage Notes Payable, Net

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

The following table reflects the Company’s mortgage notes payable as of March 31, 2023 and December 31, 2022:

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

Portfolio Encumbered Properties (1)

September 30,

2022 December 31, 2021 September 30,

2023 December 31, 2022 March 31,

2023 December 31, 2022 Interest Rate Maturity

(In thousands) (In thousands)

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

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

Fox Ridge Bryant - Bryant, AR 1 $ 6,774 $ 6,817 3.98 % 3.98 % Fixed May 2047

4 unchanged sentences

Shiloh - Illinois

1 13,151 13,384 4.34 % 4.34 % Fixed March 2026

1 12,989 13,071 4.34 % 4.34 % Fixed Jan.

BMO CMBS Loan 9 42,750 42,750 2.89 % 2.89 % Fixed Dec.

5 unchanged sentences

_____________

(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.

(1) Calculated on a weighted average basis for all mortgages outstanding as of March 31, 2023 and December 31, 2022.

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

For the Capital One MOB Loan, the effective rate does not include the effect of amortizing the amount paid to terminate the previous pay-fixed swap.

See Note 7 — Derivatives and Hedging Activities for additional details.

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

(2) Variable rate loan, based on daily SOFR as of March 31, 2023 and December 31, 2022, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements.

The Company allocated $ 378.5 million of its “pay-fixed” interest rate swaps to this mortgage consistently as of March 31, 2023 and December 31, 2022.

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

2 unchanged sentences

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

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.

As of March 31, 2023, 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 September 30, 2022, the Company was in compliance with these financial covenants.

As of March 31, 2023, 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

September 30, 2022

March 31, 2023

Note 5 — Credit Facilities

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

The Company had the following credit facilities outstanding as of March 31, 2023 and December 31, 2022:

Outstanding Facility

1 unchanged sentence

Credit Facility Encumbered Properties (1)

September 30,

2022 December 31, 2021 September 30,

2023 December 31, 2022 March 31,

2023 December 31, 2022 Interest Rate Maturity

16 unchanged sentences

Total Credit Facilities 119 $ 549,205 $ 530,297 6.62 % (5) 5.94 % (5)

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

(1) Encumbered properties are as of March 31, 2023.

(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 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).

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

(3) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of March 31, 2023 with a carrying value of $ 349.4 million.

(4) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of March 31, 2023 with a carrying value of $ 261.3 million.

(5) Calculated on a weighted average basis for all credit facilities outstanding as of March 31, 2023 and December 31, 2022, respectively.

(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 SOFR “pay-fixed” interest rate swaps against all 30-day SOFR debt, see Note 7 — Derivatives and Hedging Activities for additional details).

(7) The effective rates above only include the impact of designated hedging instruments.

The Company has seven non-designated interest rate cap agreements with an aggregate notional amount of $ 354.6 million which limits 30-day LIBOR to 3.50 %.

The Company did not designate these derivatives as hedges and accordingly, the changes in value and any cash received from these derivatives are presented within gain (loss) on derivative instruments on the consolidated statements of operations and comprehensive income ( see Note 7 — Derivatives and Hedging Activities for additional details).

Inclusive of the impact of these interest rate caps on these non-designated derivatives, the economic interest rate on the Capital One Fannie Mae Facility and KeyBank Fannie Mae Facility was 5.26 %, and 5.96 %, respectively, as of March 31, 2023 and December 31, 2022.

(8) During the year ended December 31 2022, the Company exercised its option to extend the maturity one year to March 2024 subject to certain conditions.

(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 September 30, 2022 and December 31, 2021.

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.

1 unchanged sentence

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.

As of December 31, 2022, the Company allocated the $ 150.0 million SOFR-based “pay-fixed” swaps to the Term Loan.

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

The $ 50.0 million of LIBOR-based “pay-fixed” swaps were terminated in the three months ended March 31, 2023.

See Note 7 — Derivatives and Hedging Activities for additional details.

As of March 31, 2023, 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 $ 1.0 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

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.

Unencumbered real estate investments, at cost as of March 31, 2023 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

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”).

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

The Term Loan is interest-only and matures on March 13, 2024.

The Revolving Credit Facility and Term Loan are interest-only and mature on March 13, 2024.

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

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

As of September 30, 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.

As of March 31, 2023, $ 150.0 million was outstanding under the Term Loan and $ 50.0 million was outstanding under the Revolving Credit Facility.

Subsequent to March 31, 2023, $ 44.8 million was outstanding under the Revolving Credit Facility (see Note 17 — Subsequent Events for details).

The unused borrowing availability under the Revolving Credit Facility was $ 189.2 million based on the borrowing base as of March 31, 2023.

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”).

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

The Company satisfied the conditions during the quarter ended 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.

The Company did not satisfy the conditions during the quarter ended March 31, 2023 order to elect the quarter ending June 30, 2023 as the Commencement Quarter.

Until the first day of the Commencement Quarter, the Company must use all the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to repay amounts outstanding under the Revolving Credit Facility, to the extent there are any such amounts outstanding.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

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.

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

As of March 31, 2023, 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:

In addition, as of March 31, 2023, 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 %.

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

As of 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:

As of March 31, 2023, the Company had elected to use the SOFR option for all of its borrowings under the Revolving Credit Facility, to the extent there are any such amounts outstanding.

Further, as of March 31, 2023, 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 %;

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(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

or (b) the Base Rate, plus an applicable margin that ranges, depending on the Company’s

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

March 31, 2023

leverage, from 0.30 % to 1.05 %.

Pursuant to the terms of the Company’s Credit Facility, the “floor” on SOFR-based rates is 0.25 %.

As of March 31, 2023, the Company had elected to use the SOFR option for all of its borrowings under the Term Loan.

As of March 31, 2023, the Company was in compliance with the financial covenants under the Credit Facility.

As discussed in Note 2 — Summary of Significant Accounting Policies , the Company has experienced, and continues to experience, negative impacts from rising operating costs, particularly in its SHOP segment, as well as rising variable interest rates.

The Company’s Credit Facility matures in March 2024 and contains various operating covenants (described above) which the Company was in compliance with through March 31, 2023.

Prospectively, based upon the Company’s current expectations, the Company believes its operating results through June 30, 2023 will allow it to comply with these covenants.

However, the Company believes its operating results may not be sufficient to comply with the increased Fixed Charge Coverage Ratio, which increases from 1.20 to 1.00 to 1.35 to 1.00 commencing with the quarter ending September 30, 2023 and thereafter.

Absent a waiver or modification from the lender group, failure to comply with the Fixed Charge Coverage Ratio would constitute an Event of Default and the balance of the Credit Facility would be due and payable.

The Company has obtained such waivers and modifications from the lender group in the past, but there can be no assurance that such a waiver or modification will be granted in future periods.

Additionally, the Company executed a non-binding term sheet with potential lenders to provide long-term, fixed-rate, secured mortgage financing, utilizing some or all of the Company’s unencumbered MOB properties as collateral.

The proceeds from this loan are expected to exceed the balance of the Credit Facility and will be used to repay all amounts outstanding thereunder, which was $ 200.0 million as of March 31, 2023.

In connection with the lenders’ agreement to lock the interest rate on a portion of the loan, the Company provided a $ 7.8 million deposit in the three months ended March 31, 2023 to the potential lenders as part of its negotiations, which was recorded within prepaid expenses and other assets on the Company’s consolidated balance sheet as of March 31, 2023.

Subsequent to March 31, 2023, the Company provided an additional $ 1.1 million deposit to the potential lenders.

If the proposed secured mortgage financing is consummated pursuant to its proposed terms, the Company will be refunded its deposit at closing, otherwise it will be applied against any breakage costs incurred by the potential lenders.

The Company expects to close the loan in the three months ended June 30, 2023, however, there can be no assurance that this potential secured mortgage financing will close on its contemplated terms, or at all.

Fannie Mae Master Credit Facilities

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Periodically, the Company renews these interest rate cap agreements upon their expiration.

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

Currently, the Company has seven interest rate cap agreements with an aggregate current effective notional amount of $ 354.6 million which caps LIBOR at 3.50 % with terms through April 2024.

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

As of March 31, 2023, $ 350.6 million was outstanding under the Fannie Mae Master Credit Facilities.

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

Borrowings under the Fannie Mae Master Credit Facilities bear annual interest at a rate that varies on a monthly basis and is equal to the sum of the current LIBOR for one month U.S.

dollar-denominated deposits and a spread ( 2.41 % and 2.46 % for the Capitol One Facility and the KeyBank Facility, respectively).

The Fannie Mae Master Credit Facilities mature on November 1, 2026.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Future Principal Payments

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):

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to March 31, 2023 and thereafter, on all of the Company’s outstanding debt (mortgage notes payable and credit facilities):

Future Principal

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LIBOR Transition

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

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

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

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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

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.

During the year ended December 31, 2022, the Company converted $ 150.0 million of its “pay-fixed” swaps on its Credit Facility from LIBOR to SOFR, and the Company additionally converted its $ 378.5 million Capital One MOB Loan and related “pay-fixed” swap 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.

As of March 31, 2023, the Company had $ 350.6 million of variable-rate, LIBOR-based borrowings under the Fannie Mae Master Credit Facilities.

The Company terminated its remaining $ 50.0 million of LIBOR-based “pay-fixed” swaps during the three months ended March 31, 2023.

The “pay-fixed” swaps were terminated in an asset position and the Company received $ 1.9 million in cash following the termination.

This amount was included in accumulated other comprehensive income (“AOCI”), and will amortize into earnings as a reduction to interest expense through March 2024 (the original term of the swap and variable hedged debt).

As of March 31, 2023, the Company continues to have LIBOR-based interest rate caps with notional amounts of $ 354.6 million which are not designated as hedging instruments.

See Note 7 — Derivatives and Hedging Activities for additional details.

The Fannie Mae Master Credit Facilities will be automatically converted to SOFR-based contracts effective June 30, 2023.

The Company is planning to convert the corresponding LIBOR-based interest rate caps to SOFR-based contracts.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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

March 31, 2023

Note 6 — Fair Value of Financial Instruments

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

However, as of September 30, 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 March 31, 2023, 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

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.

March 31, 2023

The following table presents information about the Company’s assets and liabilities measured at fair value as of March 31, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those instruments fall.

(In thousands) Quoted Prices in Active Markets

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Level 3 Total

September 30, 2022

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

Derivative liabilities, at fair value — — — —

March 31, 2023

Derivative assets, at fair value (non-designated) $ — $ 2,615 $ — $ 2,615

Derivative assets, at fair value (designated) — 27,804 — 27,804

Total $ — $ 30,419 $ — $ 30,419

1 unchanged sentence

Derivative assets, at fair value (non-designated) $ — $ 3,737 $ — $ 3,737

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

Derivative assets, at fair value (designated) — 36,910 — 36,910

Total $ — $ 40,647 $ — $ 40,647

1 unchanged sentence

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

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

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2023.

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 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 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.

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 March 31, 2023 and December 31, 2022.

As of March 31, 2023, the Company owned 17 held for use properties ( nine MOBs and eight SHOPs) for which the Company had reconsidered their expected holding periods, of which 10 properties ( two MOBs and eight SHOPs) are being marketed for sale.

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

1 unchanged sentence

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 September 30, 2022 and December 31, 2021.

The Company did not have any real estate investments classified as held for sale as of March 31, 2023 and December 31, 2022.

Financial Instruments not Measured at Fair Value

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

September 30, 2022 December 31, 2021

March 31, 2023

March 31, 2023 December 31, 2022

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

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

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

(In thousands) Balance Sheet Location September 30,

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2023 and December 31, 2022:

(In thousands) Balance Sheet Location March 31,

2023 December 31, 2022

5 unchanged sentences

Cash Flow Hedges of Interest Rate Risk

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 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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

As of March 31, 2023 and December 31, 2022, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:

March 31, 2023 December 31, 2022

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

3 unchanged sentences

Total interest rate “pay-fixed” swaps 7 $ 528,500 9 $ 578,500

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2023 2022

1 unchanged sentence

Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense $ 3,960 $ ( 2,653 )

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

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

$ ( 15,785 ) $ ( 11,764 )

The Company currently has seven SOFR-based “pay-fixed” interest rate swaps that are designated as cash flow hedges.

The Company uses its interest rate swaps as part of its interest rate risk management strategy.

During the three months ended March 31, 2023 and the year ended December 31, 2022, 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 1.61 % and 2.23 % 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 income (“AOCI”) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

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

For the three months ended March 31, 2022, the Company reclassified $ 0.2 million from AOCI as an increase to interest expense.

No amounts remained in AOCI related to the MOB Loan as of December 31, 2022.

During the year ended December 31, 2022, the Company converted $ 150.0 million of the “pay-fixed” swaps on its Credit Facility and $ 378.5 million of the “pay-fixed” swaps on its mortgages from LIBOR to SOFR.

During the three months ended March 31, 2023, the Company terminated two LIBOR-based interest rate swap agreements with an aggregate notional amount of $ 50.0 million.

The swaps were terminated in an asset position, and the Company received $ 1.9 million in cash from the termination.

This amount was included in AOCI and will be amortized into earnings as a reduction to interest expense through March 2024 (the original term of the swap and the variable hedged debt).

For the three months ended March 31, 2023, the Company reclassified $ 0.3 million from AOCI as a decrease to interest expense, and $ 1.7 million remained in AOCI as of March 31, 2023.

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

During the next 12 months, from April 1, 2023 through March 31, 2024, the Company estimates that $ 16.3 million will be reclassified from AOCI as a decrease to interest expense or other comprehensive income relating to the “pay-fixed” swaps designated as derivatives.

Non-Designated Derivatives

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 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.

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 September 30, 2022 and December 31, 2021:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Interest Rate Derivatives Number of Instruments Notional Amount (1)

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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

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

March 31, 2023

(1) Notional amount represents the currently active interest rate cap contract and excludes three interest rate cap agreements (included in the instrument count) with aggregate notional amounts of $ 52.6 million which take effect upon the expiration of similar caps included above and effectively extend the term for the same notional amount.

(2) All of the Company’s interest rate cap agreements limit 30-day LIBOR to 3.50 % with terms through April 2024.

The actual 30-day LIBOR rates during the first quarter of 2023 exceeded the strike price rate of 3.50 % and the Company is currently receiving payments under these agreements.

Changes in the fair market value of these non-designated derivatives, as well as any cash received, are presented within gain (loss) on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive income.

These derivatives are used to manage the Company’s exposure to interest rate movements, but the Company has not elected to apply hedge accounting.

As of March 31, 2023, the Company had entered into seven LIBOR interest rate caps with a notional amount of $ 354.6 million (of which six caps were active as of March 31, 2023 and December 31, 2022 and one had a forward start date of April 2023) which limit 30-day LIBOR borrowings to 3.50 % and have varying expiration dates through April 2024.

Beginning in the fourth quarter of 2022, LIBOR exceeded 3.50 % and the Company began receiving payments under these interest rate caps.

While the Company does not apply hedge accounting for these interest rate caps, they are economically hedging the Capital One Facility and KeyBank Facility.

Changes in the fair value of, and any cash received from, derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net loss and are presented within gain (loss) on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.

For the three months ended March 31, 2023 and 2022, (loss) gain on non-designated derivatives were $( 0.2 ) million and $ 1.0 million, respectively.

During the three months ended March 31, 2023, the Company received aggregate payments of $ 0.9 million related to its effective interest rate caps as LIBOR exceeded the effective rates of the capped debt.

No such amounts were received during the three months ended March 31, 2022.

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 September 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 March 31, 2023 and December 31, 2022.

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

2 unchanged sentences

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

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

September 30, 2022 $ — $ — $ — $ — $ — $ — $ —

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

March 31, 2023 $ 30,419 $ — $ — $ 30,419 $ — $ — $ 30,419

December 31, 2022 $ 40,647 $ — $ — $ 40,647 $ — $ — $ 40,647

1 unchanged sentence

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

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

As of March 31, 2023, 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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Note 8 — Stockholders’ Equity

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.

As of March 31, 2023 and December 31, 2022, the Company had 106,668,245 and 105,080,531 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.

Since October 2020, the Company has issued an aggregate of approximately 14.0 million shares in respect to the stock dividends.

Except for shares issued as dividends, no additional shares of common stock were issued during the quarter ended March 31, 2023 or the year ended December 31, 2022.

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 cumulative increase in shares outstanding due to the stock dividends (including the April 2023 stock dividend) and are noted as such throughout the accompanying financial statements and notes.

Any future issuances of stock dividends will also result in retroactive adjustments.

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.

On March 31, 2023, the Company published a new Estimated Per-Share NAV as of December 31, 2022, which was approved by the Board on March 31, 2023.

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.

5 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 September 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 March 31, 2023.

Number of Shares Repurchased Average Price per Share

Cumulative repurchases as of December 31, 2022 4,896,620 $ 20.60

Nine months ended September 30, 2022 — —

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

Three months ended March 31, 2023 — —

Cumulative repurchases as of March 31, 2023 4,896,620 20.60

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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 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.

During the three months ended March 31, 2023 and the year ended December 31, 2022, 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.

2 unchanged sentences

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

Preferred Stock

Preferred Stock and Preferred Units

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

1 unchanged sentence

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 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.

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

The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of March 31, 2023 and December 31, 2022.

The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of March 31, 2023 and December 31, 2022.

The Company also had 100,000 Series A Preferred Units outstanding as of March 31, 2023 and December 31, 2022, which were accounted for as a component of non-controlling interests.

See Note 13 — Non-controlling Interests for additional information.

Distributions and Dividends

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

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 (see Note 5 — Credit Facility, Net for additional information) which restricted the Company from paying distributions on common stock.

Under the policy, distributions authorized by the Board on the Company’s shares of common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of the Company’s common stock valued at the Company’s Estimated Per Share NAV of common stock in effect on the applicable date:

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

Series A Preferred Stock

Series A Preferred Stock Add-On Offering

On May 11, 2021, the Company completed an underwritten public offering of 2,352,144 shares (which includes 152,144 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of its Series A Preferred Stock for net proceeds of $ 56.0 million after deducting the underwriters’ discount, structuring fee and other offering costs aggregating to $ 2.9 million.

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

Series A Preferred Units

In September 2021, the Company partially funded the purchase of an MOB from an unaffiliated third party by causing the OP to issue 100,000 partnership units in the OP designated as “Series A Preferred Units”.

These were recorded at fair value on the date of the acquisition at $ 2.6 million and were included as part of the consideration paid for the acquisition.

Additionally, these are considered a non-controlling interest for the Company and were recorded as an increase in non-controlling interests on the consolidated balance sheet (see Note 13 — Non-controlling Interests for additional information).

Series B Preferred Stock

Underwritten Offering — Series B Preferred Stock

On October 6, 2021, the Company completed the initial issuance and sale of 3,200,000 shares of its Series B Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $ 25.00 per share.

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 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.

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

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

Distributions and Dividends

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 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, 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.

March 31, 2023

Stock Dividend Declaration Date Stock Dividend Issue Date Quarterly Stock Dividend Rate (per share)

October 1, 2020 October 15, 2020 0.013492

January 4, 2021 January 15, 2021 0.013492

April 2, 2021 April 15, 2021 0.014655

July 1, 2021 July 15, 2021 0.014655

October 1, 2021 October 15, 2021 0.014655

January 3, 2022 January 15, 2022 0.014655

April 1, 2022 April 18, 2022 0.014167

July 1, 2022 July 15, 2022 0.014167

October 3, 2022 October 17, 2022 0.014167

January 3, 2023 January 18, 2023 0.014167

April 3, 2023 April 17, 2023 0.015179

Note 9 — Related Party Transactions and Arrangements

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.

As of March 31, 2023 and December 31, 2022, the Special Limited Partner owned 10,237 and 10,094 shares, respectively, of the Company’s outstanding common stock.

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

As of March 31, 2023 and December 31, 2022, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

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

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 September 30, 2022.

This threshold has not been exceeded through March 31, 2023.

Asset Management Fees and Variable Management/Incentive Fees

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

subordinated participation by causing the OP to issue (subject to periodic approval by the Board) to the Advisor partnership units of the OP designated as “Class B Units” (“Class B Units”).

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

12 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 September 30, 2022, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

As of March 31, 2023, 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.

2 unchanged sentences

The Board has previously approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement.

The Board determined in February

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The Board determined in February 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.

Therefore, no expense has ever been recognized in connection with the Class B Units.

2 unchanged sentences

The fixed portion of the base management fee is equal to $ 1.625 million per month, while the variable portion of the base management fee is equal to one-twelfth of 1.25 % of the cumulative net proceeds of any equity (including convertible equity and certain convertible debt but excluding proceeds from the DRIP) issued by the Company and its subsidiaries subsequent to February 17, 2017 per month.

There are no variable management fees earned from the issuance of common stock dividends.

The base management fee is payable to the Advisor or its assignees in cash, Common OP Units or shares, or a combination thereof, the form of payment to be determined at the discretion of the Advisor and the value of any Common OP Unit or 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.

1 unchanged sentence

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

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 nine months ended September 30, 2022 or 2021.

The variable management/incentive fee is payable to the Advisor or its assignees in cash or shares, or a combination

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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 months ended March 31, 2023 or 2022.

Property Management Fees

1 unchanged sentence

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

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

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

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

1 unchanged sentence

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

8 unchanged sentences

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

During the three 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.

During the three months ended March 31, 2023, the Company incurred $ 1.9 million of reimbursement expenses from the Advisor for providing administrative services.

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

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

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

Under the Advisory Agreement Amendment, including prior to the Advisory Agreement Amendment, the Company has been required to reimburse the Advisor for, among other things, reasonable salaries and wages, benefits and overhead of all employees of the Advisor or its affiliates, except for costs of employees to the extent that the employees perform services for which the Advisor receives a separate fee.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

The Advisory Agreement Amendment clarifies that, with respect to executive officers of the Advisor, the Company is required to reimburse the Advisor or its affiliates for the reasonable salaries and wages, benefits and overhead of the Company’s executive officers, other than for any executive officer that is also a partner, member or equity owner of AR Global, an affiliate of the Advisor.

4 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 %.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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.

During the second quarter of 2021, the Advisor finalized the amounts and form of the 2020 bonuses previously estimated (the “2020 Bonus Awards”) to be paid to the employees of the Advisor or its affiliates who provided administrative services during such calendar year, prorated for the time spent working on matters relating to the Company.

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

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

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

Generally, prior to the 2019 bonuses paid by the Advisor to employees of the Advisor or its affiliates in September 2020, employee bonuses had been formally awarded to employees of the Advisor or its affiliates in March as an all-cash award and paid out by the Advisor in the year subsequent to the year in which services were rendered to the Company.

Summary of fees, expenses and related payables

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

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

2022 2021 2022 2021

(In thousands) Incurred Incurred Incurred

Incurred September 30,

Three Months Ended March 31, Payable (Receivable) as of

(In thousands) Incurred Incurred March 31,

2023 December 31, 2022

9 unchanged sentences

2,386 2,226 102 39

Professional fees credit due from Advisor — — — ( 1,030 ) — ( 859 ) (2)

Total related party operation fees and reimbursements

1 unchanged sentence

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

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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Includes $ 1.5 million for the three months ended March 31, 2023, and $ 1.7 million for the three months ended March 31, 2022, subject to the Capped Reimbursement.

(2) Includes $ 49,000 and $ 0.2 million of leasing commissions which are capitalized and included in prepaid expenses and other assets.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

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 nine months ended September 30, 2022 or 2021.

No such distribution was incurred during the three months ended March 31, 2023 or 2022.

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 nine months ended September 30, 2022 or 2021.

No such participation in net sales proceeds became due and payable during the three months ended March 31, 2023 or 2022.

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

September 30, 2022

March 31, 2023

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 September 30, 2022 and activity for the period presented:

The following table reflects the amount of restricted shares outstanding as of March 31, 2023 and activity for the period presented:

Number of Shares of Common Stock Weighted Average Issue Price

1 unchanged sentence

Stock dividend 1,393 15.00

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.

Unvested, March 31, 2023 98,736 $ 18.84

As of March 31, 2023, the Company had $ 1.3 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 1.4 years.

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.

Compensation expense related to restricted shares was $ 0.2 million for the three months ended March 31, 2023, and $ 0.3 million for the three months ended March 31, 2022.

Other Share-Based Compensation

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There are no restrictions on shares issued in lieu of cash compensation since these payments in lieu of cash relate to fees earned for services performed.

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

No such shares were issued during the three months ended March 31, 2023 or 2022.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

Note 12 — Accumulated Other Comprehensive Income (Loss)

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

March 31, 2023

Note 12 — Accumulated Other Comprehensive Income

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

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

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Amount of (gain) loss reclassified from accumulated other comprehensive gain (loss) ( 3,960 )

Balance, September 30, 2022 $ 39,043

Balance, March 31, 2023 $ 29,479

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.

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Balance as of

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

(In thousands) March 31, 2023 December 31, 2022

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

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Series A Preferred Units

The Company is the sole general partner and holds substantially all of the Series A Preferred Units.

In September 2021, the Company partially funded the purchase of an MOB from an unaffiliated third party by causing the OP to issue 100,000 Series A Preferred Units, with a face value of $ 25.00 per unit, which were recorded at issuance at a then fair value of $ 2.6 million, or $ 25.78 per unit, to the unaffiliated third party.

The Company is the sole general partner and holds substantially all of the Series A Preferred Units (except as discussed below).

All common and preferred units in the OP held by the Company are eliminated in consolidation.

In September 2021, the Company partially funded the purchase of an MOB from an unaffiliated third party by causing the OP to issue 100,000 Series A Preferred Units to the unaffiliated third party, with a face value of $ 25.00 per unit, which were recorded at issuance at a then fair value of $ 2.6 million, or $ 25.78 per unit, to the unaffiliated third party.

A holder of Series A Preferred Units has the right to receive cash distributions equivalent to the cash distributions, if any, on the Company’s Series A Preferred Stock.

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

During both the three months ended March 31, 2023 and 2022, Series A Preferred Unit holders were paid $ 46,000 .

Common OP Units

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

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.

As of March 31, 2023 and December 31, 2022, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

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.

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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.

Dur ing the three months ended March 31, 2023 and 2022, 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 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.

The 405,998 Common OP Units outstanding as of March 31, 2023 would be redeemable for 474,700 shares of common stock, giving effect to adjustments for the impact of the stock dividends through April 2023.

Non-Controlling Interests in Property Owning Subsidiaries

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Distributions

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

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

Property Name

(Dollar amounts in thousands)

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

Investment Date March 31, 2023 March 31, 2023 March 31, 2023 As of December 31, 2022 2023 2022

Plaza Del Rio Medical Office Campus Portfolio (1)

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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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Net loss attributable to common stockholders (in thousands)

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$ ( 0.16 ) $ ( 0.25 )

(1) Retroactively adjusted for the effects of the Stock Dividends (see Note 1 — Organization for additional details).

(1) Retroactively adjusted for the effects of the stock dividends (see Note 1 — Organization and Note 8 — Stockholders’ Equity for additional information).

Diluted net loss per share assumes the conversion of all common stock equivalents into an equivalent number of shares of common stock, unless the effect is antidilutive.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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

2022 2021 2022 2021

March 31, 2023

Three Months Ended March 31,

Unvested restricted shares (1)

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

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

Th ere were 98,736 and 161,754 unvested restricted shares outstanding as of March 31, 2023 and 2022, 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 (see Note 1 — Organization for additional details).

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

There were 405,998 Common OP Units outstanding as of March 31, 2023 and 2022.

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 (see Note 1 — Organization for additional details).

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).

There were 359,250 Class B Units outstanding as of March 31, 2023 and 2022.

These Class B Units were unvested as of March 31, 2023 and 2022 (see Note 9 — Related Party Transactions for additional information).

Note 15 — Segment Reporting

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:

The disclosures below for the three months ended March 31, 2023 and 2022 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

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

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

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

The remaining Former NNN properties are similar in nature, cash flows, and risk structure with the Former MOB segment and are managed operationally and reported collectively by the Company’s management.

Accordingly, in the fourth quarter of 2021, the Company reevaluated its segments and concluded that it had two reportable segments.

The Company combined the properties in its Former NNN segment with the properties in its Former MOB segment for segment reporting.

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.

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

The medical office building segment primarily consists of MOBs leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses as well as seniors housing properties, hospitals, inpatient rehabilitation facilities and skilled nursing facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses.

The medical office building segment primarily consists of MOBs leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses as well as seniors housing properties, hospitals, inpatient rehabilitation facilities and skilled nursing facilities (“SNF”) under long-term leases, under which tenants are generally responsible to directly pay property-related expenses.

The SHOP segment consists of direct investments in seniors housing properties, primarily providing assisted living, independent living and memory care services, which are operated through engaging independent third-party operators.

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NOI is defined as total revenues from tenants, less property operating and maintenance expense.

NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss).

NOI excludes all other items of expense and income included in the financial statements in calculating net loss.

The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties.

The Company believes that NOI is useful 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).

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level.

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NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently.

The Company believes that in order to facilitate a clear understanding of the Company’s operating results, NOI should be examined in conjunction with net income (loss) as presented in the Company’s consolidated financial statements.

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

The Company believes that in order to facilitate a clear understanding of the Company’s operating results, NOI should be examined in conjunction with net loss as presented in the Company’s consolidated financial statements.

NOI should not be considered as an alternative to net loss as an indication of the Company’s performance or to cash flows as a measure of the Company’s liquidity or ability to pay distributions.

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

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

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

Revenue from tenants

$ 33,185 $ 50,275 $ 83,460 $ 30,813 $ 51,193 $ 82,006

Property operating and maintenance

9,377 41,821 51,198 8,803 42,415 51,218

$ 23,808 $ 8,454 32,262 $ 22,010 $ 8,778 30,788

Impairment charges

( 8,949 ) ( 26,642 )

Operating fees to related parties

( 6,333 ) ( 6,045 )

Acquisition and transaction related

( 199 ) ( 2,198 )

General and administrative

( 4,471 ) ( 4,723 )

Depreciation and amortization

( 20,854 ) ( 19,786 )

Interest expense

( 13,284 ) ( 11,775 )

Interest and other income

Gain on sale of real estate investments 194 —

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

Income tax expense ( 77 ) ( 55 )

Net loss (income) attributable to non-controlling interests 22 331

Allocation for preferred stock ( 3,450 ) ( 1,834 )

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

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

Three Months Ended March 31, Three Months Ended March 31,

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

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Impairment charges

( 25,786 ) ( 33,601 )

Operating fees to related parties

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Interest and other income

(Loss) gain on sale of real estate investments ( 109 ) 2,284

Gain on non-designated derivatives 3,212 ( 32 )

Gain (loss) on sale of real estate investments 115 ( 303 )

(Loss) gain on non-designated derivatives ( 182 ) 994

Income tax expense ( 46 ) ( 39 )

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

Net loss attributable to non-controlling interests 9 49

Allocation for preferred stock ( 3,450 ) ( 3,450 )

Net loss attributable to common stockholders $ ( 17,509 ) $ ( 26,801 )

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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

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

(In thousands) March 31, 2023 December 31, 2022

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2023 2022

2 unchanged sentences

Total capital expenditures $ 3,634 $ 3,311

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Note 16 — Commitments and Contingencies

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

As of March 31, 2023, the Company had seven operating and six direct financing lease agreements.

The seven operating leases have durations, including assumed renewals, ranging from 19.6 years to 84.5 years, excluding an adjacent parking lot lease with a term of 1.5 years.

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.

The Company did not enter into any additional ground leases during the three months ended March 31, 2023.

As of March 31, 2023, 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 34.3 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 Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 34.0 years and a weighted-average discount rate of 7.37 % as of March 31, 2023.

For the three months ended March 31, 2023, the Company paid cash of $ 0.2 million, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million, on a straight-line basis in accordance with the current accounting guidance.

The Company paid cash of $ 0.2 million for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million, for the three months ended March 31, 2022.

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 September 30, 2022:

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

The following table reflects the base cash rental payments due from the Company for the next five years as of March 31, 2023:

Future Base Rent Payments

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Total present value of minimum lease payments $ 8,075 $ 4,836

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

(1) The Direct Finance Lease liability is included in Accounts Payable and accrued expenses on the balance sheet as of March 31, 2023.

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 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.

As of March 31, 2023, 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

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for the following:

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Dividend Declaration

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.

On April 3, 2023, the Company announced the declaration of a stock dividend of 0.015179 shares of the Company’s common stock, on each share of the Company’s outstanding common stock.

The stock dividend was issued on April 17, 2023 to holders of record of the Company’s common stock at the close of business on April 13, 2023.

Subsequent Dispositions

Subsequent to March 31, 2023, the Company disposed of two SHOP properties for an aggregate contract sales price of $ 5.7 million.

These two properties were impaired by $ 6.2 million in the year ended December 31, 2022.

Pursuant to the terms of the Credit Facility, the net proceeds from the disposals were used to repay amounts outstanding under the Revolving Credit Facility.

The properties were formerly pledged to the asset pool comprising the borrowing base under the Credit Facility.

After giving effect to the repayments from these dispositions, the balance of the Revolving Credit Facility was $ 44.8 million.

Other Subsequent Events

Subsequent to March 31, 2023, the Company provided an additional $ 1.1 million deposit to potential lenders as part of its efforts to obtain secured mortgage financing.

See Note 5 — Credit Facilities for additional information.

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

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

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

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

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

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 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.

As of March 31, 2023, we owned 207 properties located in 34 states and comprised of 9.2 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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Healthcare Trust Special Limited Partnership, LLC (the “Special Limited Partner”), which is also under common control with AR Global, also has an interest in us through ownership of interests in our OP.

We operate in two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

We operate in two reportable business segments for management and financial reporting purposes:

medical office and other health-care related buildings (“MOBs”) and senior housing operating properties (“SHOPs”).

In our MOB operating segment, we own, manage, and lease single- and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent.

Our Property Manager or third-party managers manage our MOBs.

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

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

In our SHOP segment, we invest in seniors housing properties using the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure.

As of March 31, 2023, we had four eligible independent contractors operating 50 SHOPs (excluding two land parcels).

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

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

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

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, 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 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.

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

We have declared and paid quarterly dividends entirely in shares of our common stock since October 2020 in order to preserve our liquidity.

On March 31, 2023, we published a new Estimated Per-Share NAV equal to $14.00 as of December 31, 2022.

Our previous Estimated Per-Share NAV was equal to $15.00 as of December 31, 2021.

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Management Update on the Impacts of the COVID-19 Pandemic

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.

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

The negative impact of the pandemic on our results of operations and cash flows has impacted and could continue to impact our ability to comply with covenants in our Credit Facility, and the amount available for future borrowings thereunder.

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.

“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 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.

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

We calculate “original cash rent collections” by comparing the total amount of rent collected during the period to the original cash rent due.

Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements.

Eliminating the impact of deferred rent paid, we collected nearly 100% of original cash rent due for 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 $2.7 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.

The COVID-19 global pandemic created several risks and uncertainties that impacted our business, including our financial condition, future results of operations and our liquidity.

Seniors Housing Properties

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.

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

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

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%.

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

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 stabilized until December 31, 2022.

As of March 31, 2023, occupancy in this segment reached 73.3%, representing a decline from December 31, 2022 of 1.8%.

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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September 30, 2022 50 4,374 75.8%

December 31, 2022 50 4,374 75.1%

March 31, 2023 50 4,374 73.3%

(1) Exclusive of two land parcels.

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.

See below for additional information on the CARES Act.

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

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

Furthermore, as infections decline and more vaccinations and boosters are administered during 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.

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.

Since the second quarter of 2021, we experienced relative stability in occupancy and operating costs in our SHOP portfolio.

Beginning in the year ended December 31, 2022, our third party operators needed to increase their use of temporary contract labor and agencies, and the amount they pay for overtime wages and bonuses, in response to a shortage of workers, largely due to, among other things, increased inflation raising the cost of labor generally and lack of qualified personnel that our third party operators are able to employ on a permanent basis.

Costs incurred from contract labor and agencies for care providers decreased in our SHOP segment by $0.5 million, from $1.2 million in the three months ended March 31, 2022 to $0.7 million as compared to the three months ended March 31, 2023.

However, these costs were more than offset by increased wage costs for direct employees of our third party operators of $2.7 million between the periods.

Because occupancy levels have not recovered to their pre-pandemic rates (as noted in the table above) 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 labor costs.

We have also granted rent concessions since the onset of the COVID-19 pandemic which serve to reduce revenue in our SHOP segment.

We offered $0.6 million rent concessions during the three months ended March 31, 2023, and $1.3 million during the three months ended March 31, 2022.

The adverse financial impacts of the COVID-19 pandemic were partially offset by funds we received under the CARES Act.

On March 27, 2020, the CARES Act was signed into law and it provided funding to Medicare providers in order to alleviate financial hardship 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 lost revenues attributable to COVID-19.

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.

We did not receive any funding from the CARES Act during the three months ended March 31, 2023 or 2022.

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

We recognized funding under this program as a reduction of property operating and maintenance expenses in our consolidated statements of operations to offset the negative impacts of COVID-19.

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

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

Credit Facility Covenants

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 fiscal quarter 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.

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.

Prospectively, based upon our current expectations, we believe our operating results through June 30, 2023 will allow us to comply with these covenants.

However, we believe our operating results may not be sufficient to comply with the increased Fixed Charge Coverage Ratio, which increases from 1.20 to 1.00 to 1.35 to 1.00 commencing with the quarter ending September 30, 2023 and thereafter.

We have obtained such waivers and modifications from the lender group in the past, but there can be no assurance that such a waiver or modification will be granted in future periods.

Additionally, we have executed a non-binding term sheet with potential lenders to provide long-term, fixed-rate, secured mortgage financing, utilizing some or all of our unencumbered MOB properties as collateral.

The proceeds from this loan are expected to exceed the balance of the Credit Facility and will be used to repay all amounts thereunder, which was $200.0 million as of March 31, 2023.

In connection with the lenders’ agreement to lock the interest rate on a portion of the loan, we provided a $7.8 million deposit in the three months ended March 31, 2023 to the potential lenders as part of our negotiations, which was recorded within prepaid expenses and other assets on our consolidated balance sheet as of March 31, 2023.

Subsequent to March 31, 2023, we provided an additional $1.1 million to the potential lenders.

If the proposed secured mortgage financing is consummated pursuant to its proposed terms, we will be refunded our deposit at closing, otherwise it will be applied against any breakage costs incurred by the potential lenders.

We expect to close the loan in the three months ended June 30, 2023, however, there can be no assurance that this potential secured mortgage financing will close on its contemplated terms, or at all.

For additional information on the risks and uncertainties associated with the COVID-19 pandemic, please see Item 1A.

“Risk Factors — We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the COVID-19 pandemic” included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 17, 2023 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.

Significant Accounting Estimates and Critical Accounting Policies

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 2021 Annual Report on Form 10-K.

Except for those required by new accounting pronouncements discussed below, there have been no material changes from these 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 September 30, 2022:

The following table presents certain additional information about the properties we owned as of March 31, 2023:

Portfolio Number

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Seniors Housing — Operating Properties 52 (4) 4,030,413 73.3% (5) N/A 1,142,056

Land 2 — N/A N/A 3,665

Total Portfolio 207 9,191,763 $ 2,596,178

_______________

(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).

(1) Inclusive of leases signed but not yet commenced as of March 31, 2023.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of March 31, 2023.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of March 31, 2023) net of gross market lease intangible liabilities ($19.6 million total as of March 31, 2023).

Impairment charges are already reflected within gross asset value.

(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.

(4) Includes two parcels of land

(5) Weighted by unit count as of March 31, 2023.

As of March 31, 2023, we had 4,374 rentable units in our SHOP segment.

Excludes land parcels.

N/A Not applicable.

Results of Operations

Same Store Properties

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

As of September 30, 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 September 30, 2022:

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

As of March 31, 2023, we owned 207 properties.

There were 198 properties owned for the entire year ended December 31, 2022 and the three months ended March 31, 2023 (our “Same Store Properties), including two vacant land parcels.

Since January 1, 2022, we acquired nine properties (our “Acquired Properties”) and disposed of four properties (Disposed Properties).

The following table presents a roll-forward of our properties owned from January 1, 2022 to March 31, 2023:

MOB SHOP Total

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Number of properties, December 31, 2022 150 52 202

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

Acquisition activity during the three months ended March 31, 2023 5 — 5

Disposition activity during the three months ended March 31, 2023 — — —

Number of properties, March 31, 2023 155 52 207

Number of Same Store Properties 146 52 198

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, and please see the Inflation and Part II — Item 1A.

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)

Number of Acquired Properties 9 — 9

Number of Disposed Properties — 4 4

Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022

Net loss attributable to common stockholders was $17.5 million and $26.8 million for the three months ended March 31, 2023, and 2022, respectively.

The following table shows our results of operations for the three months ended March 31, 2023 and 2022 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2023 2022 $

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85,530 95,950 (10,420)

Operating loss before gain on sale of real estate investments (8,544) (28,606) 20,062

Gain on sale of real estate investments 194 — 194

Operating loss (8,350) (28,606) 20,256

Operating income (loss) before gain (loss) on sale of real estate investments 1,825 (12,300) 14,125

Gain (loss) on sale of real estate investments 115 (303) 418

Operating income (loss) 1,940 (12,603) 14,543

Other income (expense):

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Interest and other income 5 12 (7)

Gain (loss) on non-designated derivatives 1,826 (33) 1,859

(Loss) gain on non-designated derivatives (182) 994 (1,176)

Total other expenses

3 unchanged sentences

Net loss (14,068) (23,400) 9,332

Net (income) loss attributable to non-controlling interests 22 331 (309)

Net loss attributable to non-controlling interests 9 49 (40)

Allocation for preferred stock (3,450) (3,450) —

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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 items of expense and income included in the financial statements in calculating net loss attributable to common stockholders.

We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property-level and presents such items on an unlevered basis.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measure s included elsewhere in this Quarterly Report for additional disclosure and a reconciliation to our net income (loss) attributable to common stockholders.

Segment Results — Medical Office Buildings

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

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total (4)

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

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

Revenue from tenants $ 30,153 $ 29,428 $ 725 $ 3,032 $ 400 $ 2,632 $ — $ 985 $ (985) $ 33,185 $ 30,813 $ 2,372

Property operating and maintenance

9,005 8,247 758 372 108 264 — 448 (448) 9,377 8,803 574

NOI $ 21,148 $ 21,181 $ (33) $ 2,660 $ 292 $ 2,368 $ — $ 537 $ (537) $ 23,808 $ 22,010 $ 1,798

_______________

(1) Our MOB segment included 129 Same Store properties.

(2) Our MOB segment included 20 Acquisition properties.

(3) Our MOB segment included three Disposition properties.

(4) Our MOB segment included 149 properties.

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

These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses in our MOB segment.

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.

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 September 30, 2022 and 2021:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total (4)

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

Revenue from tenants $ 51,600 $ 48,964 $ 2,636 $ — $ — $ — $ (1,325) $ 2,229 $ (3,554) $ 50,275 $ 51,193 $ (918)

Property operating and maintenance

42,311 40,566 1,745 — — — (490) 1,849 (2,339) 41,821 42,415 (594)

$ 9,289 $ 8,398 $ 891 $ — $ — $ — $ (835) $ 380 $ (1,215) $ 8,454 $ 8,778 $ (324)

(1) Our SHOP segment included 52 Same Store properties, including two land parcels.

(2) Our SHOP segment included zero Acquisition properties.

(3) Our SHOP segment included nine Disposition properties.

(4) Our SHOP segment included 52 properties, including two land parcels.

Revenue from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services.

Property operating and maintenance expenses 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 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 $0.2 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.

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 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.

See the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken in response.

Other Results of Operations

Impairment Charges

We recorded 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.

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 loss attributable to common stockholders.

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

For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate-level.

In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property-level.

NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently.

We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net loss to common stockholders as presented in our consolidated statements of operations.

NOI should not be considered as an alternative to net loss attributable to common stockholders 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 Properties, Acquired Properties and Disposed Properties NOI for the three months ended March 31, 2023:

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 11,834 $ 679 $ 398 $ — $ 28 $ 44 $ (30,492) $ (17,509)

Operating fees to related parties — — — — — — 6,387 6,387

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 $5.2 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 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.

See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on our fees and expense reimbursements.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses were 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 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 $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 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.

Acquisition and transaction related — — — — — — 63 63

General and administrative 49 26 — — — — 4,946 5,021

Depreciation and amortization 12,006 7,851 319 — — — — 20,176

Interest expense 21 334 — — — — 15,430 15,785

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.

Recent and continuing increases in interest rates may adversely impact the terms on which we may borrow in the future and thus our results of operations.

Interest and other income (1) (1) — — — — (3) (5)

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 $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 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 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 $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 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 $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 $

Revenue from tenants $ 250,936 $ 246,602 $ 4,334

Operating expenses:

Property operating and maintenance 156,880 152,133 4,747

Gain on sale of real estate investments — — — — — (115) — (115)

Loss on non-designated derivative instruments — — — — — — 182 182

Income tax (benefit) expense — — — — — — 46 46

Allocation for preferred stock — — — — — — 3,450 3,450

Net loss attributable to non-controlling interests — — — — — — (9) (9)

NOI $ 23,909 $ 8,889 $ 717 $ — $ 28 $ (71) $ — $ 33,472

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 434 $ (819) $ — $ — $ 25 $ (1,132) $ (25,309) $ (26,801)

Impairment charges 10,644 — — — — — — 10,644

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Depreciation and amortization 12,346 7,732 — — — 342 — 20,420

Total expenses

277,716 278,746 (1,030)

Operating loss before gain on sale of real estate investments (26,780) (32,144) 5,364

Gain (loss) on sale of real estate investments (109) 2,284 (2,393)

Operating loss (26,889) (29,860) 2,971

Other income (expense):

Interest expense 66 475 — — — — 11,223 11,764

Interest and other income (2) — — — (9) — (1) (12)

Gain on non-designated derivatives 3,212 (32) 3,244

Total other expenses

(33,862) (35,988) 2,126

Loss before income taxes (60,751) (65,848) 5,097

Income tax expense (159) (162) 3

Net loss (60,910) (66,010) 5,100

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

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

Gain on non-designated derivative instruments — — — — — — (994) (994)

Income tax (benefit) expense — — — — — — 39 39

Allocation for preferred stock — — — — — — 3,450 3,450

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

Net Operating Income

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio.

NOI is equal to revenue from tenants less property operating and maintenance expenses.

NOI excludes all other financial statement amounts included in net income (loss) attributable to common stockholders.

We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis.

Net income attributable to non-controlling interests — — — — — — (49) (49)

NOI $ 23,643 $ 7,388 $ — $ — $ 16 $ (487) $ — $ 30,560

Segment Results — Medical Office Buildings

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

The following table presents the revenue and property operating and maintenance expense and the period to period change within our MOB segment for the three months ended March 31, 2023 and 2022:

Same Store (1)

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Segment Total (4)

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)

Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2023 2022 $ 2023 2022 $ 2023 2022 $ 2023 2022 $

Revenue from tenants $ 32,845 $ 32,339 $ 506 $ 764 $ — $ 764 $ — $ 9 $ (9) $ 33,609 $ 32,348 $ 1,261

$ 85,824 $ 85,665 $ 159 $ 12,193 $ 2,027 $ 10,166 $ 9 $ 3,060 $ (3,051) $ 98,026 $ 90,752 $ 7,274

Property operating and maintenance

8,936 8,696 240 47 — 47 (28) (7) (21) 8,955 8,689 266

NOI $ 23,909 $ 23,643 $ 266 $ 717 $ — $ 717 $ 28 $ 16 $ 12 $ 24,654 $ 23,659 $ 995

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(1) Our MOB segment included 146 Same Store Properties.

(2) Our MOB segment included 20 Acquisition properties.

(3) Our MOB segment included three Disposition properties.

(4) Our MOB segment included 149 properties.

(2) Our MOB segment included nine Acquired Properties.

(3) Our MOB segment did not include any Disposed Properties.

(4) Our MOB segment included 155 total properties.

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

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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.

Revenue from Tenants

During the three months ended March 31, 2023, revenue from tenants increased by $1.3 million in our MOB segment as compared to the three months ended March 31, 2022, which was primarily driven by an increase in revenue from tenants of $0.8 million due to our Acquired Properties and an increase in revenue from tenants of $0.5 million due to our Same Store Properties, partially offset by an immaterial decrease in revenue from tenants due to our Disposed Properties.

The increase in our Same Store properties revenue from tenants was primarily driven by an increase of operating expense reimbursement revenue from increased property, operating and maintenance expenses, as well as from marginally higher occupancy in the three months ended March 31, 2023 as compared to March 31, 2022.

Property Operating and Maintenance

During the quarter ended March 31, 2023, property operating and maintenance costs in our MOB segment increased by $0.3 million as compared to the same period last year, primarily as a result of increased costs from our Same Store Properties of $0.2 million.

The increase in property operating and maintenance expenses from our Same Store properties is primarily the result of the impacts of inflation on utility and maintenance costs, which are largely reimbursed by tenants.

Segment Results — Seniors Housing Operating Properties

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

The following table presents the revenue and property operating and maintenance expenses and the period to period change within our SHOP segment for the three months ended March 31, 2023 and 2022:

Same Store (1)

2 unchanged sentences

Segment Total (4)

Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease) Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2023 2022 $ 2023 2022 $ 2023 2022 $ 2023 2022 $

Revenue from tenants $ 53,746 $ 50,027 $ 3,719 $ — $ — $ — $ — $ 1,275 $ (1,275) $ 53,746 $ 51,302 $ 2,444

$ 152,903 $ 146,369 $ 6,534 $ — $ — $ — $ 7 $ 9,481 $ (9,474) $ 152,910 $ 155,850 $ (2,940)

Property operating and maintenance

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(1) Our SHOP segment included 52 Same Store Properties (including two land parcels).

(2) Our SHOP segment included zero Acquisition properties.

(3) Our SHOP segment included nine Disposition property.

(4) Our SHOP segment included 52 properties, including two land parcels.

Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services.

(2) Our SHOP segment did not include any Acquired Properties.

(3) Our SHOP segment included four Disposed Properties.

(4) Our SHOP segment included 52 total properties (including two land parcels).

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 $1.1 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.

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 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.

See the “ Overview — Management Update on the Impacts of the COVID-19 Pandemic ” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken in response.

Revenue from Tenants

During the three months ended March 31, 2023, revenue from tenants increased by $2.4 million in our SHOP segment as compared to the three months ended March 31, 2022, which was due to an increase in revenue from tenants of $3.7 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $1.3 million from our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, partially offset by marginally lower occupancy in the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

Additionally, we offered less rent concessions during the three months ended March 31, 2023, which amounted to $0.6 million as compared to $1.3 million of rent concessions offered during the three months ended March 31 2022.

Property Operating and Maintenance

During the three months ended March 31, 2023, property operating and maintenance expenses increased $0.5 million in our SHOP segment as compared to the three months ended March 31, 2022, primarily due to an increase in property operating and maintenance expenses of $2.2 million in our Same Store Properties, partially offset by a decrease of $1.7 million from our Disposed Properties.

Our Same Store properties operating and maintenance expenses increased in the quarter ended March 31, 2023 compared to the same period last year, primarily from amounts our third party operators pay for overtime wages and bonuses, as well as overall inflation on utilities and supplies which increased our property maintenance and operating costs by $2.7 million.

These increased costs were partially offset by a decrease in contract labor and agencies at our Same Store Properties of $0.5 million.

Other Results of Operations

Impairment Charges

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.

We did not record any impairment charges during the quarter ended March 31, 2023.

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

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 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 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.

Operating fees to related parties were $6.4 million and $6.3 million for the three months ended March 31, 2023 and 2022, 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 for both the three months ended March 31, 2023 and 2022.

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

There were no incentive fees incurred in either of the three months ended March 31, 2023 or 2022.

Property management fees decreased to $1.0 million from $1.0 million for the three months ended March 31, 2023 and 2022, respectively.

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Acquisition and Transaction Related Expenses

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.

Acquisition and transaction related expenses were approximately $0.1 million for the three months ended March 31, 2023, compared to $0.6 million for the three months ended March 31, 2022.

The decrease was due to (i) $0.2 million of decreased dead deal costs, as well as from (ii) $0.1 million of prepayment penalties on our mortgage repayments and $0.1 million of termination fees paid to former SHOP operators which were incurred in the three months ended March 31, 2022.

General and Administrative Expenses

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.

General and administrative expenses increased by $0.1 million to $5.0 million for the three months ended March 31, 2023 compared to $4.9 million for the three months ended March 31, 2022, which includes $2.4 million and $2.2 million for the three months ended March 31, 2023 and March 31, 2022, respectively, incurred in expense reimbursements.

Depreciation and Amortization Expenses

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

Depreciation and amortization expense decreased $0.2 million to $20.2 million for the three months ended March 31, 2023 from $20.4 million for the three months ended March 31, 2022.

Gains on Sale of Real Estate Investments

We did not dispose of any properties in the three months ended March 31, 2023.

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 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.

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 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.

We completed the sale of the LaSalle Properties in the three months ended March 31, 2022 and recorded a loss on sale of $0.3 million.

Interest Expense

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.

Interest expense increased by $4.0 million to $15.8 million for the three months ended March 31, 2023 from $11.8 million for the three months ended March 31, 2022.

The increase in interest expense resulted from higher average rates average balances of amounts outstanding under our Revolving Credit Facility during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

As of March 31, 2023, our outstanding debt obligations were $1.1 billion at a weighted average interest rate of 5.18% per year.

As of March 31, 2022, we had total borrowings of $1.1 billion, at a weighted average interest rate of 3.47% per year.

The weighted-average interest rates include the impact of our “pay-fixed” interest rate swaps which are designated as hedges on a portion of our variable-rate borrowings.

Our interest expense in future periods will vary based on our level of future borrowings and the cost of borrowings, among other factors (including the impact of variable rates to the extent such borrowings are not hedged).

Recent and continuing increases in interest rates may adversely impact the terms on which we may borrow in the future and thus our results of operations.

Interest and Other Income

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

Interest and other income was approximately $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 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)

Interest and other income was approximately $5,000 and $12,000 for the three months ended March 31, 2023 and 2022, respectively.

Gains (Losses) on Non-Designated Derivatives

The loss in the three months ended March 31, 2023 and March 31, 2022 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 relevant amounts in each period represent the change in value and any cash received on the non-designated derivatives.

Income Tax Expense

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.

We recorded an income tax expense of $46,000 and $39,000 for the three months ended March 31, 2023 and 2022, 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 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 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.

Since that time, our TRS’s operating performance has not significantly improved and thus we have recorded a 100% valuation allowance on our net deferred tax assets as of March 31, 2023.

Net Loss Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $9,000 for the three months ended March 31, 2023 and net loss attributable to non-controlling interests was approximately $49,000 for the three months ended March 31, 2022.

These amounts represent the portion of our net loss that is related to the Series A Preferred Units held by third parties, Common OP Units held by third parties, and non-controlling interest holders in our subsidiaries that own certain properties.

Cash Flows from Operating Activities

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.

Cash inflows included non-cash items of $30.4 million (net loss of $60.9 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges) and, a decrease in prepaid expenses and other assets of $1.0 million.

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 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.

During the three months ended March 31, 2023, net cash used in operating activities was $5.0 million.

Cash inflows included non-cash items of $8.5 million (net loss of $14.1 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges), a decrease in deferred rent and other liabilities of $0.5 million and a decrease in prepaid expenses and other assets of $0.5 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $4.4 million and by an increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.2 million.

During the three months ended March 31, 2022, net cash provided by operating activities was $5.9 million.

Cash inflows include non-cash items of $9.1 million (net loss of $23.4 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges), a decrease in prepaid expenses and other assets of $1.0 million and an increase in deferred rent and other liabilities of $1.8 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $2.0 million and by an increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.4 million.

Cash Flows from Investing Activities

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 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.

Net cash used in investing activities during the three months ended March 31, 2023 was $29.1 million.

The cash used in investing activities included $25.4 million for the acquisition of five properties and $3.6 million in capital expenditures.

Net cash used in investing activities during the three months ended March 31, 2022 was $8.4 million.

The cash used in investing activities included $11.8 million from the sale of the four LaSalle Properties and $3.3 million in capital expenditures.

Cash Flows from Financing Activities

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.

Net cash provided by financing activities during the three months ended March 31, 2023 was $8.9 million.

Cash inflows consisted of proceeds from borrowings under our Revolving Credit Facility of $20.0 million and proceeds from terminated “pay-fixed” interest rate swaps of $1.9 million.

Cash outflows consisted of payments for deposits for financings of $7.8 million, dividends paid to holders of Series A Preferred Stock of $1.8 million, dividends to paid holders of Series B Preferred Stock of $1.6 million, payments on our Fannie Mae Master Credit Facilities of $1.4 million and principal payments on our mortgages of $0.3 million.

Net cash used in financing activities of $6.9 million during the three months ended March 31, 2022 related to cash outflows of payments of deferred financing costs of $40,000 and dividends paid to preferred stockholders of $1.8 million, payments for derivative instruments of $39,000 and principal payments on mortgages of $3.4 million.

Liquidity and Capital Resources

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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 Inflation and Part II – Item 1A.

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 September 30, 2022 we had $40.1 million of cash and cash equivalents, and our ability to use this cash on hand is restricted.

our property operations and draws on the Revolving Credit Facility, which may include additional borrowings following the repayments we were or are required to make thereunder.

As of March 31, 2023 and December 31, 2022 we had $35.8 million and $53.7 million of cash and cash equivalents, respectively, 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 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.

As of March 31, 2023, $189.2 million was available for future borrowings under our Revolving Credit Facility, of which $112.0 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 on our common stock, will no longer apply starting in the “Commencement Quarter” which is a quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and our Fixed Charge Coverage Ratio is not less than 1.50 to 1.00 for the most recently ended four fiscal quarters.

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

We satisfied the conditions during the quarter ended 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.

We did not satisfy the conditions during the quarter ended March 31, 2023 in order to elect the quarter ending June 30, 2023 as the Commencement Quarter.

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.

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Until the first day of the Commencement Quarter, we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to repay amounts outstanding under the Revolving Credit Facility, to the extent there are any such amounts outstanding.

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

We 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.

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%.

As of March 31, 2023, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 42.4%.

Net debt totaled $1.1 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($35.8 million).

Gross asset value totaled $2.6 billion, which represents total real estate investments, at cost ($2.6 billion) net of gross market lease intangible liabilities ($19.6 million).

Impairment charges are already reflected within gross asset value.

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

Cumulative impairment charges are already reflected within gross asset value.

As of March 31, 2023, we had total gross borrowings of $1.1 billion, at a weighted-average interest rate of 5.18%.

As of December 31, 2022, we had total gross borrowings of $1.1 billion at a weighted average interest rate of 4.83%.

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.

The weighted-average interest rates include the impact of “pay-fixed” swaps that are designated as hedging instruments on a portion of our variable-rate debt.

As of March 31, 2023, the carrying value of our real estate investments, at cost was $2.6 billion, with $0.9 billion of this asset value pledged as collateral for mortgage notes payable, $0.6 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities and $1.0 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.

We expect to utilize proceeds from our Credit Facility to fund future property acquisitions, as well as, subject to the terms of our Credit Facility, other sources of funds that may be available to us.

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

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

Unencumbered real estate investments, at cost as of March 31, 2023 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 September 30, 2022, we had $585.5 million in mortgage notes payable outstanding.

As of March 31, 2023, we had $584.9 million in mortgage notes payable outstanding.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2023 and 2024 are $0.9 million and $1.2 million, respectively.

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Our Credit Facility consists of two components, the Revolving Credit Facility and our Term Loan.

The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to one one-year extension at our option.

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

Our Term Loan is interest-only and matures on March 13, 2024.

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

As of March 31, 2023, $150.0 million was outstanding under our Term Loan, and $50.0 million was outstanding under the Revolving Credit Facility.

The unused borrowing availability under the Credit Facility was $189.2 million based on the current borrowing base, of which $112.0 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 September 30, 2022, the Term Loan had an effective interest rate per annum equal to 5.12%.

As of March 31, 2023, the Term Loan had an effective interest rate per annum equal to 5.11%.

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.

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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.

However, we were in compliance with the new covenants under the Credit Facility for the six fiscal quarter periods ended March 31, 2023.

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

Prospectively, based upon our current expectations, we believe our operating results through June 30, 2023 will allow us to comply with these covenants.

We have obtained such waivers and modifications from the lender group in the past, but there can be no assurance that such a waiver or modification will be granted in future periods.

The proceeds from this loan are expected to exceed the balance of the Credit Facility and will be used to repay all amounts outstanding thereunder, which was $200.0 million as of March 31, 2023.

Subsequent to March 31, 2023, we provided an additional $1.1 million to the potential lenders.

If the proposed secured mortgage financing is consummated pursuant to its proposed terms, we will be

refunded our deposit at closing, otherwise it will be applied against any breakage costs incurred by the potential lenders.

We expect to close the loan in the three months ended June 30, 2023, however, there can be no assurance that this potential secured mortgage financing will close on its contemplated terms, or at all.

Fannie Mae Master Credit Facilities

As of September 30, 2022, $353.1 million was outstanding under the Fannie Mae Master Credit Facilities.

As of March 31, 2023, $350.6 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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Borrowings under the Fannie Mae Master Credit Facilities bear annual interest at a rate that varies on a monthly basis and is equal to the sum of the current LIBOR for one month U.S.

dollar-denominated deposits and 2.62%, with a combined floor of 2.62%.

dollar-denominated deposits and a spread (2.41% and 2.46% for the Capitol One Facility and the KeyBank Facility, respectively) with a combined floor of 2.62%.

The Fannie Mae Master Credit Facilities mature on November 1, 2026.

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Capital Expenditures

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 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 September 30, 2022

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

During the three months ended March 31, 2023, our capital expenditures were $3.6 million, of which $1.2 million related to our MOB segment and $2.4 million related to our SHOP segment.

We anticipate this rate of capital expenditures for the MOB and SHOP segments throughout 2023.

Acquisitions — Three Months Ended March 31, 2023

During the three months ended March 31, 2023, we acquired five single-tenant MOBs for an aggregate contract purchase price of $25.2 million.

These acquisitions were funded with $20.0 million of borrowings from our Revolving Credit Facility and the remainder with cash on hand.

Acquisitions — Subsequent to March 31, 2023

We have not acquired any properties subsequent to March 31, 2023.

Dispositions — Three Months Ended March 31, 2023

During the three months ended March 31, 2023, we did not sell any properties.

Dispositions — Subsequent to March 31, 2023

Subsequent to March 31, 2023, we disposed of two SHOP properties for an aggregate contract sales price of $5.7 million.

Pursuant to the terms of the Credit Facility, the net proceeds from the disposals were used to repay amounts outstanding under the Revolving Credit Facility.

The properties were formally pledged to the asset pool comprising the borrowing base under the Credit Facility.

Share Repurchase Program

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Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”), Modified Funds from Operations (“MFFO”) and NOI.

This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”) and Modified Funds from Operations (“MFFO”).

For additional information on Net Operating Income, another non-GAAP financial measure we use to evaluate our performance, see Results of Operations — Net Operating Income above.

While NOI is a property-level measure, MFFO is based on our total performance as a company and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties.

Additionally, NOI as defined herein, includes straight-line rent which is excluded from MFFO.

A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net income, are provided below:

Funds from Operations and Modified Funds from Operations

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In the future, updates to the White Paper or the Practice Guideline may be published or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.

Accounting Treatment of Rent Deferrals

All of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information).

As a result of relief granted by the FASB and SEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO has not been, and we do not expect it to be, significantly impacted by these types of deferrals.

As of 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 income (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 loss attributable to stockholders in our calculation of FFO and MFFO for the periods indicated.

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

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

Three Months Ended March 31,

(In thousands) 2023 2022

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Adjustments for non-controlling interests (3)

(124) (208) (386) (409)

FFO (as defined by NAREIT) attributable to stockholders

5,689 3,842 14,658 18,827

Acquisition and transaction related 63 579

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Straight-line rent adjustments

(183) (148) (1,236) (693)

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

— (46) — (280)

Amortization of mortgage premiums and discounts, net

(Gain) loss on non-designated derivatives 182 (994)

Cash received from non-designated derivative instruments 926 —

Deferred tax asset valuation allowance (2)

216 17 1,358 (1,009)

Adjustments for non-controlling interests (3)

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(1) Net of non-real estate depreciation and amortization.

(2) Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced.

These amounts are included in the straight-line rent receivable on our balance sheets but are considered to be earned revenue attributed to the current period for rent that was deferred, for purposes of MFFO, as they are expected to be collected.

Accordingly, when the deferred amounts are collected, the amounts reduce MFFO.

As of March 31, 2021, all deferred amounts have been collected and we have not deferred any additional amounts since the year ended December 31, 2020.

(2) This is a non-cash item and is added back as it is not considered a part of operating performance.

(3) Represents the portion of the adjustments allocable to non-controlling interests.

Net Operating Income

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio.

NOI is equal to revenue from tenants less property operating and maintenance expenses.

NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss).

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.

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.

For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level.

In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level.

NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently.

We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements.

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 September 30, 2022:

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 9,465 $ (7,875) $ 1,323 $ — $ — $ (641) $ (25,575) $ (23,303)

Impairment charges — 8,949 — — — — — 8,949

Operating fees to related parties — — — — — — 6,333 6,333

Acquisition and transaction related — — 1 — — — 198 199

General and administrative 22 — — — — — 4,449 4,471

Depreciation and amortization 11,641 7,877 1,336 — — — — 20,854

Interest expense 21 338 — — — — 12,925 13,284

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)

Income tax (benefit) expense — — — — — — 77 77

Allocation for preferred stock — — — — — — 3,450 3,450

Net loss attributable to non-controlling interests — — — — — — (22) (22)

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 September 30, 2021:

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 9,664 $ 493 $ 74 $ — $ 281 $ (26,600) $ (25,880) $ (41,968)

Impairment charges — — — — — 26,642 — 26,642

Operating fees to related parties — — — — — — 6,045 6,045

Acquisition and transaction related — — — — — — 2,198 2,198

General and administrative 25 1 — — — — 4,697 4,723

Depreciation and amortization 11,414 7,560 218 — 256 338 — 19,786

Interest expense 80 344 — — — — 11,351 11,775

Interest and other income (2) — — — — — (2) (4)

Loss on non-designated derivative instruments — — — — — — 33 33

Income tax (benefit) expense — — — — — — 55 55

Allocation for preferred stock — — — — — — 1,834 1,834

Net income attributable to non-controlling interests — — — — — — (331) (331)

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

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 18,801 $ (15,291) $ 4,013 $ — $ 24 $ (2,324) $ (76,382) $ (71,159)

Impairment charges 10,644 15,142 — — — — — 25,786

Operating fees to related parties — — — — — — 19,003 19,003

Acquisition and transaction related 212 — 1 — — — 940 1,153

General and administrative 66 3 — — — — 13,300 13,369

Depreciation and amortization 32,063 23,417 5,703 — — 342 — 61,525

Interest expense 95 1,050 — — — — 35,953 37,098

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

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

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

Income tax (benefit) expense — — — — — — 159 159

Allocation for preferred stock — — — — — — 10,349 10,349

Net loss attributable to non-controlling interests — — — — — — (100) (100)

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

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 23,476 $ 6,546 $ 238 $ — $ 1,571 $ (29,438) $ (72,576) $ (70,183)

Impairment charges 6,082 — — — — 27,519 — 33,601

Operating fees to related parties — — — — — — 17,851 17,851

Acquisition and transaction related — 3 — — — — 2,450 2,453

General and administrative 70 11 — — — — 13,237 13,318

Depreciation and amortization 32,538 22,650 1,180 — 1,743 1,279 — 59,390

Interest expense 242 1,062 — — — — 34,712 36,016

Interest and other income (18) (1) — — — — (41) (60)

Gains (losses) on sale of real estate investments — — — — (2,343) 59 — (2,284)

Gain on non-designated derivative instruments — — — — — — 32 32

Income tax (benefit) expense — — — — — — 162 162

Allocation for preferred stock — — — — — — 4,402 4,402

Net loss attributable to non-controlling interests — — — — — — (229) (229)

NOI $ 62,390 $ 30,271 $ 1,418 $ — $ 971 $ (581) $ — $ 94,469

Dividends and Other Distributions

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

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

Dividends on our Series B Preferred Stock accrue in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to Series B Preferred Stock holders, which is equivalent to 7.125% of per annum in the $25.00 liquidation preference per share of Series B Preferred Stock.

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

Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the

next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.

Dividends on our Series B Preferred Stock are declared quarterly in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to Series B Preferred Stock holders, which is equivalent to 7.125% of per annum in the $25.00 liquidation preference per share of Series B Preferred Stock.

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

The first dividend on the Series B Preferred Stock was paid in January 2022.

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 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, 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.

Since mid-2020, we have not paid cash dividends on our shares of common stock but have issues stock dividends to the holders.

The stock dividends have been declared quarterly using a rate of $0.85 per share per year.

The number of shares issued with each dividends is based on the estimated per share asset value in effect on the applicable date.

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.

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The following table shows the sources for the payment of distributions to preferred stockholders, including distributions on unvested restricted shares and Common OP Units, but excluding distributions related to Class B Units as these distributions are recorded as an expense in our consolidated statements of operations and comprehensive loss, for the periods indicated.

Three Months Ended Year-To-Date

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

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

No cash distributions were made to common stockholders, restricted shareholders, holders of Common OP

Units or holders of Class B Units in the quarter ended March 31, 2023.

March 31, 2023

(In thousands) Amounts Percentage of Distributions

Distributions:

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Dividends to holders of Series B Preferred Stock 1,616 46.3%

Distributions paid to holders of Series A OP Units 46 46 46 138

Total distributions $ 3,406 $ 3,585 $ 3,496 $ 10,487

Distributions paid to holders of Series A Preferred Units 46 1.3%

Total cash distributions $ 3,494 100.0%

Source of distribution coverage:

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$ 3,494 100.0%

Available cash on hand

Total source of distribution coverage $ 3,494 100.0%

Cash flows provided by operations (in accordance with GAAP)

$ 5,882 $ 7,855 $ 7,358 $ 21,095

Net loss (in accordance with GAAP) $ (14,068)

(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.

For the three months ended March 31, 2023, cash flows used in operations were $5.0 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.

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

Our ability to pay dividends on our Series A Preferred Stock and Series B Preferred Stock and starting with the Commencement Quarter, other distributions and maintain compliance with the restrictions on the payment of distributions in our Credit Facility depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties.

Our ability to pay dividends on our Series A Preferred Stock, Series B Preferred Stock and Series A Preferred Units and, starting with the Commencement Quarter, other distributions and maintain compliance with the restrictions on the payment of distributions in our Credit Facility depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties.

There can be no assurance that we will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all.

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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.

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

provided, however, that from and after the Commencement Quarter, we must satisfy

a minimum Fixed Charge Coverage Ratio of 1.50 to 1.00.

Prospectively, based upon our current expectations, we believe our operating results through June 30, 2023 will allow us to comply with these covenants.

We have obtained such waivers and modifications from the lender group in the past, but there can be no assurance that such a waiver or modification will be granted in future periods.

See Note 5 — Credit Facilities, Net 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.

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

We 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.

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

As of March 31, 2023, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 5.0%.

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