What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-13 compared with 2023-08-11 · 598 added, 561 removed, 1603 unchanged (42% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

2023 December 31, 2022

12 unchanged sentences

Operating lease right-of-use assets 7,739 7,814

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

33,125 34,554

Prepaid expenses and other assets 36,019 34,554

Deferred costs, net 15,300 17,223

4 unchanged sentences

Market lease intangible liabilities, net 8,519 9,407

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

Accounts payable and accrued expenses (including $ 665 and $ 47 , respectively, due to related parties as of September 30, 2023 and December 31, 2022)

48,234 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 June 30, 2023 and December 31, 2022

3,977,144 issued and outstanding as of September 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 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

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

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 109,877,212 shares and 105,080,531 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 2,485,745 2,417,059

10 unchanged sentences

(In thousands, except share and per share data)

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

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

2023 2022 2023 2022

9 unchanged sentences

86,425 92,004 256,940 277,716

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 )

Operating (loss) income before loss (gain) on sale of real estate investments ( 739 ) ( 8,544 ) 2,205 ( 26,780 )

(Loss) gain on sale of real estate investments ( 173 ) 194 ( 364 ) ( 109 )

Operating (loss) income ( 912 ) ( 8,350 ) 1,841 ( 26,889 )

Other income (expense):

1 unchanged sentence

Interest and other income

258 10 576 24

Gain on non-designated derivatives 406 1,826 510 3,212

20 unchanged sentences

(In thousands, except share data)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

16 unchanged sentences

Rebalancing of ownership percentage — — — — — — 69 — — 69 ( 69 ) —

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

Balance, September 30, 2023 3,977,144 $ 40 3,630,000 $ 36 109,877,212 $ 1,098 $ 2,485,745 $ 35,340 $ ( 1,588,261 ) $ 933,998 $ 6,583 $ 940,581

Three Months Ended September 30, 2023

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

3 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

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

Share-based compensation, net — — — — — — 229 — — 229 — 229

8 unchanged sentences

Unrealized gain on designated derivatives — — — — — — — 395 — 395 — 395

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

Rebalancing of ownership percentage — — — — — — 17 — — 17 ( 17 ) —

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

Balance, September 30, 2023 3,977,144 $ 40 3,630,000 $ 36 109,877,212 $ 1,098 $ 2,485,745 $ 35,340 $ ( 1,588,261 ) $ 933,998 $ 6,583 $ 940,581

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

3 unchanged sentences

(In thousands, except share data)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

16 unchanged sentences

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

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

Three Months Ended June 30, 2022

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

Three Months Ended September 30, 2022

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

3 unchanged sentences

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

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

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

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

10 unchanged sentences

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

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

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

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

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

29 unchanged sentences

Payments on mortgage notes payable ( 850 ) ( 8,329 )

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

Proceeds from termination of derivative instruments 5,413 —

Payments of deferred financing costs ( 7,774 ) ( 858 )

Payments for derivative instruments — ( 39 )

Preferred stock issuance costs — ( 39 )

11 unchanged sentences

(In thousands)

Six Months Ended June 30,

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

Nine Months Ended September 30,

Cash and cash equivalents, end of period $ 51,041 $ 40,120

Restricted cash, end of period 40,245 23,858

13 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

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

As of September 30, 2023, the Company owned 204 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.

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

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.

As of September 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.

1 unchanged sentence

MOBs and SHOPs.

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

In its MOB operating segment, the Company owns, manages, and leases single- and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent.

The Property Manager or third-party managers manage the Company’s MOBs.

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

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.

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

As of September 30, 2023, the Company had four eligible independent contractors operating 46 SHOPs, although effective on September 30, 2023, the Company terminated its contract with one independent contractor which managed 20 SHOPs.

The Company is in the process of transferring the management of these 20 SHOPs to a new independent contractor, which the Company expects to be completed before December 31, 2023.

The Company incurred $ 0.3 million of costs directly related to the termination in the three and nine months ended September 30, 2023.

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

2 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 July 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 October 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.

1 unchanged sentence

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

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

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

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

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 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 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 six months ended June 30, 2023.

The results of operations for the nine months ended September 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 United States Securities and Exchange Commission (the “SEC”) on March 17, 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 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 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.

Continuing Impacts of the COVID-19 Pandemic

During the first quarter of 2020, the global COVID-19 pandemic commenced.

The pandemic and its aftermath has had, and could continue to have, adverse impacts on economic and market conditions.

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.

1 unchanged sentence

economy as could the rates charged to residents at its SHOPs.

Moreover, the demand for leasing space at the Company’s MOB properties could decline further negatively impacting occupancy percentage, revenue and net income.

Moreover, the demand for leasing space at the Company’s MOB properties could decline, negatively impacting occupancy percentage, revenue and earnings.

Additionally, downturns or stagnation in the U.S.

housing market as a result of an economic downturn could adversely affect the ability, or perceived ability, of seniors to afford the resident fees and services at the Company’s SHOPs.

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

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.

Further, recent and continuing increases in inflation brought about by labor shortages, supply chain disruptions and increases in interest rates have had, and may continue to have, adverse impacts on the Company’s results of operations.

Moreover, these increases in the rate of inflation, the ongoing wars in Ukraine, Israel 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.

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

June 30, 2023

September 30, 2023

COVID-19 Impact — MOB Segment

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

3 unchanged sentences

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

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

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

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

However, in light of the COVID-19 pandemic in which many leases were modified, the Financial Accounting Standards Board (“FASB”) and SEC provided relief that allowed companies to elect whether they treated COVID-19 related lease amendments as provisions included in the pre-concession arrangements, and therefore, not lease modifications, or to treat lease amendments as modifications.

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

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

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

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

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

In accordance with the relief provisions, instead of treating these qualifying leases as modifications, the Company has elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary).

Under that accounting, for modifications that were deferrals only, there would be no impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease.

For leases not qualifying for this relief, the Company has applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.

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

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

In accordance with the relief provisions, instead of treating these qualifying leases as modifications, the Company elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary).

Under that accounting, for modifications that were deferrals only, there was no impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact was recognized ratably over the remaining life of the leases.

For leases not qualifying for this relief, the Company applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.

COVID-19 Impact — SHOP Segment

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

Since then, occupancy has trended downward.

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

Since then, SHOP occupancy has trended downward.

The Company also experienced lower inquiry volumes and reduced in-person tours during the COVID-19 pandemic compared to pre-pandemic periods.

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

2 unchanged sentences

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 was partially offset by funds received by the Company under the CARES Act.

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

However, the wage expenses (including overtime, training and bonus wages) incurred by the Company from employees of its third party operators has increased due to, among other things, inflation raising the cost of labor generally, a lack of qualified personnel that the Company’s third party operators are able to employ on a permanent basis and training hours and other onboarding costs for permanent staff which replaced previously utilized contract and agency labor.

The persistence of high inflation, labor shortages and supply chain disruptions have caused 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 were 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 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.

The Company did no t receive any such funds during the three and nine months ended September 30, 2023 and it received $ 4.3 million and $ 4.5 million, respectively, in funding from the CARES Act during the three and nine months ended September 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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2023

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.

Revenue Recognition

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

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

As of September 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.

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

As of June 30, 2023:

As of September 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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

circumstances affecting the credit risk of the tenant.

September 30, 2023

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.

2 unchanged sentences

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

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.

The Company recorded reductions in revenue of $ 0.2 million and $ 0.9 million, respectively, for uncollectable amounts during the three and nine months ended September 30, 2023, and $ 1.7 million and $ 2.6 million, respectively, during the three and nine months ended September 30, 2022.

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 June 30, 2023 and 2022.

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

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

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

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

Purchase Price Allocation

7 unchanged sentences

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

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

All acquisitions during the nine months ended September 30, 2023 were asset acquisitions.

The Company acquired seven properties during the nine months ended September 30, 2023.

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

1 unchanged sentence

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 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 six months ended June 30, 2023 or 2022.

The Company did not record any intangible asset amounts related to customer relationships during the nine months ended September 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 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 of September 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 June 30, 2023 and

These leases are reflected on the balance sheets as of September 30, 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 nine months ended September 30, 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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2023

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

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

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

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

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

As of September 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 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 June 30, 2023 and may continue to be extended for future periods.

Significant components of the deferred tax assets and liabilities as of September 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 COVID-19 pandemic.

During the three months ended September 30, 2023, the Company modified 26 intercompany leases with the TRS which reduced intercompany rent.

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.

thus the Company has provided a 100 % valuation allowance of $ 7.6 million as of September 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 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.

The Company did not receive any funding from the CARES Act during the three and nine months ended September 30, 2023 and the Company received $ 4.3 million and $ 4.5 million, respectively, in funding from the CARES Act during the three and nine months ended September 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

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

Not yet Fully Adopted as of September 30, 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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2023

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.

4 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 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,

The Company owned 204 properties as of September 30, 2023.

During the nine months ended September 30, 2023 and 2022, the Company acquired seven and three properties, respectively.

All acquisitions in the nine months ended September 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 nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

(In thousands) 2023 2022

11 unchanged sentences

Significant Tenants

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.

The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of June 30, 2023 and 2022:

As of September 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.

September 30,

State 2023 2022

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 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 June 30, Six Months Ended June 30,

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

(In thousands) 2023 2022 2023 2022

17 unchanged sentences

$ 208 $ 878 $ 761 $ 641 $ 411

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

Three and Nine Months Ended September 30, 2023

During the three months ended September 30, 2023, the Company did not dispose of any properties.

During the nine months ended September 30, 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 $ 15.1 million in the year ended December 31, 2022 (see below).

As a result, the Company recorded an aggregate loss on sale of $ 0.4 million, which is presented in the Company’s consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2023 .

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 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 June 30, 2023 and December 31, 2022.

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

Assets Held for Use

7 unchanged sentences

Impairment Charges

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,

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

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

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

(In thousands) 2022 2022

6 unchanged sentences

(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 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.

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

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

Two of these properties were sold in the nine months ended September 30, 2023.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 30, 2023

Note 4 — Mortgage Notes Payable, Net

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

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

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

Portfolio Encumbered Properties June 30,

2023 December 31, 2022 June 30,

Portfolio Encumbered Properties September 30,

2023 December 31, 2022 September 30,

2023 December 31, 2022 Interest Rate Maturity

9 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

Barclays MOB Loan 62 240,000 — 6.45 % — % Fixed June 2033

Gross mortgage notes payable 136 821,668 585,181 4.58 % 3.83 %

4 unchanged sentences

_____________

(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.

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

For the SOFR (defined in Note 5 — Credit Facilities )/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 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.

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

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

2 unchanged sentences

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

As of September 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 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”).

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

Barclays MOB Loan

On May 24, 2023, the Company, through certain subsidiaries of the OP), entered into a non-recourse loan agreement (the “Barclays 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

The Barclays MOB Loan is secured by, among other things, first priority mortgages on the Company’s interests in 62 MOBs with an aggregate gross asset value of $ 416.8 million.

The Barclays 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, the Company is required to make interest-only

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 30, 2023

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

3 unchanged sentences

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”).

At the closing of the Barclays MOB Loan, the Company applied $ 194.8 million of the Barclays 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.

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

Under the Guaranty, the OP has (i) guaranteed the full repayment of the Barclays 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 June 30, 2023 and December 31, 2022:

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

Outstanding Facility

1 unchanged sentence

Credit Facilities Encumbered Properties (1)

2023 December 31, 2022 June 30,

September 30,

2023 December 31, 2022 September 30,

2023 December 31, 2022 Interest Rate Maturity

14 unchanged sentences

Total Credit Facilities 21 $ 347,720 $ 530,297 7.86 % (4) 5.94 % (4)

(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.

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

(2) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of September 30, 2023 with an aggregate carrying value, at cost of $ 350.5 million.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 30, 2023

(3) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of September 30, 2023 with an aggregate carrying value, at cost of $ 261.9 million.

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

(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).

2 unchanged sentences

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 June 30, 2023 and December 31, 2022.

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 5.89 % and 5.93 %, respectively, as of September 30, 2023, and 5.26 %, and 5.96 %, respectively, as of 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.

(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.

If no “pay-fixed” swaps are allocated, the effective interest rate below represents the variable rate (or contractual floor if appropriate) and the applicable margin in effect as of June 30, 2023 and December 31, 2022.

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.

The interest rate swaps allocated to the Prior Credit Facility were all terminated in the nine months ended September 30, 2023.

Upon termination, the fair values 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.

The Company continues to have $ 378.5 million of SOFR-based “pay-fixed” interest rate swaps allocated to a variable-rate mortgage note payable as of September 30, 2023.

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

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.

As of September 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.

Unencumbered real estate investments, at cost as of September 30, 2023 were $ 0.7 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

1 unchanged sentence

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 was fully repaid in May 2023 with net proceeds provided by the Barclays 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) Secured Overnight Financing Rate (“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 ranged, 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 elected to use the SOFR option for all of its borrowings under the Prior Credit Facility.

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

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

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

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

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

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.

September 30, 2023

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

Advances made under these agreements were 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 which the Company periodically renews upon their expiration.

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

As of September 30, 2023 the Company had six non-designated interest rate cap agreements with an aggregate current effective notional amount of $ 351.6 million which caps SOFR at 3.50 % and 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.

As of September 30, 2023, $ 347.7 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.

6 unchanged sentences

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.

In the three months ended September 30, 2023, the Company provided 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.

Subsequent to September 30, 2023, the Company provided an additional deposit of $ 6.7 million, which brought the total deposit to $ 11.8 million (see Note 17 — Subsequent Events for additional information).

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Future Principal Payments

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):

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

Future Principal

9 unchanged sentences

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

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

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

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

The remaining USD LIBOR settings 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 Company had no LIBOR-based borrowings or derivative instruments as of September 30, 2023.

As of September 30, 2023, the Company had $ 347.7 million of variable-rate, SOFR-based borrowings under the Fannie Mae Master Credit Facilities, which automatically transitioned from variable-rate, LIBOR-based borrowings on July 1, 2023.

As of September 30, 2023, the Company had SOFR-based interest rate caps with notional amounts of $ 351.6 million which are not designated as hedging instruments which also transitioned from LIBOR-based contracts effective July 1, 2023.

During the 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 nine months ended September 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.

1 unchanged sentence

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

5 unchanged sentences

Level 3 — Unobservable inputs that reflect the entity’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability.

5 unchanged sentences

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

However, as of June 30, 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 September 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

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.

September 30, 2023

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

June 30, 2023

September 30, 2023

Derivative assets, at fair value (non-designated) $ — $ 4,946 $ — $ 4,946

7 unchanged sentences

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

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2023.

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

The Company also had impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheets as of September 30, 2023 and December 31, 2022.

As of September 30, 2023, the Company owned 16 held for use properties ( 10 MOBs and six SHOPs) for which the Company had reconsidered their expected holding periods, of which six properties ( three MOB and three 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.

2 unchanged sentences

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

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

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

Financial Instruments Not Measured at Fair Value

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 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

September 30, 2023 December 31, 2022

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

14 unchanged sentences

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

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

(In thousands) Balance Sheet Location June 30,

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

(In thousands) Balance Sheet Location September 30,

2023 December 31, 2022

4 unchanged sentences

Cash Flow Hedges of Interest Rate Risk

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

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

September 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

June 30, 2023

September 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 June 30, Six Months Ended June 30,

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

(In thousands) 2023 2022 2023 2022

3 unchanged sentences

$ ( 15,720 ) $ ( 13,284 ) $ ( 50,208 ) $ ( 37,098 )

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

As of September 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.

During the nine months ended September 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.

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

MOB Loan Swap Termination

1 unchanged sentence

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

For the nine months ended September 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.

During the nine months ended September 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.

For the three and nine months ended September 30, 2023, the Company reclassified $ 1.5 million and $ 2.7 million, respectively, from AOCI as decreases to interest expense, and $ 2.7 million remained in AOCI as of September 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 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.

During the next 12 months, from October 1, 2023 through September 30, 2024, the Company estimates that $ 16.5 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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 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 June 30, 2023 and December 31, 2022:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Interest Rate Derivatives Number of Instruments Notional Amount (1)

3 unchanged sentences

6 $ 351,572 7 $ 354,624

(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.

(1) Notional amount represents the currently active interest rate cap contracts.

(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.

The actual 30-day LIBOR rates during the six months ended June 30, 2023, and the SOFR rates during the three months ended September 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 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.

As of September 30, 2023 and December 31, 2022, the Company had entered into six SOFR-based and seven LIBOR-based interest rate caps, respectively, with notional amounts of $ 351.6 million and $ 354.6 million, respectively, which limited 30-day SOFR/LIBOR borrowings to 3.50 % and have varying maturities through July 2025.

The Company paid premiums of $ 4.6 million to renew three caps with an aggregate notional amount of $ 138.5 million which matured in the nine months ended September 30, 2023.

Subsequent to September 30, 2023, the Company paid premiums of $ 5.0 million to renew two maturing interest rate caps with an aggregate notional amount of $ 150.9 million (see Note 17 — Subsequent Events for additional information).

One interest rate cap with a notional amount of $ 60.0 million matures in April 2024, which represents the next interest rate cap maturity excluding those renewed subsequent to September 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.

Beginning in the year ended December 31, 2022, LIBOR exceeded 3.50 % and the Company began receiving payments under these interest rate caps.

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

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

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.

The gains on non-designated derivatives were $ 0.4 million and $ 0.5 million, respectively, for the three and nine months ended September 30, 2023, and were $ 1.8 million and $ 3.2 million, respectively, for the three and nine months ended September 30, 2022.

During the nine months ended September 30, 2023, the Company received aggregate payments of $ 3.9 million related to its effective interest rate caps as LIBOR/SOFR exceeded the effective rates of the capped debt.

No such amounts were received during the nine months ended September 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 June 30, 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 September 30, 2023 and December 31, 2022.

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Gross Amounts Not Offset in the Consolidated Balance Sheet

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

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

September 30, 2023 $ 37,547 $ — $ — $ 37,547 $ — $ — $ 37,547

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

Credit-risk-related Contingent Features

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

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

As of June 30, 2023, there were no derivatives in a net liability position.

As of September 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 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.

As of September 30, 2023 and December 31, 2022, the Company had 109,877,212 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 17.3 million shares in respect to the stock dividends.

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

References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive income have been retroactively adjusted to reflect the cumulative increase in shares outstanding due to the stock dividends (including the April 2023 stock dividend) and are noted as such throughout the accompanying financial statements and notes.

Except for shares issued as dividends, no additional shares of common stock were issued during the nine months ended September 30, 2023 or the year ended December 31, 2022.

References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive loss have been retroactively adjusted to reflect the cumulative increase in shares outstanding due to the stock dividends (including the October 2023 stock dividend) and are noted as such throughout the accompanying financial statements and notes.

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

11 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

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

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

Number of Shares Repurchased Average Price per Share

Cumulative repurchases as of December 31, 2022 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

Nine months ended September 30, 2023 — —

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

Distribution Reinvestment Plan

5 unchanged sentences

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

During the six months ended June 30, 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 nine months ended September 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 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.

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

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

The Company also had 100,000 Series A Preferred Units outstanding as of September 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 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

June 30, 2023

September 30, 2023

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.

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

11 unchanged sentences

July 3, 2023 July 17, 2023 0.015179

October 2, 2023 October 16, 2023 0.015179

Note 9 — Related Party Transactions and Arrangements

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.

As of September 30, 2023 and December 31, 2022, the Special Limited Partner owned 10,550 and 10,094 shares (assuming conversion of its partnership interests), respectively, of the Company’s outstanding common stock.

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

As of June 30, 2023 and December 31, 2022, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

As of September 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.

9 unchanged sentences

The amount reimbursed for insourced expenses may not exceed 0.5 % of the contract purchase price of each acquired property or 0.5 % of the amount advanced for a loan or other investment.

Additionally, the Company reimburses the Advisor for third-party acquisition expenses.

Additionally, the Company reimburses the Advisor for

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

third-party acquisition expenses.

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

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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 30, 2023

Asset Management Fees and Variable Management/Incentive Fees

14 unchanged sentences

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

As of June 30, 2023, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

As of September 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.

14 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 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.

No incentive fee was incurred for the three and nine months ended September 30, 2023 or 2022.

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 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.

During the three and nine months ended September 30, 2023, the Company incurred $ 2.5 million and $ 6.4 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

5 unchanged sentences

Initially, for the year ended December 31, 2020;

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

(a) the Fixed Component was equal to $ 6.8 million (currently $ 7.7 million) and (b) the Variable Component was equal to (i) the sum of the total real estate investments, at cost as recorded on the balance sheet dated as of the last day of each fiscal quarter (the “Real Estate Cost”) in the year divided by four , which amount is then (ii) multiplied by 0.29 %.

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

1 unchanged sentence

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

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

2023 2022 2023 2022

(In thousands) Incurred Incurred Incurred

Incurred June 30,

Incurred September 30,

2023 December 31, 2022

9 unchanged sentences

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

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.

Includes $ 2.0 million and $ 5.2 million, respectively, for the three and nine months ended September 30, 2023, and $ 1.7 million and $ 4.6 million, respectively, for the three and nine months ended September 30, 2022, subject to the Capped Reimbursement.

(2) The three and nine months ended September 30, 2023 includ es $ 0.2 million and $ 0.4 million of leasing commissions, respectively, which are capitalized and included in prepaid expenses and other assets as of September 30, 2023.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

1 unchanged sentence

If the common stock of the Company is listed on a national securities exchange, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive a subordinated incentive listing distribution from the OP equal to 15.0 % of the amount by which the market value of all issued and outstanding shares of common stock plus distributions exceeds the aggregate capital contributed plus an amount equal to a 6.0 % cumulative, pre-tax non-compounded annual return to investors in the Company’s initial public offering of common stock.

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

No such distribution was incurred during the nine months ended September 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 six months ended June 30, 2023 or 2022.

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

September 30, 2023

Note 10 — Economic Dependency

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Any distributions payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

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

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

Number of Shares of Common Stock Weighted Average Issue Price

1 unchanged sentence

Stock dividend 4,399 14.32

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.

Vested ( 50,871 ) 20.40

Unvested, September 30, 2023 50,871 $ 16.98

As of September 30, 2023, the Company had $ 0.8 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

This cost will be recognized over a weighted-average period of 0.9 years.

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.

Compensation expense related to restricted shares was $ 0.2 million and $ 0.7 million, respectively, for the three and nine months ended September 30, 2023, and $ 0.3 million and $ 1.0 million, respectively, for the three and nine months ended September 30, 2022.

Other Share-Based Compensation

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

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

No such shares were issued during the nine months ended September 30, 2023 or 2022.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Note 12 — Accumulated Other Comprehensive Income

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Rebalancing of ownership percentage —

Balance, June 30, 2023 $ 34,945

Balance, September 30, 2023 $ 35,340

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

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Balance as of

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

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

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

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

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

A holder of Series A Preferred Units has the right to receive cash distributions equivalent to the cash distributions, if any, on the Company’s Series A Preferred Stock, which earn dividends at a rate equal to 7.375 % of its face value.

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

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 September 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 September 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.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

September 30, 2023

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

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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.

Dur ing the nine months ended September 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 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.

The 405,998 Common OP Units outstanding as of September 30, 2023 would be redeemable for 489,233 shares of common stock, giving effect to adjustments for the impact of the stock dividends through October 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 June 30,

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

Property Name

(Dollar amounts in thousands)

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

Investment Date September 30, 2023 September 30, 2023 September 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

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

Note 14 — Net Loss Per Share

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

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

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

2023 2022 2023 2022

6 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

3 unchanged sentences

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

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

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

2023 2022 2023 2022

8 unchanged sentences

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

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

Th ere were 50,871 and 95,983 unvested restricted shares outstanding, respectively, as of September 30, 2023 and 2022.

(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 June 30, 2023 and 2022.

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

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

These Class B Units were unvested as of September 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 June 30, 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 and nine months ended September 30, 2023 and 2022 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

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

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

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

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

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”).

4 unchanged sentences

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

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

For example, interest expense is not necessarily linked to the operating performance of a real estate asset.

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

2 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

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

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

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

16 unchanged sentences

Interest and other income

Loss on sale of real estate investments ( 306 ) —

(Loss) gain on sale of real estate investments ( 173 ) 194

Gain on non-designated derivatives 406 1,826

3 unchanged sentences

Net loss attributable to common stockholders $ ( 19,561 ) $ ( 23,303 )

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

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

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

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

22 unchanged sentences

Net loss attributable to common stockholders $ ( 57,829 ) $ ( 71,159 )

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

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

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

Investments in real estate, net:

Medical office buildings

$ 1,126,415 $ 1,121,857

Seniors housing — operating properties 834,972 856,440

MOB Segment $ 1,126,677 $ 1,121,857

SHOP Segment 831,475 856,440

Total investments in real estate, net

9 unchanged sentences

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

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

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

(In thousands) 2023 2022 2023 2022

Medical office buildings $ 1,742 $ 2,484 $ 2,964 $ 3,672

Seniors housing — operating properties 3,764 3,280 6,176 5,403

MOB Segment $ 1,686 $ 2,309 $ 4,650 $ 5,981

SHOP Segment 3,172 5,323 9,348 10,726

Total capital expenditures $ 4,858 $ 7,632 $ 13,998 $ 16,707

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

Note 16 — Commitments and Contingencies

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 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.

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

The seven operating leases have durations, including assumed renewals, ranging from 19.1 years to 84.0 years, excluding an adjacent parking lot lease with a term of 1.0 year.

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

As of September 30, 2023, the Company’s balance sheet included ROU assets and liabilities of $ 7.7 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 34.2 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 Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 33.6 years and a weighted-average discount rate of 7.37 % as of September 30, 2023.

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

For the nine months ended September 30, 2023, the Company paid cash of $ 0.6 million for amounts included in the measurement of lease liabilities and recorded expense of $ 0.6 million.

For the nine months ended September 30, 2022, the Company paid cash of $ 0.7 million for amounts included in the measurement of lease liabilities and recorded expense of $ 0.7 million.

The lease expense is recorded in property operating expenses in the consolidated statements of operations and comprehensive loss.

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Future Base Rent Payments

5 unchanged sentences

Total present value of minimum lease payments $ 8,051 $ 4,834

(1) The direct finance lease liability is included in a ccounts payable and accrued expenses on the balance sheet as of June 30, 2023.

(1) The direct finance lease liability is included in accounts payable and accrued expenses on the balance sheet as of September 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.

4 unchanged sentences

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters.

As of 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.

As of September 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

1 unchanged sentence

Dividend Declaration

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

On October 2, 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 October 16, 2023 to holders of record of the Company’s common stock at the close of business on October 12, 2023.

Other Subsequent Events

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

Subsequent to September 30, 2023, the Company renewed two interest rate caps, which matured on November 1, 2023, with an aggregate notional amount of $ 150.9 million and a strike price of 3.50 % for $ 5.0 million.

Additionally, the Company provided a $ 6.7 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.

This deposit will be refunded at 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.

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

5 unchanged sentences

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements.

Those statements include statements regarding the intent, belief or current expectations of Healthcare Trust, Inc.

(“we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions.

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts may be forward-looking statements.

Such forward-looking statements include the intent, belief or current expectations of Healthcare Trust, Inc.

(“we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,”, “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions, although not all forward-looking statements contain these identifying words.

Actual results may differ materially from those contemplated by such forward-looking statements.

1 unchanged sentence

These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements.

These risks and uncertainties include the risks associated with the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, including related sanctions and other penalties imposed by the U.S.

and European Union, and the related impact on us, our tenants and the global economy and financial markets;

that any potential future acquisition by the Company is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all.

Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2022 as well as Part II — Other Information, Item IA — Risk Factors below.

2 unchanged sentences

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

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

As of September 30, 2023, we owned 204 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.

5 unchanged sentences

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

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

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

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

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

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.

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

As of September 30, 2023, we had four eligible independent contractors operating 46 SHOPs, although effective on September 30, 2023, we terminated our contract with one independent contractor which managed 20 SHOPs.

We are in the process of transferring the management of these 20 SHOPs to a new independent contractor, which we expect to be completed before December 31, 2023.

There were no material costs incurred by this termination in the three or nine months ended September 30, 2023.

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

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

The Estimated Per-Share NAV has not been adjusted since publication and will not be adjusted until the Board determines a new Estimated Per-Share NAV.

The Estimated Per-Share NAV has not been

adjusted since publication and will not be adjusted until the Board determines a new Estimated Per-Share NAV.

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

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

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 and its Aftermath

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 and until we list our common stock.

Management Update on the Continuing Impacts of the COVID-19 Pandemic

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.

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

As of September 30, 2023, occupancy in this segment reached 74.1%, representing a decline from December 31, 2022 of 1.0%.

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

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June 30, 2023 (2)

46 4,164 73.3%

September 30, 2023 (2)

46 4,164 74.1%

(1) Exclusive of two land parcels.

(2) Inclusive of one SHOP with 39 rentable units which was closed in May 2023.

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.

Beginning with the second quarter of 2021, our occupancy and operating costs in our SHOP portfolio were 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, training and bonus wages, in response to a shortage of workers, the cost of labor generally, lack of qualified personnel that our third party operators are able to employ on a permanent basis and training hours and other onboarding costs for permanent staff which replaced previously utilized contract and agency labor.

During the nine months ended September 30, 2023, these contract and agency costs declined.

In particular, costs incurred from contract labor and agencies for care providers decreased in our SHOP segment by $2.9 million and $5.1 million, from $3.2 million and $6.7 million, respectively, in the three and nine months ended September 30, 2022, to $0.3 million and $1.6 million, respectively, as compared to the three and nine months ended September 30, 2023.

However, these costs were offset by increased wage costs for direct employees of our third party operators of $0.8 million and $4.9 million, respectively, in the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022.

Likewise, occupancy levels have not recovered to their pre-pandemic rates (as noted in the table above), thus the 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 $0.8 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.

We offered $0.8 million and $2.3 million rent concessions during the three and nine months ended September 30, 2023, and $0.7 million and $2.7 million during the three and nine months ended September 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.

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 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.

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

We received $4.3 million and $4.5 million, respectively, of funds through the CARES Act for the three and nine months ended September 30, 2022.

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

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

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

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

Portfolio Number

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(In thousands)

Medical Office and Other Healthcare Related Buildings 154 5,132,166 91.5% 4.8 $ 1,448,862

Seniors Housing — Operating Properties 48 (4) 3,857,652 73.3% (5) N/A 1,126,844

MOB Segment 156 5,153,419 90.9% 4.8 $ 1,465,516

SHOP Segment 48 (4) 3,857,652 74.1% (5) N/A 1,132,650

Total Portfolio 204 9,011,071 $ 2,598,166

(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).

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

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

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of September 30, 2023) net of gross market lease intangible liabilities ($23.5 million total as of September 30, 2023).

Impairment charges are already reflected within gross asset value.

(4) Includes two parcels of land

(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.

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

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

The SHOP segment includes one closed SHOP with 30 rentable units, and excludes land parcels.

N/A Not applicable.

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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 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:

As of September 30, 2023, we owned 204 properties.

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

Since January 1, 2022, we acquired eleven 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 September 30, 2023:

MOB SHOP Total

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Number of properties, December 31, 2022 150 52 202

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

Acquisition activity during the nine months ended September 30, 2023 7 — 7

Disposition activity during the nine months ended September 30, 2023 (1) (4) (5)

Number of properties, September 30, 2023 156 48 204

Number of Same Store Properties 145 48 193

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Results of Operations

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)

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

Net loss attributable to common stockholders was $19.6 million and $23.3 million, respectively, for the three months ended September 30, 2023, and 2022.

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

Three Months Ended September 30, Increase (Decrease)

(Dollars in thousands) 2023 2022 $

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86,425 92,004 (5,579)

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

Operating loss before (loss) gain on sale of real estate investments (739) (8,544) 7,805

(Loss) gain on sale of real estate investments (173) 194 (367)

Operating loss (912) (8,350) 7,438

Other income (expense):

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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.

For example, interest expense is not necessarily linked to the operating performance of a real estate asset.

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

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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 June 30, 2023:

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

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NOI $ 23,312 $ 7,105 $ 970 $ — $ (4) $ (23) $ — $ 31,360

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

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

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

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

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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 June 30, 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 September 30, 2023 and 2022:

Same Store (1)

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Segment Total (4)

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

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

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

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

(2) Our MOB segment included nine Acquired Properties.

(2) Our MOB segment included 11 Acquired Properties.

(3) Our MOB segment included one Disposed Property.

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Revenue from Tenants

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.

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 June 30, 2023 as compared to June 30, 2022.

During the three months ended September 30, 2023, revenue from tenants increased by $0.5 million in our MOB segment as compared to the three months ended September 30, 2022, which was primarily driven by an increase in revenue from tenants of $0.7 million due to our Acquired Properties, partially offset by a decrease in revenue from tenants of $0.2 million due to our Same Store Properties.

The decrease in our Same Store properties revenue from tenants was primarily due to marginally lower occupancy in these properties in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

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 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.

Our MOB segment had consistent property operating and maintenance expenses of $9.4 million in each of the three months ended September 30, 2023 and 2022.

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 June 30, 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 September 30, 2023 and 2022:

Same Store (1)

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Segment Total (4)

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

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

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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 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.

During the three months ended September 30, 2023, revenue from tenants increased by $1.8 million in our SHOP segment as compared to the three months ended September 30, 2022, which was due to an increase in revenue from tenants of $2.4 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $0.6 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 September 30, 2023 as compared to the three months ended September 30, 2022, partially offset by marginally lower occupancy in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Additionally, we offered more rent concessions during the three months ended September 30, 2023, which amounted to $0.8 million as compared to $0.7 million of rent concessions offered during the three months ended September 30, 2022.

Property Operating and Maintenance

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.

During the three months ended September 30, 2023, property operating and maintenance expenses increased $3.1 million in our SHOP segment as compared to the three months ended September 30, 2022, primarily due to an increase in property operating and maintenance expenses of $4.4 million in our Same Store Properties, partially offset by a decrease of $1.3 million from our Disposed Properties.

Our Same Store Properties property operating and maintenance expenses increased in the quarter ended September 30, 2023 compared to the same period last year, primarily from $3.5 million of funds received through the CARES Act in the three months ended September 30, 2022 (of a total $4.3 million received from the CARES Act during that period), 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 September 30, 2023.

The increase was also due to (i) $1.6 million of increased costs for overtime, training and bonus wages paid to employees of our third party operators, (ii) $1.1 million of increased management fees paid to our third party operators, (iii) $0.7 million of higher insurance expense, (iv) $0.3 million of costs directly related to the termination of one SHOP operator effective September 30, 2023 and (v) the effects of inflation which raised the general costs of food, supplies, and utilities generally.

These increases to property operating and maintenance expenses were partially offset by decreased costs for contract labor of $2.8 million.

Other Results of Operations

Impairment Charges

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.

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

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

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

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 consistent at $6.4 million for the three months ended June 30, 2023 and 2022, respectively.

Operating fees to related parties were consistent at $6.4 million and $6.3 million, respectively, for the three months ended September 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 June 30, 2023 and 2022.

Asset management fees were $5.5 million for both the three months ended September 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 June 30, 2023 or 2022.

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

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

Property management fees were consistent at $0.9 million for the three months ended September 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 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.

Acquisition and transaction related expenses were consistent at $0.2 million for the three months ended September 30, 2023 and 2022.

General and Administrative Expenses

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.

General and administrative expenses increased by $0.3 million to $4.8 million for the three months ended September 30, 2023 compared to $4.5 million for the three months ended September 30, 2022, which includes $2.8 million and $2.4 million, respectively, for the three months ended September 30, 2023 and September 30, 2022, incurred in expense reimbursements.

The increase in general and administrative expenses was primarily attributable to $0.3 million of severance payments incurred in the three months ended September 30, 2023 made to former employees of the Advisor.

Depreciation and Amortization Expenses

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

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.

Depreciation and amortization expense increased $0.1 million to $20.8 million for the three months ended September 30, 2023 from $20.9 million for the three months ended September 30, 2022.

Loss on Sale of Real Estate Investments

During the three months ended September 30, 2023 and 2022, we did not dispose of any properties.

However, we did record a loss on sale of $0.2 million during the three months ended September 30, 2023 and gain on sale of $0.2 million in the three months ended September 30, 2022, related to various settlements of liens and accruals on formerly disposed properties.

Interest Expense

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.

Interest expense increased by $2.4 million to $15.7 million for the three months ended September 30, 2023 from $13.3 million for the three months ended September 30, 2022.

The increase in interest expense mainly resulted from higher average rates and higher average balances of our indebtedness during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

These increases were partially offset by the amortization of our terminated swaps, which reduced interest expense in the three months ended September 30, 2023 by $1.5 million as well as by a decrease in deferred financing cost amortization of $0.5 million in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

As of September 30, 2023, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.56% per year.

As of September 30, 2022, we had total borrowings of $1.1 billion, at a weighted average interest rate of 4.29% 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 $0.3 million and $2,000 for the three months ended June 30, 2023 and 2022, respectively.

Interest and other income was approximately $0.3 million and $10,000, respectively, for the three months ended September 30, 2023 and 2022.

Interest income increased in the three months ended September 30, 2023 due to a higher balance of cash (including restricted cash) as well as higher interest rates on our cash accounts.

Gains (Losses) on Non-Designated Derivatives

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 loss in the three months ended September 30, 2023 and September 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 $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 June 30, 2023.

We recorded an income tax expense of $0.2 million and $0.1 million, respectively, for the three months ended September 30, 2023 and 2022.

Because of our TRS’s recent operating history of losses and the continuing impacts of the COVID-19 pandemic on the results of operations of our SHOP assets, in the third quarter of 2020, we were not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets and recorded a full valuation allowance.

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

Net loss attributable to non-controlling interests was approximately $14,000 for the three months ended September 30, 2023 and net loss attributable to non-controlling interests was approximately $22,000 for the three months ended September 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.

Allocation for preferred stock was $3.5 million for the three months ended September 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

Comparison of the Nine Months Ended September 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)

Net loss attributable to common stockholders was $57.8 million and $71.2 million, respectively, for the nine months ended September 30, 2023 and 2022.

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

Nine Months Ended September 30, Increase (Decrease)

(Dollars in thousands) 2023 2022 $

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Loss on sale of real estate investments (364) (109) (255)

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

Operating income (loss) 1,841 (26,889) 28,730

Other income (expense):

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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

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NOI $ 70,828 $ 24,189 $ 2,616 $ — $ (29) $ (237) $ — $ 97,367

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

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Segment Results — Medical Office Buildings

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

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

Same Store (1)

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Segment Total

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

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

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

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

(2) Our MOB segment included nine Acquisition properties.

(2) Our MOB segment included 11 Acquisition properties.

(3) Our MOB segment included one Disposition property.

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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.

During the nine months ended September 30, 2023, revenue from tenants increased by $3.2 million in our MOB segment as compared to the nine months ended September 30, 2022, primarily as a result of increased revenue from tenants of $2.4 million due to our Acquired Properties and an increase in revenue from tenants of $0.7 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 nine months ended September 30, 2023, as compared to September 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.

During the nine months ended September 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:

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

Same Store (1)

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Segment Total

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

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

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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.

During the nine months ended September 30, 2023, revenue from tenants increased by $5.0 million in our SHOP segment as compared to the nine months ended September 30, 2022, which was primarily driven by an increase in revenue from tenants of $8.1 million due to our Same Store Properties, partially offset by a decrease in revenue from tenants of $3.1 million due to our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, as well as by $1.6 million of less rent concessions offered during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

These increases were partially offset by marginally lower occupancy in the nine months ended September 30, 2023 as compared to the nine months ended September 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.

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

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

During the nine months ended September 30, 2023, property operating and maintenance expenses increased $3.5 million in our SHOP segment as compared to the nine months ended September 30, 2022, primarily due to an increase in property operating and maintenance expenses of $8.0 million from our Same Store Properties, partially offset by a decrease of $4.5 million from our Disposed Properties.

Our Same Store properties operating and maintenance expenses increased in the nine months ended September 30, 2023 compared to the same period last year, primarily from $3.7 million of funds received through the CARES Act in the nine months ended September 30, 2022 (of a total $4.5 million received from the CARES Act in that period), which serve to reduce property operating expenses in the period received.

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

The increase was also due to (i) $6.6 million of increased costs for overtime, training and bonus wages paid to employees of our third party operators, (ii) $1.3 million of increased management fees paid to our third party operators, (iii) $0.4 million of higher insurance expense, (iv) $0.3 million of costs directly related to the termination of one SHOP operator effective September 30, 2023 and (v) the effects of inflation which raised the general costs of food, supplies, and utilities generally.

These increases to property operating and maintenance expenses were partially offset by decreased costs for contract labor of $4.9 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.

We did not record any impairment charges during the nine months ended September 30, 2023.

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

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

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

Operating fees to related parties were $19.2 million and $19.0 million, respectively, for the nine months ended September 30, 2023 and 2022.

Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis (see — Results of Operations — Comparison of the Three Months Ended September 30, 2023 and 2022 for additional information).

Asset management fees were $16.4 million for both the nine months ended September 30, 2023 and 2022.

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.

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

Property management fees were consistent at $2.8 million and $2.6 million, respectively, for the nine months ended September 30, 2023 and 2022.

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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.

Acquisition and transaction related expenses decreased by $0.8 million, to $0.4 million for the nine months ended September 30, 2023 from $1.2 million for the nine months ended September 30, 2022.

This decrease was due to $0.6 million of less dead deal costs, $0.1 million of less legal costs from terminated SHOP operators and $0.1 million of less mortgage prepayment penalties.

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.

General and administrative expenses increased $0.7 million to $14.1 million for the nine months ended September 30, 2023 compared to $13.4 million for the nine months ended September 30, 2022, which includes $7.6 million and $6.7 million, respectively, for the nine months ended September 30, 2023 and 2022, incurred in expense reimbursements.

The increase in general and administrative expenses was primarily attributable to $0.3 million of severance payments incurred in the nine months ended September 30, 2023 made to former employees of the Advisor.

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.

Depreciation and amortization expense was consistent at $61.5 million for the nine months ended September 30, 2023 and 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.

During the nine months ended September 30, 2023, we 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 $15.1 million in the nine months ended September 30, 2022 (see above).

As a result, the Company recorded an aggregate loss on sale of $0.4 million in the nine months ended September 30, 2023.

During the nine months ended September 30, 2022, we recorded a loss on sale of real estate investments of $0.1 million.

This was comprised of a loss on sale of $0.3 million for the sale of the LaSalle Properties, partially offset by a gain of $0.2 million related to the settlement of a lien on formerly disposed 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.

Interest expense increased $13.1 million to $50.2 million for the nine months ended September 30, 2023 from $37.1 million for the nine months ended September 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 nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

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

As of September 30, 2023, our outstanding debt obligations were $1.2 billion, at a weighted average interest rate of 5.56% per year.

As of September 30, 2022, we had total borrowings of $1.1 billion, at a weighted average interest rate of 4.29% 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 $0.3 million for the six months ended June 30, 2023 and approximately $14,000 for the six months ended June 30, 2022.

Interest and other income was approximately $0.6 million for the nine months ended September 30, 2023 and approximately $24,000 for the nine months ended September 30, 2022.

Interest income increased in the nine months ended September 30, 2023 due to a higher balance of cash (including restricted cash) as well as higher interest rates on our cash accounts.

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.

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

We recorded an income tax expense of approximately $0.2 million for the nine months ended September 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.

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

Net loss attributable to non-controlling interests was approximately $45,000 for the nine months ended September 30, 2023 and net loss attributable to non-controlling interests was approximately $0.1 million for the nine months ended September 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.

Allocation for preferred stock was $10.3 million for the nine months ended September 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.

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

During the nine months ended September 30, 2023, net cash provided by operating activities was $16.4 million.

Cash inflows included non-cash items of $18.1 million (net loss of $47.5 million adjusted for non-cash items including:

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These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $1.5 million, an increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.9 million and a decrease in deferred rent and other liabilities of $1.0 million.

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

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

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

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Cash Flows from Investing Activities

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.

Net cash used in investing activities during the nine months ended September 30, 2023 was $49.0 million.

The cash used in investing activities included (i) $35.3 million for the acquisition of seven properties, (ii) $14.0 million in capital expenditures and (iii) payments for non-designated derivative instruments of $4.6 million.

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.

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

The cash used in investing activities included $17.8 million for the acquisition of three properties and $16.7 million in capital expenditures, partially offset by $11.8 million from the sale of the four LaSalle Properties.

Cash Flows from Financing Activities

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.

Net cash provided by financing activities during the nine months ended September 30, 2023 was $47.4 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 $199.2 million, (ii) payments for deferred financing costs of $7.8 million, (iii) dividends paid to holders of Series A Preferred Stock of $5.5 million, (iv) dividends paid to holders of Series B Preferred Stock of $4.8 million, (v) principal payments on our mortgages of $0.9 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.

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

Liquidity and Capital Resources

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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 maintain a minimum balance of cash and cash equivalents of $12.5 million at all times.

As of September 30, 2023, we had $51.0 million of cash and cash equivalents.

At the closing of the Barclays MOB Loan (see below), we applied $194.8 million of the Barclays 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 to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information).

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

On May 24, 2023, we, through certain subsidiaries of our OP, entered into a non-recourse loan agreement (the “Barclays 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 “Barclays MOB Loan”).

In connection with the Barclays 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 Barclays 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 $416.8 million as of September 30, 2023.

The Barclays 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%.

The Barclays 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 September 30, 2023, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 43.0%.

Net debt totaled $1.1 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($51.0 million).

Gross asset value totaled $2.6 billion, which represents total real estate investments, at cost ($2.6 billion) net of gross market lease intangible liabilities ($23.5 million).

Cumulative impairment charges are already reflected within gross asset value.

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.

Cumulative impairment charges are reflected within gross asset value.

As of September 30, 2023, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.56%.

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 (discussed below).

As of September 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.

Unencumbered real estate investments, at cost as of September 30, 2023 was $0.7 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.

Non-Designated Interest Rate Caps

Our interest rate caps are used to limit our exposure to interest rate movements on our Fannie Mae Master Credit Facilities for economic purposes, however, we do not elect to apply hedge accounting to these instruments.

As of September 30, 2023, we had six SOFR-based interest rate caps with an aggregate notional amount of $351.6 million, which limits 30-day SOFR to 3.50% and have varying maturities through July 2025.

As SOFR has increased beyond 3.50%, we have received cash payments of $3.9 million in the nine months ended September 30, 2023.

We did not receive such payments in the nine months ended September 30, 2022.

We paid premiums of $4.6 million to renew three caps with an aggregate notional amount of $138.5 million which matured in the nine months ended September 30, 2023.

Subsequent to September 30, 2023, we paid premiums of $5.0 million to renew two maturing interest rate caps with an aggregate notional amount of $150.9 million.

We have one interest rate cap with a notional amount of $60.0 million which matures in April 2024, which represents the next maturing interest rate cap, excluding those renewed subsequent to September 30, 2023.

Upon the maturity and renewal of our interest rate caps, we have been obligated to provide a cash deposit to Fannie Mae 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.

In the nine months ended September 30, 2023, we provided a cash deposit of $5.1 million, and we provided another cash deposit of $6.7 million subsequent to September 30, 2023, bringing the total deposit to $11.8 million.

We expect to provide another deposit upon the maturity of one interest rate cap in April 2024.

Please see Fannie Mae Master Credit Facilities section below for additional information.

Mortgage Notes Payable

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

As of September 30, 2023, we had $821.7 million in mortgage notes payable outstanding, all of which is either fixed-rate or effectively fixed through our interest rate swap contracts.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2023 and 2024 are $0.3 million and $1.2 million, respectively.

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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 was fully repaid in May 2023 with net proceeds provided by the Barclay’s MOB Loan (see Note 4 — Mortgage Notes Payable, Net to our consolidated financial statements in this Quarterly Report on Form 10-Q for details).

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

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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.

As of September 30, 2023, $347.7 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.

We do not expect to draw any further amounts on the Fannie Mae Master Credit Facilities.

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) with a combined floor of 2.62%.

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 SOFR 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) with a combined floor of 2.62%.

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

Future scheduled principal payments on our Fannie Mae Master Credit Facilities for the remainder of 2023 and 2024 are $1.4 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.

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

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.

Subsequent to September 30, 2023, we provided an additional $6.7 million deposit to Fannie Mae which brought the total deposit to $11.8 million.

Capital Expenditures

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.

During the nine months ended September 30, 2023, our capital expenditures were $14.0 million, of which $4.7 million related to our MOB segment and $9.3 million related to our SHOP segment.

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

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.

Acquisitions — Three and Nine Months Ended September 30, 2023

During the three months ended September 30, 2023, we acquired two single-tenant MOBs for an aggregate contract purchase price of $9.8 million, funded with cash on hand.

During the nine months ended September 30, 2023, we acquired seven single-tenant MOBs for an aggregate contract purchase price of $34.9 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.

Acquisitions — Subsequent to September 30, 2023

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

We have signed one letter of intent to acquire four properties for a contract purchase of $12.6 million.

There can be no assurance we will complete this acquisition on its contemplated terms, or at all.

We anticipate primarily using cash on hand to fund the consideration required to complete this acquisition.

Dispositions — Three and Nine Months Ended September 30, 2023

We did not dispose of any properties during the three months ended September 30, 2023.

During the nine months ended September 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.

Dispositions — Subsequent to September 30, 2023

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

Share Repurchase Program

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

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

Non-GAAP Financial Measures

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While NOI is a property-level measure, MFFO is based on our total performance as a company and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties.

Additionally, NOI as defined herein, includes straight-line rent which is excluded from MFFO.

Additionally, NOI as defined herein, includes straight-line rent adjustments which are excluded from MFFO.

Funds from Operations and Modified Funds from Operations

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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.

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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 June 30, Six Months Ended June 30,

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

(In thousands) 2023 2022 2023 2022

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Impairment charges — 8,949 — 25,786

Loss on sale of real estate investment 306 — 191 303

Loss (gain) on sale of real estate investment 173 (194) 364 109

Adjustments for non-controlling interests (3)

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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.

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.

Since mid-2020, we have not paid cash dividends on our shares of common stock but have issues stock dividends to the holders.

The stock dividends have been declared quarterly using a rate of $0.85 per share per year.

The number of shares issued with each dividends is based on the estimated per share asset value in effect on the applicable date.

The number of shares issued with each dividend is based on the estimated per share asset value in effect on the applicable date.

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”).

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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.

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.

No cash 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

March 31, 2023 June 30, 2023 September 30, 2023 September 30, 2023

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

Distributions:

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

For the six months ended June 30, 2023, cash flows provided by operations were $10.7 million.

For the nine months ended September 30, 2023, cash flows provided by operations were $16.4 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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We may be adversely impacted by inflation on the leases with tenants in our MOB segment that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates.

As of June 30, 2023, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.0%.

As of September 30, 2023, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.7%.

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.

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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