What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-11 compared with 2023-05-12 · 838 added, 667 removed, 1326 unchanged (53% of the section changed)

18 unchanged sentences

Operating lease right-of-use assets 7,764 7,814

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

Prepaid expenses and other assets (including $ 2,262 of prepayments to related parties as of June 30, 2023)

33,125 34,554

5 unchanged sentences

Market lease intangible liabilities, net 8,639 9,407

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

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

42,348 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 March 31, 2023 and December 31, 2022

3,977,144 issued and outstanding as of June 30, 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 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

3,630,000 issued and outstanding as of June 30, 2023 and December 31, 2022

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 108,284,434 shares and 105,080,531 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,462,523 2,417,059

10 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

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

2023 2022 2023 2022

Revenue from tenants $ 86,104 $ 83,826 $ 173,459 $ 167,476

8 unchanged sentences

84,985 89,762 170,515 185,712

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 income (loss) before loss on sale of real estate investments 1,119 ( 5,936 ) 2,944 ( 18,236 )

Loss on sale of real estate investments ( 306 ) — ( 191 ) ( 303 )

Operating income (loss) 813 ( 5,936 ) 2,753 ( 18,539 )

2 unchanged sentences

Interest and other income

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

Gain on non-designated derivatives 286 392 104 1,386

Total other expenses

6 unchanged sentences

Net loss attributable to common stockholders ( 20,759 ) ( 21,055 ) ( 38,268 ) ( 47,856 )

Other comprehensive (loss) income:

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

Other comprehensive income (loss):

Unrealized gain (loss) on designated derivatives 5,466 10,170 ( 1,965 ) 36,436

Comprehensive loss attributable to common stockholders $ ( 15,293 ) $ ( 10,885 ) $ ( 40,233 ) $ ( 11,420 )

9 unchanged sentences

(In thousands, except share data)

Three Months Ended March 31, 2023

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

Six Months Ended June 30, 2023

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

Par Value Number of

3 unchanged sentences

Balance, December 31, 2022 3,977,144 40 3,630,000 $ 36 105,080,531 $ 1,051 $ 2,417,059 $ 36,910 $ ( 1,462,457 ) $ 992,639 $ 6,551 $ 999,190

Issuance of Preferred Stock, net — — — — — — ( 2 ) — — ( 2 ) — ( 2 )

Share-based compensation, net — — — — — — 460 — — 460 — 460

8 unchanged sentences

Unrealized loss on designated derivatives — — — — — — — ( 1,965 ) — ( 1,965 ) — ( 1,965 )

Contributions from minority interests — — — — — — — — — — 284 284

Rebalancing of ownership percentage — — — — — — 52 — — 52 ( 52 ) —

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

Balance, June 30, 2023 3,977,144 $ 40 3,630,000 $ 36 108,284,434 $ 1,082 $ 2,462,523 $ 34,945 $ ( 1,545,708 ) $ 952,918 $ 6,660 $ 959,578

Three Months Ended June 30, 2023

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

Par Value Number of

2 unchanged sentences

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

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

Issuance of Preferred Stock, net — — — — — — 2 — — 2 — 2

Share-based compensation, net — — — — — — 230 — — 230 — 230

Distributions declared in common stock, $ 0.21 per share

— — — — 1,616,189 16 22,632 — ( 22,648 ) — — —

Distributions declared on Series A Preferred Stock, $ 0.46 per share

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

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

— — — — — — — — ( 1,617 ) ( 1,617 ) — ( 1,617 )

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

Net loss — — — — — — — — ( 17,310 ) ( 17,310 ) ( 22 ) ( 17,332 )

Unrealized gain on designated derivatives — — — — — — — 5,466 — 5,466 — 5,466

Contributions from minority interests — — — — — — — — — — 284 284

Rebalancing of ownership percentage — — — — — — ( 3 ) — — ( 3 ) 3 —

Balance, June 30, 2023 3,977,144 $ 40 3,630,000 $ 36 108,284,434 $ 1,082 $ 2,462,523 $ 34,945 $ ( 1,545,708 ) $ 952,918 $ 6,660 $ 959,578

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Six Months Ended June 30, 2022

Series A Preferred Stock Series B Preferred Stock Common Stock Accumulated Other Comprehensive (Loss) Income

Shares Par Value Number of

Shares Par Value Additional

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

Balance, December 31, 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

11 unchanged sentences

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

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

Three Months Ended June 30, 2022

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

Shares Par Value Number of

Shares Par Value Additional

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

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

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

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

Distributions declared in common stock, $ 0.21 per share

— — — — 1,427,447 15 21,450 — ( 21,465 ) — — —

Distributions declared on Series A Preferred Stock, $ 0.46 per share

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

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

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

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

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

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

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

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

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

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

8 unchanged sentences

Equity-based compensation 460 664

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

Loss on sale of real estate investments, net 191 303

Cash received from non-designated derivative instruments 2,301 —

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

Gain on non-designated derivative instruments ( 104 ) ( 1,386 )

Impairment charges — 16,837

4 unchanged sentences

Deferred rent ( 446 ) ( 1,801 )

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

Net cash provided by operating activities 10,677 13,737

Cash flows from investing activities:

1 unchanged sentence

Capital expenditures ( 9,140 ) ( 9,075 )

Investments in non-designated interest rate caps ( 4,580 ) —

Proceeds from sales of real estate investments 4,803 11,759

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

Net cash used in investing activities ( 34,360 ) ( 15,115 )

Cash flows from financing activities:

1 unchanged sentence

Proceeds from credit facilities 20,000 —

Proceeds from mortgage notes payable 240,000 —

Payments on mortgage notes payable ( 565 ) ( 7,199 )

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

Proceeds from termination of (payments for) derivative instruments 5,413 ( 39 )

Payments of deferred financing costs ( 7,774 ) ( 277 )

Payments of deposits for financings ( 7,783 ) —

Preferred stock issuance costs — ( 6 )

Contributions from non-controlling interests 284 —

Dividends paid on Series A Preferred stock ( 3,666 ) ( 3,666 )

9 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash, cash equivalents, end of period $ 71,705 $ 42,664

3 unchanged sentences

Cash paid for interest $ 28,093 $ 20,987

Cash paid for income taxes 140 372

Cash paid for income and franchise taxes 415 565

Non-cash investing and financing activities:

Common stock issued through stock dividends $ 44,983 $ 42,569

Proceeds from real estate sales used to repay mortgage notes payable $ 2,663 $ —

Mortgage notes payable repaid with proceeds from real estate sales $ ( 2,663 ) $ —

Proceeds from real estate sales used to repay amounts outstanding under the Prior Credit Facility $ 5,167 $ —

Amounts outstanding under the Prior Credit Facility repaid with proceeds from real estate sales $ ( 5,167 ) $ —

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

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 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”).

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

As of June 30, 2023, the Company owned 202 properties located in 33 states and comprised of 9.0 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 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.

As of June 30, 2023, the Company owned 46 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 March 31, 2023, the Company had four eligible independent contractors operating 50 SHOPs.

As of June 30, 2023, the Company had four eligible independent contractors operating 46 SHOPs.

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

3 unchanged sentences

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.

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 July 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.

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 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 months ended March 31, 2023 and 2022 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

The results of operations for the six months ended June 30, 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 months ended March 31, 2023.

Principles of Consolidation and Basis of Presentation

8 unchanged sentences

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

Impacts of the COVID-19 Pandemic

Impacts of the COVID-19 Pandemic and its Aftermath

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

The 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.

6 unchanged sentences

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.

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

Risk Factors below.

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:

COVID-19 Impact — MOB Segment

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

COVID-19 Impact — MOB Segment

June 30, 2023

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

18 unchanged sentences

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 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.

See “ CARES Act Grants” below for additional information on the CARES Act.

During the year ended December 31, 2022, the Company relied more on the use of temporary contract labor and agencies than it had historically.

The Company has since reduced its reliance on this labor source in the six months ended June 30, 2023.

However, the wage expenses (including overtime and bonus wages) incurred by the Company from employees of its third party operators has increased, in response to a shortage of workers largely due to, among other things, inflation raising the cost of labor generally and a lack of qualified personnel that the Company’s third party operators are 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 adverse financial impacts of the COVID-19 pandemic on the Company was 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 Company did no t receive any such funds during the three and six months ended June 30, 2023 and it received $ 0.2 million in funding from the CARES Act during the three and six months ended June 30, 2022.

For accounting purposes, the Company treated 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.

The Company does not anticipate that any further funds under the CARES

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

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.

Revenue Recognition

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

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

As of June 30, 2023, these leases had a weighted average remaining lease term of 4.8 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.

16 unchanged sentences

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

As of March 31, 2023:

As of June 30, 2023:

(In thousands) Future

4 unchanged sentences

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

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).

June 30, 2023

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).

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 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.

The Company recorded reductions in revenue of $ 0.4 million and $ 0.7 million for uncollectable amounts during the three and six months ended June 30, 2023, respectively, and $ 0.4 million and $ 0.9 million during the three and six months ended June 30, 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 three months ended March 31, 2023 and 2022.

No properties were presented as discontinued operations during the three months ended June 30, 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 March 31, 2023 or December 31, 2022.

There were no real estate investments held for sale as of June 30, 2023 or December 31, 2022.

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

9 unchanged sentences

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

All acquisitions during the three months ended March 31, 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.

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

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.

All acquisitions during the six months ended June 30, 2023 were asset acquisitions.

The Company acquired five properties during the six months ended June 30, 2023.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 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 months ended March 31, 2023 or 2022.

The Company did not record any intangible asset amounts related to customer relationships during the six months ended June 30, 2023 or 2022.

Accounting for Leases

4 unchanged sentences

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 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 of June 30, 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;

4 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 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

These leases are reflected on the balance sheets as of June 30, 2023 and

HEALTHCARE TRUST, INC.

1 unchanged sentence

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.

June 30, 2023

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 six months ended June 30, 2023 and 2022.

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

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

24 unchanged sentences

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

four subsequent taxable years.

The Company distributed to its stockholders 100% of its REIT taxable income for each of the years ended December 31, 2022, 2021 and 2020.

3 unchanged sentences

federal income and excise taxes on its undistributed income.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

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

As of June 30, 2023, the Company owned 46 seniors housing properties which are leased and operated through its TRS.

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

5 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.

Significant components of the deferred tax assets and liabilities as of June 30, 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 provided a 100 % valuation allowance of $ 7.6 million as of March 31, 2023.

These abatements were extended through June 30, 2023 and may continue to be extended for future periods.

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

thus the Company has provided a 100 % valuation allowance of $ 7.9 million as of June 30, 2023.

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 loss.

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

The Company did not receive any funding from the CARES Act during the three and six months ended June 30, 2023 and the Company received $ 0.2 million in funding from the CARES Act during the three and six months ended June 30, 2022.

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

9 unchanged sentences

The standard allows for either modified or full retrospective transition methods.

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 March 31, 2023:

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

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

The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through 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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

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.

June 30, 2023

consolidated financial statements.

Not yet Fully Adopted as of June 30, 2023:

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

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

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

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

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

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 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,

The Company owned 202 properties as of June 30, 2023.

During the six months ended June 30, 2023 and 2022, the Company acquired five and three properties, respectively.

All acquisitions in the six months ended June 30, 2023 and 2022 were considered asset acquisitions for accounting purposes.

The following table presents the allocation of real estate assets acquired and liabilities assumed during the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

(In thousands) 2023 2022

Real estate investments, at cost:

Land $ 2,085 $ 4,199

Buildings, fixtures and improvements 19,440 10,662

8 unchanged sentences

Significant Tenants

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.

The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of March 31, 2023 and 2022:

As of June 30, 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

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 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 March 31,

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

(In thousands) 2023 2022 2023 2022

4 unchanged sentences

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

$ 40 $ 40 $ 80 $ 80

(1) Reflected within depreciation and amortization expense.

10 unchanged sentences

$ 443 $ 848 $ 730 $ 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

Three and Six Months Ended June 30, 2023

During the second quarter of 2023, the Company disposed of four SHOPs and one MOB for an aggregate contract sales price of $ 13.8 million.

Two of the four disposed SHOPs were impaired by $ 6.2 million in the second quarter of 2022 (see below).

As a result, the Company recorded an aggregate loss on sale of $ 0.2 million, which is presented in the Company’s consolidated statement of operations and comprehensive loss for the six months ended June 30, 2023 .

Three and Six Months Ended June 30, 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 three months ended March 31, 2022.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

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 March 31, 2023 and December 31, 2022.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

There were no assets held for sale as of June 30, 2023 and December 31, 2022.

Assets Held for Use

7 unchanged sentences

Impairment Charges

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,

There were no impairment charges recorded in the three and six months ended June 30, 2023.

The following table presents impairment charges by segment recorded during the six months ended June 30, 2022:

Six Months Ended June 30,

(In thousands) 2022

1 unchanged sentence

Total MOB impairment charges 10,644

SHOP Segment:

Various held for use SHOPs (2)

Total SHOP impairment charges 6,193

Total impairment charges $ 16,837

(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.

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

As of June 30, 2023, these properties were not disposed nor were under contract for disposal.

(2) Consists of two properties that were impaired as a result of the Company reassessing the holding period for the properties.

These properties were sold in the second quarter of 2023.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

Note 4 — Mortgage Notes Payable, Net

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

The following table reflects the Company’s mortgage notes payable as of June 30, 2023 and December 31, 2022:

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

Portfolio Encumbered Properties (1)

2023 December 31, 2022 March 31,

Portfolio Encumbered Properties June 30,

2023 December 31, 2022 June 30,

2023 December 31, 2022 Interest Rate Maturity

3 unchanged sentences

Fox Ridge North Little Rock - North Little Rock, AR 1 9,582 9,704 2.95 % 2.95 % Fixed May 2049

Capital One MOB Loan 41 378,500 378,500 3.73 % 3.73 % Fixed (2) Dec.

Capital One MOB Loan (2)

41 378,500 378,500 3.71 % 3.73 % Fixed (2) Dec.

Multi-Property CMBS Loan 20 116,037 118,700 4.60 % 4.60 % Fixed May 2028

2 unchanged sentences

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

Barclay’s MOB Loan 62 240,000 — 6.45 % — % Fixed June 2033

Gross mortgage notes payable 136 821,952 585,181 4.58 % 3.83 %

4 unchanged sentences

_____________

(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.

(1) Calculated on a weighted average basis for all mortgages outstanding as of June 30, 2023 and December 31, 2022.

For the SOFR/LIBOR based loans, the Company used the applicable SOFR/LIBOR rate index in effect at the balance sheet date.

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 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.

(2) Variable rate loan, based on daily SOFR as of June 30, 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 June 30, 2023 and December 31, 2022.

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

1 unchanged sentence

Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity.

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 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.

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 or result in a definitive agreement.

As of June 30, 2023, the Company had pledged $ 1.3 billion in total real estate investments, at cost, as collateral for its $ 0.8 billion of gross mortgage notes payable.

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

1 unchanged sentence

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

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

As of June 30, 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.

Barclay’s MOB Loan

On May 24, 2023, the Company, through certain subsidiaries of the OP), entered into a non-recourse loan agreement (the “Barclay’s MOB Loan Agreement”), with (i) Barclays Capital Real Estate Inc., (ii) Société Générale Financial Corporation and (iii) KeyBank National Association (each individually, a “Lender,” and collectively, the “Lenders”), in the aggregate amount of $ 240.0 million (the “Barclay’s MOB Loan”).

In connection with the Barclay’s MOB Loan Agreement, the OP entered into a Guaranty Agreement (the “Guaranty”) and an Environmental Indemnity Agreement (the “Environmental Indemnity”) for the benefit of the Lenders.

The Barclays MOB Loan is secured by, among other things, first priority mortgages on the Company’s interests in 62 MOBs with an aggregate carrying value of $ 414.8 million.

Under the Barclay’s MOB Loan has a 10-year term and is interest-only at a fixed rate of 6.453 % per year.

The Barclays MOB Loan Agreement the Company is required to make interest-only

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

payments on a monthly basis with the principal balance due on the maturity date of June 6, 2033.

The Barclays MOB Loan Agreement requires the OP to comply with certain covenants, including, maintaining combined cash and cash equivalents totaling at least $ 12.5 million at all times.

Subject to certain conditions, the Company may prepay the Barclays MOB Loan in whole or in part at any time after one year from closing with a pre-payment premium equal to the Yield Maintenance Program (as defined in the Barclays MOB Loan Agreement) by providing the lenders thereunder with prior written notice of prepayment no less than thirty days before prepayment, subject to a pre-payment premium equal to the Yield Maintenance Premium (as defined in the Barclay’s MOB Loan Agreement).

Following the earlier of May 24, 2026 and the date that is two years after the securitization of the Barclay’s MOB Loan, the Company may prepay the Barclays MOB Loan through defeasance, Notwithstanding the foregoing, the Barclays MOB Loan may be prepaid at par during the final six months of the term.

The Company paid $ 7.8 million in deferred financing costs related to the Barclay’s MOB Loan, which is amortized into interest expense over the term of the loan.

At the closing of the Barclay’s MOB Loan, the Company applied $ 194.8 million of the Barclay’s MOB Loan proceeds to repay and terminate the Company’s then-existing credit facility (the “Prior Credit Facility”).

The Company also terminated its interest rate swap contracts that formerly hedged interest rate changes under the Prior Credit Facility (see Note 7 — Derivatives and Hedging Activities for additional information).

The remaining proceeds of approximately $ 39.0 million (after the payment of Barclay’s MOB Loan closing costs and reimbursement of deposits) are available for general corporate purposes, subject to the terms of the Barclay’s MOB Loan Agreement.

Additionally, by terminating the Prior Credit Facility, the Company is no longer subject to certain restrictive covenants previously imposed by the Prior Credit Facility (see Note 5 — Credit Facilities for additional information).

Under the Guaranty, the OP has (i) guaranteed the full repayment of the Barclay’s MOB Loan in the case of certain major defaults by the Company or the OP, including bankruptcy, and (ii) indemnified the Lenders against losses, costs or liabilities related to certain other “bad boy” acts of the Company or the OP, including fraud, willful misconduct, bad faith, and gross negligence.

Pursuant to the Environmental Indemnity, the OP and the Company have indemnified the Lenders against losses, costs or liabilities related to certain environmental matters.

Note 5 — Credit Facilities

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

The Company had the following credit facilities outstanding as of June 30, 2023 and December 31, 2022:

Outstanding Facility

Amount as of Effective Interest Rate (8)

Credit Facility Encumbered Properties (1)

2023 December 31, 2022 March 31,

Credit Facilities Encumbered Properties (1)

2023 December 31, 2022 June 30,

2023 December 31, 2022 Interest Rate Maturity

(In thousands) (In thousands)

Credit Facility:

Prior Credit Facility:

Revolving Credit Facility $ — $ 30,000 — % 7.26 % Variable Mar.

2 unchanged sentences

Term Loan, net

148,600 148,250

Total Credit Facility

98 (2) $ 198,600 $ 178,250

Total Prior Credit Facility — $ — $ 178,250

Fannie Mae Master Credit Facilities:

6 unchanged sentences

Total Credit Facilities 21 $ 349,162 $ 530,297 7.63 % (4) 5.94 % (4)

(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 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.

(1) Encumbered properties are as of June 30, 2023.

(2) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of June 30, 2023 with a carrying value of $ 0.3 million.

(3) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of June 30, 2023 with a carrying value of $ 0.3 million.

(4) Calculated on a weighted average basis for all credit facilities outstanding as of June 30, 2023 and December 31, 2022, respectively.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(5) 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).

(6) 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 has seven non-designated interest rate cap agreements with an aggregate notional amount of $ 353.8 million which limited 30-day LIBOR (until June 30, 2023, and SOFR thereafter) 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.

(7) 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 March 31, 2023 and December 31, 2022.

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

Prior to the Fourth Amendment (as defined below) which, among other things, changed the reference rate on the Credit Facility from LIBOR to SOFR, to present average rates in the table above, the Company historically allocated the notional amount of a “pay-fixed” swap to the outstanding amounts of its Credit Facility (both the Revolving Credit Facility and the Term Loan) with any remaining notional amounts applied to its Capital One Fannie Mae Facility.

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

As of 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.

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

The Company allocated $ 150.0 million of its SOFR-based interest rate swaps to the Term Loan $ 50.0 million of its LIBOR-based interest rate swaps to the Capital One Facility as of December 31, 2022.

These interest rate swaps were all terminated in the six months ended June 30, 2023.

Upon termination, the fair value of terminated swaps are recorded within AOCI, and are amortized into interest expense over the original term of the then-existing swap.

These amortized amounts from terminated swaps are not included in the calculation of effective interest.

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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).

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 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.

The Credit Facility includes an uncommitted “accordion feature” that may be used to increase the commitments under either component of the Credit Facility by up to an additional $ 370.0 million to a total of over $ 1.0 billion.

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

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

As of March 31, 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”).

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

Pursuant to the Fourth Amendment, the lenders agreed to reduce the minimum required Fixed Charge Coverage Ratio covenant to permit the Company to avoid any Default or Events of Default through the amendment date.

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

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

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

Certain other restrictions and conditions described below will no longer apply beginning in the quarter in which the Company makes an election and, as of the day prior to the commencement of the applicable quarter, the Company has a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $ 100.0 million, giving effect to the aggregate amount of distributions projected to be paid by the Company during the applicable quarter, the Company’s ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5 % and the Company’s Fixed Charge Coverage Ratio (as defined below) for the most recently ended four fiscal quarters is not less than 1.50 to 1.00 (the “Commencement Quarter”).

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

The Company did not satisfy the conditions during the quarter ended 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.

The Company may borrow additional amounts if all relevant conditions are met, including sufficient availability for future borrowings.

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Beginning in the Commencement Quarter, the Company will be able to pay cash distributions to holders of common stock, subject to the restrictions described below and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock, Series B Preferred Stock or any other class of preferred stock that may be issued) for any period of four fiscal quarters may not exceed 95 % of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

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

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

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

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

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

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

As of 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 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 %.

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

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

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

As of 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 %;

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

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

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

As of June 30, 2023, the carrying value of the Company’s real estate investments, at cost was $ 2.6 billion, with $ 1.3 billion of this asset value pledged as collateral for mortgage notes payable and $ 0.6 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities.

All of the real estate assets pledged to secure debt or to secure the Fannie Mae Master Credit Facilities are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, unless, as applicable, the existing indebtedness associated with the property is satisfied or the property is removed from the pledged collateral.

Unencumbered real estate investments, at cost as of June 30, 2023 were $ 0.6 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 future mortgage loans, future advances under the Fannie Mae Master Credit Facilities, or other future financings.

Prior Credit Facility

The Prior Credit Facility, consisted of two components, a revolving credit facility (the “Revolving Credit Facility”) and a term loan (the “Term Loan”).

The Revolving Credit Facility and Term Loan were interest-only and would have matured on March 13, 2024.

The Prior Credit Facility was fully repaid in May 2023 with net proceeds provided by the Barclay’s MOB Loan (see Note 4 — Mortgage Notes Payable, Net for details) and the Prior Credit Facility was terminated.

Amounts outstanding under the Prior Credit Facility bore interest at the Company’s option of either (i) SOFR, plus an applicable margin that ranges, depending on the Company’s leverage, from 2.10 % to 2.85 % or (ii) the Base Rate (as defined in the Prior Credit Facility), plus an applicable margin that ranges, depending on the Company’s leverage, from 0.85 % to 1.60 %.

For the period from January 1, 2023 through the termination of the Prior Credit Facility in May 2023, the Company had elected to use the SOFR option for all of its borrowings under the Prior Credit Facility.

At termination, the Company wrote off the remaining deferred financing costs associated with the Prior Credit Facility of $ 2.6 million which is included in interest expense in the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2023.

The Prior Credit Facility contained various restrictions which no longer apply, that limited the Company’s ability to incur additional debt, maintain certain cash balances or pay dividends, among other things.

Fannie Mae Master Credit Facilities

2 unchanged sentences

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

In connection with the Fannie Mae Master Credit Facilities, the Company was required to enter into interest rate cap agreements.

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

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.

In connection with the Fannie Mae Master Credit Facilities, the Company was required to enter into interest rate cap agreements which the Company periodically renews upon their expiration.

During the three months ended June 30, 2023, the Company paid premiums of $ 4.6 million to renew three caps which matured in the three months ended June 30, 2023.

The Company also deposited $ 2.8 million with the lender was held in escrow, reflected within restricted cash on the Company’s balance sheet as of June 30, 2023.

Subsequent to June 30, 2023, the escrowed amount was returned to the Company.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

As of June 30, 2023 the Company had nine non-designated interest rate cap agreements ( six active and the three replacement caps, which are forward-starting) with an aggregate current effective notional amount of $ 353.8 million which caps LIBOR at 3.50 % with various maturities through April 2024.

The existing caps were transitioned to SOFR-based contracts effective July 1, 2023.

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

As of June 30, 2023, $ 349.2 million was outstanding under the Fannie Mae Master Credit Facilities.

Borrowings under the Fannie Mae Master Credit Facilities bore annual interest at a rate that varied on a monthly basis and was 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 Capital One Facility and the KeyBank Facility, respectively).

Effective July 1, 2023, the Fannie Mae Master Credit Facilities automatically transitioned to SOFR-based borrowings with monthly interest equal to the sum of the current SOFR for one-month denominated deposits and a spread of ( 2.41 % and 2.46 % for the Capital One Facility and the KeyBank Facility, respectively).

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

As of December 31, 2022, the Company had $ 150.0 million of SOFR-based interest swap agreements, which were allocated to the Term Loan, and $ 50.0 million of LIBOR-based interest swap agreements which were allocated to the Capital One Facility.

These swaps were all terminated in the six months ended June 30, 2023.

The Term Loan was fully repaid in the three months ended June 30, 2023, but the Capital One Facility remained outstanding.

Subsequent to June 30, 2023, the Company made a $ 5.1 million cash deposit to Fannie Mae because the debt service coverage ratios of the underlying properties of each facility were below the minimum required amount per the debt agreements.

This amount will be recorded as restricted cash and is pledged as additional collateral for the Fannie Mae Master Credit Facilities.

This deposit will be refunded the earlier of the Company’s achievement of a debt service coverage ratio above the minimum required amount of 1.40 or the maturity of the Fannie Mae Master Credit Facilities.

Future Principal Payments

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):

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to June 30, 2023 and thereafter, on all of the Company’s outstanding debt (mortgage notes payable and credit facilities):

Future Principal

11 unchanged sentences

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

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

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

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

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

While the Company currently expects LIBOR to be available in substantially its current form until at least through June 30, 2023 for the USD LIBOR rates currently relevant to the Company, it is possible that LIBOR will become unavailable prior to that time.

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

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.

The remaining USD LIBOR settings were published through June 30, 2023.

As of June 30, 2023, the Company had $ 349.2 million of variable-rate, LIBOR-based borrowings under the Fannie Mae Master Credit Facilities, which automatically transitioned to variable-rate, SOFR-based borrowings on July 1, 2023.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

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

During the six months ended June 30, 2023, the Company terminated its remaining $ 50.0 million of LIBOR-based “pay-fixed” swaps.

The “pay-fixed” swaps were terminated in an asset position and the Company received $ 5.4 million in cash following the termination.

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

As of June 30, 2023, the Company had LIBOR-based interest rate caps with notional amounts of $ 353.8 million which are not designated as hedging instruments which also transitioned to SOFR-based contracts effective July 1, 2023.

Note 6 — Fair Value of Financial Instruments

12 unchanged sentences

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

However, as of March 31, 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.

However, as of June 30, 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

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.

June 30, 2023

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

3 unchanged sentences

Level 3 Total

March 31, 2023

June 30, 2023

Derivative assets, at fair value (non-designated) $ — $ 6,106 $ — $ 6,106

7 unchanged sentences

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

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

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

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 the year ended December 31, 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 June 30, 2023 and December 31, 2022.

As of June 30, 2023, the Company owned 18 held for use properties ( 10 MOBs and eight SHOPs) for which the Company had reconsidered their expected holding periods, of which five properties ( one MOB and four SHOPs) are being marketed for sale.

As a result, the Company evaluated the impact on its ability to recover the carrying values of the respective properties, and has previously recorded impairment charges on 10 properties ( eight MOBs and two SHOPs) to reduce the carrying values to their estimated fair values during the year ended December 31, 2022.

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 March 31, 2023 and December 31, 2022.

The Company did not have any real estate investments classified as held for sale as of June 30, 2023 and December 31, 2022.

Financial Instruments not Measured at Fair Value

1 unchanged sentence

The fair values of short-term financial instruments such as cash and cash equivalents, restricted cash, straight-line rent receivable, net, prepaid expenses and other assets, deferred costs, net, accounts payable and accrued expenses, deferred rent and distributions payable approximate their carrying value on the consolidated balance sheets due to their short-term nature.

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

March 31, 2023 December 31, 2022

June 30, 2023

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

June 30, 2023 December 31, 2022

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

1 unchanged sentence

3 $ 820,634 $ 834,616 $ 583,817 $ 550,626

Credit Facility

3 $ 200,000 $ 199,481 $ 180,000 $ 179,496

Prior Credit Facility 3 $ — $ — $ 180,000 $ 179,496

Fannie Mae Master Credit Facilities

10 unchanged sentences

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

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

(In thousands) Balance Sheet Location March 31,

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2023 and December 31, 2022:

(In thousands) Balance Sheet Location June 30,

2023 December 31, 2022

1 unchanged sentence

Interest rate “pay-fixed” swaps Derivative assets, at fair value $ 30,670 $ 36,910

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

Derivatives not designated as hedging instruments:

1 unchanged sentence

Cash Flow Hedges of Interest Rate Risk

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

As of June 30, 2023 and December 31, 2022, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:

June 30, 2023 December 31, 2022

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

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 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 March 31,

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

(In thousands) 2023 2022 2023 2022

Amount of gain recognized in accumulated other comprehensive loss on interest rate derivatives $ ( 3,471 ) $ 23,613

Amount of gain recognized in accumulated other comprehensive income on interest rate derivatives $ 10,131 $ 8,397 $ 6,660 $ 32,009

Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense $ 4,665 $ ( 1,773 ) $ 8,626 $ ( 4,427 )

1 unchanged sentence

$ ( 18,703 ) $ ( 12,050 ) $ ( 34,488 ) $ ( 23,814 )

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.

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

During the three months ended March 31, 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.

As of June 30, 2023, the Company had one SOFR-based “pay-fixed” interest rate swap that is designated as a cash flow hedge.

The Company uses its interest rate swap as part of its 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 fixed-rate payments by the Company over the life of the agreement without exchange of the underlying notional amount.

During the six months ended June 30, 2023 and the year ended December 31, 2022, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

The remaining interest rate “pay-fixed” swap has a base interest rate of 1.61 % and matures 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.

MOB Loan Swap Termination

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

Following these terminations, $ 2.2 million was recorded in AOCI and 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.

For the six months ended June 30, 2022, the Company reclassified $ 0.4 million from AOCI as an increase to interest expense.

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

Prior Credit Facility Swap Terminations

During the six months ended June 30, 2023, the Company terminated two LIBOR-based interest rate swap agreements with an aggregate notional amount of $ 50.0 million and six SOFR-based interest rate swap agreements with an aggregate notional amount of $ 150.0 million.

The swaps were terminated in asset positions, and the Company received $ 1.9 million in cash from the LIBOR-based swap terminations, and $ 3.5 million in cash from the SOFR-based swap terminations.

These amounts were included in AOCI and will be amortized into earnings as a reduction to interest expense from the termination dates of the swaps through March 2024 (the original term of the swap and the Prior Credit Facility).

For the three and six months ended June 30, 2023, the Company reclassified $ 0.9 million and $ 1.1 million, respectively, from AOCI as decreases to interest expense, and $ 4.3 million remained in AOCI as of June 30, 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.

During the next 12 months, from July 1, 2023 through June 30, 2024, the Company estimates that $ 17.7 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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

Non-Designated Derivatives

The Company had the following outstanding interest rate derivatives with current effective notional amounts that were not designated as hedges in qualified hedging relationships as of March 31, 2023 and December 31, 2022:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Interest Rate Derivatives Number of Instruments Notional Amount (1)

3 unchanged sentences

9 $ 353,829 7 $ 354,624

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

(2) All of the Company’s interest rate cap agreements limited 30-day LIBOR through June 30, 2023 (and SOFR, thereafter) to 3.50 % with terms through July 2025.

The actual 30-day LIBOR rates during the six months ended June 30, 2023 exceeded the strike price rate of 3.50 % and the Company received 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.

These derivatives are used to limit the Company’s exposure to interest rate movements for economic purposes, however, the Company has not elected to apply hedge accounting.

As of June 30, 2023 and December 31, 2022, the Company had entered into nine and seven LIBOR-based interest rate caps, respectively, with notional amounts of $ 353.8 million and $ 354.6 million, respectively, (of which six caps were active as of June 30, 2023 and December 31, 2022) which limited 30-day LIBOR borrowings to 3.50 % and have varying maturities through July 2025.

The Company paid premiums of $ 4.6 million to renew three caps which matured in the three months ended June 30, 2023.

All of the Company’s LIBOR-based interest rate caps were transitioned to SOFR-based contracts effective July 1, 2023.

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

1 unchanged sentence

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.

The gain on non-designated derivatives were $ 0.3 million and $ 0.1 million for the three and six months ended June 30, 2023, respectively, and were $ 0.4 million and $ 1.4 million for the three and six months ended June 30, 2022, respectively.

During the six months ended June 30, 2023, the Company received aggregate payments of $ 2.3 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 six months ended June 30, 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 March 31, 2023 and December 31, 2022.

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

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

June 30, 2023 $ 36,776 $ — $ — $ 36,776 $ — $ — $ 36,776

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

Credit-risk-related Contingent Features

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

As of 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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

As of June 30, 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.

Note 8 — Stockholders’ Equity

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.

As of June 30, 2023 and December 31, 2022, the Company had 108,284,434 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 15.7 million shares in respect to the stock dividends.

11 unchanged sentences

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

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

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

The Board suspended the SRP in August 2020 and rejected all repurchase requests made during the period from January 1, 2020 until the effectiveness of the suspension of the SRP.

No further repurchase requests under the SRP may be made unless and until the SRP is reactivated.

2 unchanged sentences

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

The table below reflects the number of shares repurchased and the average price per share, under the SRP and does not include any repurchases under tender offers, cumulatively through March 31, 2023.

The table below reflects the number of shares repurchased and the average price per share, under the SRP and does not include any repurchases under tender offers, cumulatively through June 30, 2023.

Number of Shares Repurchased Average Price per Share

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

Three months ended March 31, 2023 — —

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

Six months ended June 30, 2023 — —

Cumulative repurchases as of June 30, 2023 4,896,620 20.60

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 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 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.

During the six months ended June 30, 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.

8 unchanged sentences

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.

The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of June 30, 2023 and December 31, 2022.

The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of June 30, 2023 and December 31, 2022.

The Company also had 100,000 Series A Preferred Units outstanding as of June 30, 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.

1 unchanged sentence

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:

On August 13, 2020, the Board changed the Company’s common stock distribution policy to preserve the Company’s liquidity and maintain additional financial flexibility.

Under the policy, distributions authorized by the Board on the Company’s shares of common stock, if and when declared, are 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

March 31, 2023

June 30, 2023

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

10 unchanged sentences

April 3, 2023 April 17, 2023 0.015179

July 3, 2023 July 17, 2023 0.015179

Note 9 — Related Party Transactions and Arrangements

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.

As of June 30, 2023 and December 31, 2022, the Special Limited Partner owned 10,392 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 March 31, 2023 and December 31, 2022, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

As of June 30, 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 March 31, 2023.

Asset Management Fees and Variable Management/Incentive Fees

This threshold has not been exceeded through June 30, 2023.

HEALTHCARE TRUST, INC.

1 unchanged sentence

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”).

June 30, 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”).

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 March 31, 2023, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

As of June 30, 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.

10 unchanged sentences

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

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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

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.

June 30, 2023

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 and six months ended June 30, 2023 or 2022.

In June 2023, the Board approved a one-time, non-recurring prepayment to the Advisor of the July 2023 asset management fees totaling $ 1.8 million (including both the fixed and variable portions), which was paid on June 29, 2023.

The amount of this prepayment is presented within prepaid expenses and other assets on the Company’s consolidated balance sheet as of June 30, 2023.

Property Management Fees

12 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

Professional Fees and Other Reimbursements

1 unchanged sentence

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

During the three 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.

During the three and six months ended June 30, 2023, the Company incurred $ 2.4 million and $ 4.8 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

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

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

1 unchanged sentence

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.

7 unchanged sentences

Summary of fees, expenses and related payables

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

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

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

(In thousands) Incurred Incurred March 31,

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

2023 2022 2023 2022

(In thousands) Incurred Incurred Incurred

Incurred June 30,

2023 December 31, 2022

1 unchanged sentence

Acquisition cost reimbursements $ — $ 18 $ 21 $ 18 $ — $ 5

$ 21 $ — $ 21 $ 5

Ongoing fees and reimbursements:

Asset management fees 5,458 5,458 10,916 10,916 ( 1,819 ) —

5,458 5,458 — —

Property management and fees (2)

3 unchanged sentences

Total related party operation fees and reimbursements $ 8,742 $ 8,529 $ 17,536 $ 17,241 $ ( 2,262 ) $ 47

$ 8,843 $ 8,710 $ 111 $ 47

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

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Includes $ 1.7 million and $ 3.2 million for the three and six months ended June 30, 2023, respectively, and $ 1.4 million and $ 2.9 million for the three and six months ended June 30, 2022, respectively, subject to the Capped Reimbursement.

(2) Includ es $ 0.1 million and $ 0.2 million of leasing commissions which are capitalized and included in prepaid expenses and other assets.

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 three months ended March 31, 2023 or 2022.

No such distribution was incurred during the six months ended June 30, 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 three months ended March 31, 2023 or 2022.

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

3 unchanged sentences

If the Special Limited Partner or any of its affiliates receives the subordinated incentive termination 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 listing distribution described above.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

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

3 unchanged sentences

The Subject Fees are equal to (i) the product of four multiplied by the actual base management fee plus (ii) the product of four multiplied by the actual variable management/incentive fee, in each of clauses (i) and (ii), payable for the fiscal quarter immediately prior to the fiscal quarter in which the change of control occurs or the transition to self-management, as applicable, is consummated, plus (iii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity raised (but excluding proceeds from the DRIP) in respect to the fiscal quarter immediately prior to the fiscal quarter in which the change of control occurs or the transition to self-management, as applicable, is consummated.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 March 31, 2023 and activity for the period presented:

The following table reflects the amount of restricted shares outstanding as of June 30, 2023 and activity for the period presented:

Number of Shares of Common Stock Weighted Average Issue Price

1 unchanged sentence

Stock dividend 2,878 14.48

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.

Unvested, June 30, 2023 100,221 $ 18.76

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

As of June 30, 2023, the Company had $ 1.1 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

This cost will be recognized over a weighted-average period of 1.1 years.

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.

Compensation expense related to restricted shares was $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2023, respectively, and $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2022, respectively.

Other Share-Based Compensation

1 unchanged sentence

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

No such shares were issued during the six months ended June 30, 2023 or 2022.

Note 12 — Accumulated Other Comprehensive Income

2 unchanged sentences

Balance, December 31, 2022 $ 36,910

Other comprehensive gain, before reclassifications ( 3,471 )

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

Balance, March 31, 2023 $ 29,479

Amount of gain recognized in accumulated other comprehensive income on interest rate derivatives 6,661

Amount of gain reclassified from accumulated other comprehensive income ( 8,626 )

Rebalancing of ownership percentage —

Balance, June 30, 2023 $ 34,945

Accumulated other comprehensive income predominately relates to the unrealized gains (losses) on designated derivatives, however, as previously discussed in Note 7 — Derivatives and Hedging Activities , a previously designated hedge was terminated and the termination costs are being amortized over the term of the hedged item.

2 unchanged sentences

Balance as of

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

(In thousands) June 30, 2023 December 31, 2022

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

12 unchanged sentences

After holding the Series A Preferred Units for a period of one year , a holder of Series A Preferred Units has the right to redeem Series A Preferred Units for, at the option of the OP, the corresponding number of shares of the Company’s Series A Preferred Stock, or the cash equivalent.

The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

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 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.

The remaining rights of the limited partners in the

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

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 both the three months ended June 30, 2023 and 2022, Series A Preferred Unit holders were paid $ 0.1 million.

Common OP Units

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

As of June 30, 2023 and December 31, 2022, the Advisor held 90 Common OP Units, which represents a nominal percentage of the aggregate ownership in the OP.

A holder of Common OP Units has the right to receive cash distributions equivalent to the cash distributions, if any, on the Company’s common stock in an amount retroactively adjusted to reflect the stock dividends, other stock dividends and other similar events.

1 unchanged sentence

Dur ing the three months ended March 31, 2023 and 2022, Common OP Unit non-controlling interest holders were no t paid any cash distribu tions.

Dur ing the six months ended June 30, 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 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.

The 405,998 Common OP Units outstanding as of June 30, 2023 would be redeemable for 481,919 shares of common stock, giving effect to adjustments for the impact of the stock dividends through July 2023.

Non-Controlling Interests in Property Owning Subsidiaries

6 unchanged sentences

Distributions

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

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

Property Name

(Dollar amounts in thousands)

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

Investment Date June 30, 2023 June 30, 2023 June 30, 2023 As of December 31, 2022 2023 2022

Plaza Del Rio Medical Office Campus Portfolio (1)

2 unchanged sentences

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

In the three months ended June 30, 2023, the unaffiliated third party contributed $ 0.3 million to increase its ownership from 2.6 % to 4.4 %.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

Note 14 — Net Loss Per Share

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Net loss attributable to common stockholders (in thousands)

10 unchanged sentences

The amounts in the table below have been retroactively adjusted to reflect the stock dividends (see Note 1 — Organization for additional details):

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Three Months Ended March 31,

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

2023 2022 2023 2022

Unvested restricted shares (1)

7 unchanged sentences

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

Th ere were 98,736 and 161,754 unvested restricted shares outstanding as of March 31, 2023 and 2022, respectively.

Th ere were 100,221 and 164,055 unvested restricted shares outstanding as of June 30, 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 March 31, 2023 and 2022.

There were 405,998 Common OP Units outstanding as of June 30, 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 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).

There were 359,250 Class B Units outstanding as of June 30, 2023 and 2022.

These Class B Units were unvested as of June 30, 2023 and 2022 (see Note 9 — Related Party Transactions for additional information).

Note 15 — Segment Reporting

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:

The disclosures below for the three months ended June 30, 2023 and 2022 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

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Net Operating Income

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

The Company evaluates the performance of the combined properties in each segment based on net operating income (“NOI”).

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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.

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

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

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

Revenue from tenants

$ 33,920 $ 52,184 $ 86,104 $ 32,493 $ 51,333 $ 83,826

Property operating and maintenance

9,438 44,131 53,569 8,352 44,240 52,592

$ 24,482 $ 8,053 32,535 $ 24,141 $ 7,093 31,234

Impairment charges

Operating fees to related parties

( 6,369 ) ( 6,352 )

Acquisition and transaction related

( 148 ) ( 375 )

General and administrative

( 4,331 ) ( 3,999 )

Depreciation and amortization

( 20,568 ) ( 20,251 )

Interest expense

( 18,703 ) ( 12,050 )

Interest and other income

Loss on sale of real estate investments ( 306 ) —

Gain on non-designated derivatives 286 392

Income tax expense ( 41 ) ( 43 )

Net loss attributable to non-controlling interests 22 29

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

Net loss attributable to common stockholders $ ( 20,759 ) $ ( 21,055 )

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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

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

June 30, 2023

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

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

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Interest and other income

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

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

Loss on sale of real estate investments ( 191 ) ( 303 )

Gain on non-designated derivatives 104 1,386

Income tax expense ( 87 ) ( 82 )

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

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

(In thousands) June 30, 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 March 31,

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

(In thousands) 2023 2022 2023 2022

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

Note 16 — Commitments and Contingencies

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

As of June 30, 2023, the Company had seven operating and six direct financing lease agreements.

The seven operating leases have durations, including assumed renewals, ranging from 19.4 years to 84.2 years, excluding an adjacent parking lot lease with a term of 1.3 years.

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.

The Company did not enter into any additional ground leases during the six months ended June 30, 2023.

As of June 30, 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 34.0 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 Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 34.2 years and a weighted-average discount rate of 7.37 % as of June 30, 2023.

For the three and six months ended June 30, 2023 and 2022, the Company paid cash of $ 0.2 million and $ 0.4 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million and $ 0.4 million, respectively, on a straight-line basis in accordance with the current accounting guidance.

The 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 March 31, 2023:

The following table reflects the base cash rental payments due from the Company for the next five years as of June 30, 2023:

Future Base Rent Payments

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Total present value of minimum lease payments $ 8,063 $ 4,835

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

(1) The direct finance lease liability is included in a ccounts payable and accrued expenses on the balance sheet as of June 30, 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 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.

As of June 30, 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:

Dividend Declaration

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Dividend Declaration

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.

June 30, 2023

On July 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 July 17, 2023 to holders of record of the Company’s common stock at the close of business on July 13, 2023.

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.

In July 2023, the Company provided a $ 5.1 million cash deposit to Fannie Mae.

This deposit was provided because the debt service coverage ratio of the underlying properties of each facility were below the minimum required amount per the debt agreements.

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.

As of March 31, 2023, we owned 207 properties located in 34 states and comprised of 9.2 million rentable square feet.

As of June 30, 2023, we owned 202 properties located in 33 states and comprised of 9.0 million rentable square feet.

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

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

As of June 30, 2023, we had four eligible independent contractors operating 46 SHOPs (excluding two land parcels).

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

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

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

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

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We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually unless we list our common stock.

Management Update on the Impacts of the COVID-19 Pandemic

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.

Management Update on the Impacts of the COVID-19 Pandemic and its Aftermath

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

Seniors Housing Properties

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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%.

As of June 30, 2023, occupancy in this segment reached 73.3%, representing a decline from December 31, 2022 of 1.5%.

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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March 31, 2023 50 4,374 73.3%

June 30, 2023 46 4,164 73.3%

(1) Exclusive of two land parcels.

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.

Contract Labor and Wage Expenses

Beginning with the second quarter of 2021, our occupancy and operating costs in our SHOP portfolio have been relatively stable.

During the year ended December 31, 2022, our third party operators needed to increase their use of temporary contract labor and agencies, and the amount paid for overtime wages and bonuses, in response to a shortage of workers, the cost of labor generally and lack of qualified personnel that our third party operators are able to employ on a permanent basis.

During the six months ended June 30, 2023, these costs declined.

In particular, costs incurred from contract labor and agencies for care providers decreased in our SHOP segment by $2.1 million and $3.5 million, from $2.8 million and $4.9 million in the three and six months ended June 30, 2022, respectively, to $0.7 million and $1.4 million as compared to the three and six months ended June 30, 2023, respectively.

However, these costs were offset by increased wage costs for direct employees of our third party operators of $1.9 million and $4.2 million in the three and six months ended June 30, 2023 compared to the same periods ended June 30, 2022.

Likewise, occupancy levels have not recovered to their pre-pandemic rates (as noted in the table above), thus our results of operations in our SHOP segment have been significantly adversely affected by the increase in labor costs even though resident fees have increased.

Rent Concessions

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.

We offered $0.8 million and $1.4 million rent concessions during the three and six months ended June 30, 2023, respectively, and $0.7 million and $2.0 million during the three and six months ended June 30, 2022.

The CARES Act

The adverse financial impacts of the COVID-19 pandemic were partially offset by funds we received under the CARES Act in prior years, however, no such funds have been received or are expected in 2023.

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.

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

We did not receive any funding from the CARES Act during the three and six months ended June 30, 2023.

We received $0.2 million of funds through the CARES Act for the three and six months ended June 30, 2022.

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

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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

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 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.

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.

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

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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 March 31, 2023:

The following table presents certain additional information about the properties we owned as of June 30, 2023:

Portfolio Number

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Total Portfolio 202 8,989,818 $ 2,575,706

(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).

(1) Inclusive of leases signed but not yet commenced as of June 30, 2023.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of June 30, 2023.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of June 30, 2023) net of gross market lease intangible liabilities ($29.4 million total as of June 30, 2023).

Impairment charges are already reflected within gross asset value.

(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.

(5) Weighted by unit count as of June 30, 2023.

As of June 30, 2023, we had 4,164 rentable units in our SHOP segment.

Excludes land parcels.

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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:

As of June 30, 2023, we owned 202 properties.

There were 193 properties owned for the entire year ended December 31, 2022 and the six months ended June 30, 2023 (our “Same Store Properties), including two vacant land parcels.

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

The following table presents a roll-forward of our properties owned from January 1, 2022 to June 30, 2023:

MOB SHOP Total

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Number of properties, December 31, 2022 150 52 202

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

Acquisition activity during the six months ended June 30, 2023 5 — 5

Disposition activity during the six months ended June 30, 2023 (1) (4) (5)

Number of properties, June 30, 2023 154 48 202

Number of Same Store Properties 145 48 193

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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)

Comparison of the Three Months Ended June 30, 2023 and 2022

Net loss attributable to common stockholders was $20.8 million and $21.1 million for the three months ended June 30, 2023, and 2022, respectively.

The following table shows our results of operations for the three months ended June 30, 2023 and 2022 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2023 2022 $

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84,985 89,762 (4,777)

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) before loss on sale of real estate investments 1,119 (5,936) 7,055

Loss on sale of real estate investments (306) — (306)

Operating income (loss) 813 (5,936) 6,749

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Interest and other income 313 2 311

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

Gain on non-designated derivatives 286 392 (106)

Total other expenses

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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.

NOI excludes certain components from net loss 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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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:

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.

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

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NOI $ 23,566 $ 8,240 $ 922 $ — $ (6) $ (187) $ — $ 32,535

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

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

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

Gain on non-designated derivative instruments — — — — — — (392) (392)

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Segment Results — Medical Office Buildings

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:

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 June 30, 2023 and 2022:

Same Store (1)

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Segment Total (4)

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

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

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

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(2) Our MOB segment included nine Acquired Properties.

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

(3) Our MOB segment included one Disposed Property.

(4) Our MOB segment included 154 total properties.

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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.

During the three months ended June 30, 2023, revenue from tenants increased by $1.4 million in our MOB segment as compared to the three months ended June 30, 2022, which was primarily driven by an increase in revenue from tenants of $0.9 million due to our Acquired Properties and an increase in revenue from tenants of $0.5 million due to our Same Store Properties.

Property Operating and Maintenance

Property operating and maintenance expenses reflect the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third-party property management fees.

During the 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.

During the quarter ended June 30, 2023, property operating and maintenance costs in our MOB segment increased by $1.1 million as compared to the same period last year, primarily as a result of increased costs from our Same Store Properties of $1.0 million and increased costs from our Acquired Properties of $0.1 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 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:

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 June 30, 2023 and 2022:

Same Store (1)

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Segment Total (4)

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

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

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

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

(3) Our SHOP segment included four Disposed Properties.

(3) Our SHOP segment included eight Disposed Properties.

(4) Our SHOP segment included 48 total 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.

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.

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.

During the three months ended June 30, 2023, revenue from tenants increased by $0.9 million in our SHOP segment as compared to the three months ended June 30, 2022, which was due to an increase in revenue from tenants of $2.1 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $1.2 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 June 30, 2023 as compared to the three months ended June 30, 2022, partially offset by marginally lower occupancy in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Additionally, we offered more rent concessions during the three months ended June 30, 2023, which amounted to $0.8 million as compared to $0.7 million of rent concessions offered during the three months ended June 30, 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.

During the three months ended June 30, 2023, property operating and maintenance expenses decreased $0.1 million in our SHOP segment as compared to the three months ended June 30, 2022, primarily due to a decrease of $1.6 million from our Disposed Properties, partially offset by an increase in property operating and maintenance expenses of $1.5 million in our Same Store Properties.

Our Same Store properties operating and maintenance expenses increased in the quarter ended June 30, 2023 compared to the same period last year, primarily from increased amounts our third party operators pay for overtime wages and bonuses of $1.9 million, as well as overall inflation on utilities and supplies which increased our property maintenance and operating costs by $1.4 million.

The three months ended June 30, 2022 also includes $0.2 million of funds received through the CARES Act, which serve to reduce property operating expenses in the period received.

There were no such receipts from the CARES Act in the three months ended June 30, 2023.

These increased costs were partially offset by a decrease in contract labor and agencies at our Same Store Properties of $2.0 million.

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Impairment Charges

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.

We did not record any impairment charges during the quarter ended June 30, 2023.

During the three months ended June 30, 2022, we incurred $6.2 million of impairment charges to reduce the carrying value of two SHOPs to their estimated fair value after reconsidering our intended holding.

The projected cash flows for these two properties, on an undiscounted basis over the intended holding periods did not recover their respective carrying values, and therefore concluded that these two properties were impaired.

These properties were sold in the second quarter of 2023.

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

Operating Fees to Related Parties

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

Operating fees to related parties were consistent at $6.4 million for the three months ended June 30, 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.

Asset management fees were $5.5 million for both the three months ended June 30, 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.

There were no incentive fees incurred in either of the three months ended June 30, 2023 or 2022.

Property management fees were consistent at $0.9 million for the three months ended June 30, 2023 and 2022.

Property management fees increase or decrease in direct correlation with gross revenues of the properties managed and depending on the mix of properties managed, as the fee payable for different types of properties varies.

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Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses were 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.

Acquisition and transaction related expenses decreased by $0.2 million, to $0.1 million for the three months ended June 30, 2023, compared to $0.4 million for the three months ended June 30, 2022.

The decrease was due to $0.1 million of decreased

dead deal costs, as well as from and $0.1 million of termination fees paid to former SHOP operators which were incurred in the three months ended June 30, 2022.

General and Administrative Expenses

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.

General and administrative expenses increased by $0.3 million to $4.3 million for the three months ended June 30, 2023 compared to $4.0 million for the three months ended June 30, 2022, which includes $2.4 million and $2.1 million for the three months ended June 30, 2023 and June 30, 2022, respectively, incurred in expense reimbursements.

Depreciation and Amortization Expenses

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.

Depreciation and amortization expense increased $0.3 million to $20.6 million for the three months ended June 30, 2023 from $20.3 million for the three months ended June 30, 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 three months ended March 31, 2022 and recorded a loss on sale of $0.3 million.

During the second quarter of 2023, we disposed of four SHOPs and one MOB for an aggregate contract sales price of $13.8 million.

Two of these SHOPs were impaired by $6.2 million in the second quarter of 2022 (see above).

As a result, we recorded an aggregate loss on sale of $0.3 million in th e three months ended June 30, 2023 .

We did not dispose of any properties in the three months ended June 30, 2022.

Interest Expense

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.

Interest expense increased by $6.7 million to $18.7 million for the three months ended June 30, 2023 from $12.1 million for the three months ended June 30, 2022.

The increase in interest expense mainly resulted from the acceleration of deferred financing costs of $2.6 million from the termination of our Prior Credit Facility, as well as from higher average rates and higher average balances of our indebtedness during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

These increases were partially offset by the amortization of our terminated swaps, which reduced interest expense in the three months ended June 30, 2023 by $0.9 million but increased interest expense by $0.2 million in the three months ended June 30, 2022.

As of June 30, 2023, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.49% per year.

As of June 30, 2022, we had total borrowings of $1.1 billion, at a weighted average interest rate of 3.76% 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.

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

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

Interest and other income was approximately $0.3 million and $2,000 for the three months ended June 30, 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 loss in the three months ended June 30, 2023 and June 30, 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.

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

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

We recorded an income tax expense of $41,000 and $43,000 for the three months ended June 30, 2023 and 2022, 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 March 31, 2023.

Since that time, our TRS’s operating performance has not significantly improved and thus we have recorded a 100% valuation allowance on our net deferred tax assets as of June 30, 2023.

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 loss.

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.

Net loss attributable to non-controlling interests was approximately $22,000 for the three months ended June 30, 2023 and net loss attributable to non-controlling interests was approximately $29,000 for the three months ended June 30, 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.

Allocation for Preferred Stock Dividends

Allocation for preferred stock was $3.4 million for the three months ended June 30, 2023 and 2022.

These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and holders of Series B Preferred Stock.

Comparison of the Six Months Ended June 30, 2023 and 2022

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 $38.3 million and $47.9 million for the six months ended June 30, 2023 and 2022, respectively.

The following table shows our results of operations for the six months ended June 30, 2023 and 2022 and the period to period change by line item of the consolidated statements of operations:

Six Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2023 2022 $

Revenue from tenants $ 173,459 $ 167,476 $ 5,983

Operating expenses:

Property operating and maintenance 107,452 105,682 1,770

Impairment charges — 16,837 (16,837)

Operating fees to related parties 12,756 12,670 86

Acquisition and transaction related 211 954 (743)

General and administrative 9,352 8,898 454

Depreciation and amortization 40,744 40,671 73

Total expenses

170,515 185,712 (15,197)

Operating income (loss) before loss on sale of real estate investments 2,944 (18,236) 21,180

Loss on sale of real estate investments (191) (303) 112

Operating loss 2,753 (18,539) 21,292

Other income (expense):

Interest expense (34,488) (23,814) (10,674)

Interest and other income

Gain on non-designated derivatives 104 1,386 (1,282)

Total other expenses

(34,066) (22,414) (11,652)

Loss before income taxes (31,313) (40,953) 9,640

Income tax expense (87) (82) (5)

Net loss (31,400) (41,035) 9,635

Net loss attributable to non-controlling interests 31 78 (47)

Allocation for preferred stock (6,899) (6,899) —

Net loss attributable to common stockholders $ (38,268) $ (47,856) $ 9,588

Net Operating Income

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 six months ended June 30, 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) $ 23,351 $ 1,073 $ 825 $ — $ (348) $ (370) $ (62,799) $ (38,268)

Operating fees to related parties — — — — — — 12,756 12,756

Acquisition and transaction related — — — — — — 211 211

General and administrative 76 26 — — — — 9,250 9,352

Depreciation and amortization 24,056 15,598 814 — 63 213 — 40,744

Interest expense 42 666 — — — — 33,780 34,488

Interest and other income (2) (267) — — — — (49) (318)

Loss on sale of real estate investments — (12) — — 260 (57) — 191

Gain on non-designated derivative instruments — — — — — — (104) (104)

Income tax (benefit) expense — — — — — — 87 87

Allocation for preferred stock — — — — — — 6,899 6,899

Net loss attributable to non-controlling interests — — — — — — (31) (31)

NOI $ 47,523 $ 17,084 $ 1,639 $ — $ (25) $ (214) $ — $ 66,007

(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) $ 12,173 $ (892) $ 48 $ — $ (170) $ (8,207) $ (50,808) $ (47,856)

Impairment charges 10,644 — — — — 6,193 — 16,837

Operating fees to related parties — — — — — — 12,670 12,670

Acquisition and transaction related 211 — — — — — 743 954

General and administrative 43 2 — — — — 8,853 8,898

Depreciation and amortization 24,697 15,118 30 — 61 765 — 40,671

Interest expense 74 712 — — — — 23,028 23,814

Interest and other income (2) — — — (9) — (3) (14)

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

Gain on non-designated derivative instruments — — — — — — (1,386) (1,386)

Income tax (benefit) expense — — — — — — 82 82

Allocation for preferred stock — — — — — — 6,899 6,899

Net loss attributable to non-controlling interests — — — — — — (78) (78)

NOI $ 47,840 $ 14,940 $ 78 $ — $ (118) $ (946) $ — $ 61,794

Segment Results — Medical Office Buildings

The following table presents the components of NOI and the period to period change within our MOB segment for the six months ended June 30, 2023 and 2022:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

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

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

Revenue from tenants

$ 65,695 $ 64,778 $ 917 $ 1,774 $ 82 $ 1,692 $ 61 $ (19) $ 80 $ 67,530 $ 64,841 $ 2,689

Property operating and maintenance 18,172 16,938 1,234 135 4 131 86 99 (13) 18,393 17,041 1,352

NOI $ 47,523 $ 47,840 $ (317) $ 1,639 $ 78 $ 1,561 $ (25) $ (118) $ 93 $ 49,137 $ 47,800 $ 1,337

_______________

(1) Our MOB segment included 145 Same Store properties.

(2) Our MOB segment included nine Acquisition properties.

(3) Our MOB segment included one Disposition property.

(4) Our MOB segment included 154 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.

Revenue from Tenants

During the six months ended June 30, 2023, revenue from tenants increased by $2.7 million in our MOB segment as compared to the six months ended June 30, 2022, primarily as a result of increased revenue from tenants of $1.7 million due to our Acquired Properties and an increase in venue from tenants of $0.9 million from our Same Store Properties, and an increase in revenue from tenants of $0.1 million 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 six months ended June 30, 2023, as compared to June 30, 2022.

Property Operating and Maintenance

During the six months ended June 30, 2023, property operating and maintenance costs in our MOB segment increased by $1.4 million as compared to the same period last year, primarily as a result of increased costs from our Same Store Properties of $1.2 million.

Segment Results — Seniors Housing - Operating Properties

The following table presents the components of NOI and the period to period change within our SHOP segment for the six months ended June 30, 2023 and 2022:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

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

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

Revenue from tenants

$ 103,163 $ 97,390 $ 5,773 $ — $ — $ — $ 2,766 $ 5,245 $ (2,479) $ 105,929 $ 102,635 $ 3,294

Property operating and maintenance 86,079 82,450 3,629 — — — 2,980 6,191 (3,211) 89,059 88,641 418

$ 17,084 $ 14,940 $ 2,144 $ — $ — $ — $ (214) $ (946) $ 732 $ 16,870 $ 13,994 $ 2,876

_______________

(1) Our SHOP segment included 48 Same Store properties (including two land parcels.

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

(3) Our SHOP segment included eight Disposed Properties.

(4) Our SHOP segment included 48 total 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.

Property operating

Revenue from Tenants

During the six months ended June 30, 2023, revenue from tenants increased by $3.3 million in our SHOP segment as compared to the six months ended June 30, 2022, which was primarily driven by an increase in revenue from tenants of $5.8 million due to our Same Store Properties, partially offset by a decrease in revenue from tenants of $2.5 million due to our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by less rent concessions during the six months ended June 30, 2023, which amounted to $1.4 million as compared to $4.9 million of rent concessions offered during the six months ended June 30, 2022.

The increase was also attributable to higher leasing rates during the six months ended June 30, 2023, as compared to the same period last year, partially offset by marginally lower occupancy in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

Property Operating and Maintenance

During the six months ended June 30, 2023, property operating and maintenance expenses increased $0.4 million in our SHOP segment as compared to the six months ended June 30, 2022, primarily due to an increase in property operating and maintenance expenses of $3.6 million from our Same Store Properties, partially offset by a decrease of $3.2 million from our Disposed Properties.

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 did not record any impairment charges during the six months ended June 30, 2023.

We recorded $16.8 million of impairment charges for the six months ended June 30, 2022.

The impairment charges recorded during the six months ended June 30, 2022 related to (i) two SHOP properties for which we reconsidered our holding period and recorded impairment charges of $6.2 million, which were disposed in the six months ended June 30, 2023 and (ii) seven SNF properties in our MOB segment located in Illinois for which we reduced the carrying values on these properties to their estimated fair values as determined by a tenant’s $50.5 million offer to purchase these properties and recorded impairment charges of $10.6 million.

See Note 3 — Real Estate Investments to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges for the six months ended June 30, 2023 and 2022.

Operating Fees to Related Parties

Operating fees to related parties were $12.8 million and $12.7 million for the six months ended June 30, 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 (see — Results of Operations — Comparison of the Three Months Ended June 30, 2023 and 2022 for additional information).

Asset management fees were $10.9 million and $10.9 million for the six months ended June 30, 2023 and 2022, respectively.

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

There were no incentive fees incurred in either of the six months ended June 30, 2023 or 2022.

Property management fees decreased $0.1 million to $1.8 million for the six months ended June 30, 2023 from $2.0 million for the six months ended June 30, 2022.

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 decreased by $0.7 million, to $0.2 million for the six months ended June 30, 2023 from $1.0 million for the six months ended June 30, 2022.

This decrease was due to (i) $0.4 million of decreased dead

deal costs, as well as from (ii) $0.1 million of prepayment penalties on our mortgage repayments and $0.2 million of termination fees paid to former SHOP operators which were incurred in the six months ended June 30, 2022.

General and Administrative Expenses

General and administrative expenses increased $0.5 million to $9.4 million for the six months ended June 30, 2023 compared to $8.9 million for the six months ended June 30, 2022, which includes $4.8 million and $4.4 million for the six months ended June 30, 2023 and 2022, respectively, incurred in expense reimbursements.

Depreciation and Amortization Expenses

Depreciation and amortization expense increased $0.1 million to $40.7 million for the six months ended June 30, 2023 from $40.7 million for the six months ended June 30, 2022.

Gain (Loss) on Sale of Real Estate Investments

During the six months ended June 30, 2023, we disposed of four SHOPs and one MOB for an aggregate contract sales price of $13.8 million.

Two of the SHOPs were impaired by $6.2 million in the six months ended June 30, 2022 (see above).

As a result, we recorded an aggregate loss of $0.2 million in the six months ende d June 30, 2023 .

We recorded a loss on sale of $0.3 million for the six months ended June 30, 2022 for the sale of the LaSalle properties.

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

Interest Expense

Interest expense increased $10.7 million to $34.5 million for the six months ended June 30, 2023 from $23.8 million for the six months ended June 30, 2022.

The increase in interest expense mainly resulted from the acceleration of deferred financing costs of $2.6 million from the termination of our Prior Credit Facility, as well as from higher average rates and higher average balances of amounts outstanding under our indebtedness during the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

These increases were partially offset by the amortization of our terminated swaps, which reduced interest expense in the six months ended June 30, 2023 by $1.1 million but increased interest expense by $0.4 million in the six months ended June 30, 2022.

As of June 30, 2023, our outstanding debt obligations were $1.2 billion, at a weighted average interest rate of 5.49% per year.

As of June 30, 2022, we had total borrowings of $1.1 billion, at a weighted average interest rate of 3.76% 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 $0.3 million for the six months ended June 30, 2023 and approximately $14,000 for the six months ended June 30, 2022.

Gain (Loss) on Non-Designated Derivatives

Gain (loss) on non-designated derivative instruments for the six months ended June 30, 2023 and 2022 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with the Fannie Mae Master Credit Facilities, which have floating interest rates.

The gain recorded in the six months ended June 30, 2023 was due to significant increases in interest rates during the period.

Income Tax Benefit (Expense)

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

We recorded an income tax expense of approximately $0.1 million for the six months ended June 30, 2023 and 2022.

Since that time, our TRS’s operating performance has not significantly improved and thus we have recorded a 100% valuation allowance on our net deferred tax assets through June 30, 2023.

Net Loss (Income) Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $31,000 for the six months ended June 30, 2023 and net loss attributable to non-controlling interests was approximately $0.1 million for the six months ended June 30, 2022, 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.

Allocation for Preferred Stock

Allocation for preferred stock was $6.9 million for the six months ended June 30, 2023 and 2022.

These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and holders of Series B Preferred Stock.

Cash Flows from Operating Activities

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.

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.

During the six months ended June 30, 2023, net cash provided by operating activities was $10.7 million.

Cash inflows included non-cash items of $14.2 million (net loss of $31.4 million adjusted for non-cash items including:

(i) depreciation and amortization of tangible and intangible assets, (ii) amortization of deferred financing costs, (iii) accretion of terminated swaps, (iv) net amortization of mortgage premiums and discounts, (v) accretion of market lease intangibles, (vi) bad debt expense, (vii) equity-based compensation, (viii) loss on sale of real estate investments, (ix) gain on non-designated derivatives and (x) impairment charges), cash received from non-designated derivative instruments of $2.3 million, and a decrease in prepaid expenses and other assets of $0.9 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $5.7 million, an increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.6 million and a decrease in deferred rent and other liabilities of $0.4 million.

During the six months ended June 30, 2022, net cash provided by operating activities was $13.7 million.

Cash inflows included non-cash items of $19.4 million (net loss of $41.0 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges) and a decrease in prepaid expenses and other assets of $1.9 million.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $4.7 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees, a decrease in deferred rent and other liabilities of $1.8 million and by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $1.1 million.

Cash Flows from Investing Activities

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.

Net cash used in investing activities during the six months ended June 30, 2023 was $34.4 million.

The cash used in investing activities included $25.4 million for the acquisition of five properties, $9.1 million in capital expenditures and $4.6 million in non-designated interest rate cap investments.

These outflows were partially offset by $4.8 million of proceeds from real estate dispositions.

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

The cash used in investing activities included $17.8 million for the acquisition of three properties and $9.1 million in capital expenditures, partially offset by $11.8 million from the sale of the four LaSalle Properties.

Cash Flows from Financing Activities

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.

Net cash provided by financing activities during the six months ended June 30, 2023 was $52.7 million.

Cash inflows consisted of (i) proceeds from mortgage notes payable of $240.0 million, (ii) proceeds from borrowings under our Revolving Credit Facility of $20.0 million, (iii) proceeds from terminated “pay-fixed” interest rate swaps of $5.4 million and (iv) contributions from non-controlling interests of $0.3 million.

Cash outflows consisted of (i) payments our credit facilities of $197.7 million, (ii) payments for deferred financing costs of $7.8 million, (iii) dividends paid to holders of Series A Preferred Stock of $3.7 million, (iv) dividends paid to holders of Series B Preferred Stock of $3.2 million, (v) principal payments on our mortgages of $0.6 million and (vi) distributions to our non-controlling interests of $0.1 million.

Net cash used in financing activities of $14.5 million during the six months ended June 30, 2022 was comprised of cash outflows of payments of deferred financing costs of $0.3 million, dividends paid to holders of Series A Preferred Stock of $3.7 million, dividends to holders of Series B Preferred Stock of $3.2 million, payments for derivative instruments of $39,000 and principal payments on mortgages of $7.2 million.

Liquidity and Capital Resources

Our existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of our operating and administrative expenses, debt service obligations (including principal repayment), and dividends to holders of our Series A Preferred Stock and holders of our Series B Preferred Stock.

We closely monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months.

Our future liquidity requirements, and available liquidity, however, depend on many factors, such as the impact of COVID-19 on our tenants and operators.

We monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity to meet our financial obligations for at least the next 12 months.

Our future liquidity requirements, and available liquidity, however, depend on many factors.

Further, recent and continuing increases in inflation brought about by labor shortages, supply chain disruptions and increases in interest rates may adversely impact our results of operations and thus ultimately our liquidity.

Moreover, these increases in the rate of inflation, the ongoing war in Ukraine and related sanctions, supply chain disruptions and increases in interest rates, may also impact our tenants’ ability to pay rent and hence our results of operations and liquidity.

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 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 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.

We may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Commencement Quarter.

Moreover, beginning in the Commencement Quarter, we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock, Series B Preferred Stock or any other class of preferred stock that may be issued) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

Our Credit Facility also restricts our uses of liquidity.

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

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.

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, potential borrowings secured by currently unencumbered real estate assets (see below), potential future advances under our Fannie Mae Master Credit Facilities and net cash provided by our dispositions.

The Barclay’s MOB Loan Agreement requires us to maintain a minimum balance of cash and cash equivalents of $12.5 million at all times.

As of June 30, 2023, we had $71.7 million of cash and cash equivalents.

At the closing of the Barclay’s MOB Loan (see below), we applied $194.8 million of the Barclay’s MOB Loan proceeds to repay and terminate our then-existing credit facility (the “Prior Credit Facility”).

We also terminated the interest rate swap contracts that formerly hedged interest rate changes under the Prior Credit Facility (see Note 7 — Derivatives and Hedging Activities for additional information).

The remaining proceeds of approximately $39.0 million (after the payment of Barclay’s MOB Loan closing costs and reimbursement of deposits) are available for general corporate purposes, subject to the terms of the Barclay’s MOB Loan Agreement.

Additionally, by terminating the Prior Credit Facility, we are no longer subject to certain restrictive covenants previously imposed by the Prior Credit Facility (see Note 5 — Credit Facilities for additional information).

On May 24, 2023, we, through certain subsidiaries of our OP, entered into a non-recourse loan agreement (the “Barclay’s MOB Loan Agreement”), with (i) Barclays Capital Real Estate Inc., (ii) Société Générale Financial Corporation and (iii) KeyBank National Association (each individually, a “Lender,” and collectively, the “Lenders”), in the aggregate amount of $240.0 million (the “Barclay’s MOB Loan”).

In connection with the Barclay’s MOB Loan Agreement, we entered into a Guaranty Agreement (the “Guaranty”) and an Environmental Indemnity Agreement (the “Environmental Indemnity”) for the benefit of the Lenders.

The Barclay’s MOB Loan is secured by, among other things, first priority mortgages on the Company’s interests in 62 MOBs, which had a carrying value of $414.8 million as of June 30, 2023.

The Barclay’s MOB Loan has a 10-year term and is interest-only at a fixed rate of 6.453% per year.

The Barclays MOB Loan Agreement requires us to pay interest on a monthly basis with the principal balance due on the maturity date of June 6, 2033.

The Barclay’s MOB Loan Agreement requires us to comply with certain covenants, including, among other things, a requirement to maintain at all times a combination of cash and cash equivalents totaling at least $12.5 million.

As of June 30, 2023, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 42.7%.

Net debt totaled $1.1 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($71.7 million).

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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%.

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.

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.

Pursuant to the Credit Facility, any resulting net proceeds from dispositions prior to the Commencement Quarter must be used to repay amounts outstanding under the Revolving Credit Facility, to the extent there are any such amounts outstanding.

As of June 30, 2023, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.49%.

The weighted-average interest rates in both periods include the impact of “pay-fixed” swaps that are designated as hedging instruments on a portion of our variable-rate debt, but does not include the impact of our non-designated interest rate caps.

As of June 30, 2023, the carrying value of our real estate investments, at cost was $2.6 billion, with $1.3 billion of this asset value pledged as collateral for mortgage notes payable and $0.6 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities.

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 is repaid or the collateral is released from the pledge associated with the secured debt.

Unencumbered real estate investments, at cost as of June 30, 2023 was $0.6 billion.

There can be no assurance as to the amount of liquidity we would be able to generate from using these unencumbered assets as collateral for future mortgage loans, future advances under the Fannie Mae Master Credit Facilities, or other future financings.

Mortgage Notes Payable

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

As of June 30, 2023, we had $822.0 million in mortgage notes payable outstanding.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2023 and 2024 are $0.6 million and $1.2 million, respectively.

Credit Facility

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 a one one-year extension at our option.

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

Loans under our Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs.

Any amounts repaid under our Term Loan may not be re-borrowed.

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

The Credit Facility includes an uncommitted “accordion feature” that may, subject to conditions, be used to increase the commitments under either component of the Credit Facility by up to an additional $370.0 million to over $1.0 billion.

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.

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

Both of these amounts are calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and, therefore, availability under our Credit Facility has been adversely affected by the increases in operating costs, primarily costs arising from the use of contract labor for care providers and, to a lesser extent, the amount we pay in overtime wages and bonuses, due to the effects of the COVID-19 pandemic, and may continue to be adversely affected.

See also the discussion above regarding the need to maintain certain levels of liquidity until the Commencement Quarter.

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

The Credit Facility also contains a subfacility for letters of credit of up to $25.0 million.

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

As of March 31, 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.

We entered into the Fourth Amendment to the Credit Facility on August 11, 2022.

As described above, pursuant to the Fourth Amendment, the Fixed Charge Coverage Ratio we must satisfy, based on the four most recently ended fiscal quarters, is (a) 1.20 to 1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.35 to 1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.45 to 1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter, provided, however, that from and after the Commencement Quarter, we must satisfy a minimum Fixed Charge Coverage Ratio of 1.50 to 1.00.

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

However, we were in compliance with the new covenants under the Credit Facility for the 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.

On May 24, 2023, we, through certain subsidiaries of our OP, entered into the Barclay’s MOB Loan Agreement, with the Lenders, in the aggregate amount of $240.0 million.

In connection with the Barclay’s MOB Loan Agreement, our OP entered into the “Guaranty and the “Environmental Indemnity for the benefit of the Lenders.

The Barclay’s MOB Loan is secured by, among other things, first priority mortgages on the Company’s interests in 62 MOBs, which had a carrying value of $0.4 billion as of June 30, 2023.

The Barclay’s MOB Loan has a 10-year term and is interest-only at a fixed rate of 6.453% per year.

Under the Barclays MOB Loan Agreement requires to pay interest on a monthly basis with the principal balance due on the maturity date of June 6, 2033.

The Barclay’s MOB Loan Agreement requires our OP to comply with certain covenants, including, among other things, a requirement to maintain at all times a combination of cash and cash equivalents totaling at least $12.5 million at all times.

Prior Credit Facility

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

The Revolving Credit Facility and Term Loan were interest-only and would have matured on March 13, 2024.

The Prior Credit Facility was fully repaid in May 2023 with net proceeds provided by the Barclay’s MOB Loan (see Note 4 — Mortgage Notes Payable, Net for details).

The Prior Credit Facility contained various restrictions which are no longer in affect since its repayment.

These restrictions included, but were not limited to, (i) a minimum cash and cash equivalents balance, (ii) maintaining a certain fixed charge coverage ratio, (iii) dividend restrictions (on both common stock and preferred stock), (iv) share repurchases and (v) use of net proceeds from real estate dispositions.

Fannie Mae Master Credit Facilities

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

As of June 30, 2023, $349.2 million was outstanding under the Fannie Mae Master Credit Facilities.

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

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Future scheduled principal payments on our Fannie Mae Master Credit Facilities for the remainder of 2023 and 2024 are $2.9 million and $5.8 million, respectively.

Subsequent to June 30, 2023, we provided a $5.1 million cash deposit to Key Bank and Capital One.

This deposit was provided because the debt service coverage ratios of the underlying properties of each facility were below those of the minimum required amounts per the debt agreements.

This deposit will be refunded if we achieve debt service coverage ratios above those of the minimum required amounts.

Capital Expenditures

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.

During the six months ended June 30, 2023, our capital expenditures were $9.1 million, of which $3.0 million related to our MOB segment and $6.2 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.

Acquisitions — Three and Six Months Ended June 30, 2023

During the six months ended June 30, 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 Prior Credit Facility and the remainder with cash on hand.

Acquisitions — Subsequent to June 30, 2023

We have not acquired any properties subsequent to June 30, 2023.

However, we have entered into one non-binding letter of intent to acquire two MOBs for a contract purchase price of $9.8 million.

There can be no assurance that the acquisition of these properties will be completed on its contemplated terms, or at all.

Dispositions — Three and Six Months Ended June 30, 2023

During the three and six months ended June 30, 2023, we disposed of four SHOPs and one MOB for an aggregate contract sales price of $13.8 million.

Pursuant to the terms of the Prior Credit Facility, $5.2 million of net proceeds were used to repay amounts then outstanding, and $2.7 million of net proceeds were used to partially repay the Multi-Property CMBS Loan mortgage note.

Dispositions — Subsequent to June 30, 2023

We have not disposed of any properties subsequent to June 30, 2023.

However, we have entered into one purchase and sale agreement to dispose of one SHOP for a contract sales price of $8.0 million.

There can be no assurance that the sale of this property will be completed on its contemplated terms, or at all.

Share Repurchase Program

Under the Credit Facility, we are restricted from repurchasing shares until the Commencement Quarter.

Thus, the Board suspended repurchases under the SRP effective August 14, 2020.

No further repurchase requests under the SRP may be made unless and until the SRP is reactivated.

There can be no assurance, however, as to whether our SRP will be reactivated or on what terms.

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

No assurances can be made as to when or if our SRP will be reactivated.

We did not repurchase any shares during the three and six months ended June 30, 2023 and June 30, 2022.

Non-GAAP Financial Measures

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We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”).

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

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

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

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MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP.

We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

MFFO is not equivalent to our net income or loss as determined under GAAP.

We calculate MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs:

Modified Funds from Operations (the “Practice Guideline”) issued by the IPA in November 2010, except that we adjust for deferred tax asset allowances based on management’s determination.

Modified Funds from Operations (the “Practice Guideline”) issued by the

IPA in November 2010, except that we adjust for deferred tax asset allowances based on management’s determination.

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

In calculating MFFO, we follow the Practice Guideline (with the added adjustment for deferred tax asset allowances based on management’s determination as noted above) and exclude acquisition fees and expenses, amortization of above and below market and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

In calculating MFFO, we follow the Practice Guideline (with the added adjustment for deferred tax asset allowances based on management’s determination as noted above) and exclude acquisition fees and expenses, amortization of above- and below-market leases and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt, mark-to-market adjustments included in net loss, gains or losses included in net loss from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

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

In addition, because we currently believe that concessions granted to our tenants as a result of the COVID-19 pandemic are collectable (see Accounting Treatment of Rent Deferrals below), we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these deferrals, which is not considered by the Practice Guideline.

We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance.

Our Modified FFO (as defined in our Credit Facility) is similar but not identical to MFFO as discussed in this Quarterly Report on Form 10-Q.

We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.

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

Three Months Ended March 31,

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

(In thousands) 2023 2022 2023 2022

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Impairment charges — 6,193 — 16,837

(Gains) losses on sale of real estate investment (115) 303

Loss on sale of real estate investment 306 — 191 303

Adjustments for non-controlling interests (3)

(108) (117) (201) (262)

FFO (as defined by NAREIT) attributable to stockholders

(646) 4,917 1,245 8,969

Acquisition and transaction related 148 375 211 954

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Straight-line rent adjustments

Amortization of mortgage premiums and discounts, net

(Gain) loss on non-designated derivatives 182 (994)

(388) (664) (605) (1,053)

Amortization (accretion) of mortgage premiums and discounts, net 23 (102) 46 5

Gain on non-designated derivatives (286) (392) (104) (1,386)

Cash received from non-designated derivative instruments 1,375 — 2,301 —

Deferred tax asset valuation allowance (2)

283 587 991 1,142

Adjustments for non-controlling interests (3)

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$ 268 $ 4,599 $ 3,628 $ 8,391

(1) Net of non-real estate depreciation and amortization.

(1) Excludes non-real estate depreciation and amortization.

(2) This is a non-cash item and is added back as it is not considered a part of operating performance.

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Dividends and Other Distributions

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 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 holders of Series A Preferred Stock, 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 holders of Series B Preferred Stock, 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.

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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.

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

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

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

There can be no assurance as to if, or when, we will be able to satisfy these conditions.

We may only pay cash distributions on our common stock beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock, Series B Preferred Stock or any other class of preferred stock that may be issued) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.

In addition, our ability to pay cash distributions may be limited by financial covenants in the Credit Facility, including our requirement to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges and a minimum debt service coverage ratio.

Until four full fiscal quarters have elapsed after the commencement of the Commencement Quarter, the aggregate amount of permitted distributions and Modified FFO will be determined by using only the fiscal quarters that have elapsed from and after the Commencement Quarter and annualizing those amounts.

Subject to the restrictions in our Credit Facility, the amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986 (the “Code”).

The amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986 (the “Code”).

Distribution payments are dependent on the availability of funds.

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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.

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 were made to common stockholders, restricted shareholders, holders of Common OP Units or holders of Class B Units in the six months ended June 30, 2023.

Three Months Ended Year-To-Date

March 31, 2023 June 30, 2023 June 30, 2023

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

Distributions:

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Available cash on hand

— —% — —% — —%

Total source of distribution coverage $ 3,494 100.0% $ 3,497 100.0% $ 6,991 100.0%

Cash flows provided by operations (in accordance with GAAP)

$ 4,989 $ 5,688 $ 10,677

Net loss (in accordance with GAAP) $ (14,068) $ (3,264) $ (17,332)

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

For the three months ended March 31, 2023, cash flows used in operations were $5.0 million.

For the six months ended June 30, 2023, cash flows provided by operations were $10.7 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.

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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.

Our ability to pay dividends on our Series A Preferred Stock, Series B Preferred Stock and Series A Preferred Units and other distributions 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.

Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, and there can be no assurance we will be successful in achieving this objective.

We may still pay any cash distributions necessary to maintain our status as a REIT and may not pay any cash distributions (including dividends on Series A Preferred Stock and Series B Preferred Stock) if a default or event of default exists or would result therefrom under the Credit Facility.

Loan Obligations

The payment terms of our mortgage notes payable generally require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity.

The payment terms of our Credit Facility require interest only amounts payable monthly with all unpaid principal and interest due at maturity.

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.

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.

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 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.

Election as a REIT

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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 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.

As of June 30, 2023, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.0%.

To help mitigate the adverse impact of inflation, most 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.

These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures).

Approximately 85.9% are fixed-rate, 4.1% are based on the Consumer Price Index and 10% do not contain any escalation provisions.

Although most of our leases with tenants in our MOB segment contain rent escalation provisions, these rates are generally below the current rate of inflation.

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

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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