What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-10 compared with 2023-11-13 · 601 added, 1042 removed, 1159 unchanged (59% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

2024 December 31, 2023

ASSETS (Unaudited) (Unaudited)

ASSETS (Unaudited)

Real estate investments, at cost:

10 unchanged sentences

Operating lease right-of-use assets 7,687 7,713

Prepaid expenses and other assets 36,019 34,554

Prepaid expenses and other assets (including $ 0 due to related parties as of March 31, 2024)

40,832 35,781

Deferred costs, net 16,687 15,997

4 unchanged sentences

Market lease intangible liabilities, net 7,569 8,165

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

Accounts payable and accrued expenses (including $ 872 and $ 47 due to related parties as of March 31, 2024 and December 31, 2023, respectively)

47,709 48,356

5 unchanged sentences

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

3,977,144 issued and outstanding as of September 30, 2023 and December 31, 2022

3,977,144 issued and outstanding as of March 31, 2024 and December 31, 2023

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

3,630,000 issued and outstanding as of September 30, 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

3,630,000 issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 113,238,180 shares and 111,545,018 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,533,232 2,509,303

10 unchanged sentences

(In thousands, except share and per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

Revenue from tenants $ 88,299 $ 87,355

7 unchanged sentences

Total expenses 89,419 85,530

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

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 )

Operating income before gain on sale of real estate investments ( 1,120 ) 1,825

Gain on sale of real estate investments — 115

Operating income ( 1,120 ) 1,940

Other income (expense):

1 unchanged sentence

Interest and other income 72 5

258 10 576 24

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

Gain (loss) on non-designated derivatives 1,951 ( 182 )

Total other expenses ( 14,360 ) ( 15,962 )

( 15,056 ) ( 11,448 ) ( 49,122 ) ( 33,862 )

Loss before income taxes ( 15,480 ) ( 14,022 )

9 unchanged sentences

113,148,558 113,087,553

Net loss per common share attributable to common stockholders — Basic and Diluted (1)

Net loss per share attributable to common stockholders — Basic and Diluted (1)

$ ( 0.17 ) $ ( 0.15 )

5 unchanged sentences

(In thousands, except share data)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

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

14 unchanged sentences

Unrealized loss on designated derivatives — — — — — — — 2,280 — 2,280 — 2,280

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

Rebalancing of ownership percentage — — — — — — 21 — — 21 ( 21 ) —

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

Balance, March 31, 2024 3,977,144 $ 40 3,630,000 $ 36 113,238,180 $ 1,132 $ 2,533,232 $ 25,744 $ ( 1,682,499 ) $ 877,685 $ 6,362 $ 884,047

Three Months Ended March 31, 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, 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

Distributions declared in common stock, $ 0.21 per share

— — — — 1,592,778 16 22,976 — ( 22,992 ) — — —

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

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

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

— — — — — — — — ( 1,616 ) ( 1,616 ) — ( 1,616 )

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

Net loss — — — — — — — — ( 16,111 ) ( 16,111 ) ( 14 ) ( 16,125 )

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

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

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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Nine Months Ended September 30, 2022

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

Shares Par Value Number of

Shares Par Value Additional

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

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

Issuance of Preferred Stock, net — — — — — — ( 39 ) — — ( 39 ) — ( 39 )

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

9 unchanged sentences

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

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

Three Months Ended September 30, 2022

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

Shares Par Value Number of

Shares Par Value Additional

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

Balance, 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 )

Share-based compensation, net — — — — — — 291 — — 291 — 291

Distributions declared in common stock, $ 0.21 per share

— — — — 1,447,673 14 21,697 — ( 21,711 ) — — —

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

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

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

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

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

Net loss — — — — — — — — ( 19,853 ) ( 19,853 ) ( 22 ) ( 19,875 )

Unrealized gain on designated derivatives — — — — — — — 16,948 — 16,948 — 16,948

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

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

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

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

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

8 unchanged sentences

Equity-based compensation 230 230

Loss on sale of real estate investments, net 364 109

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

Cash received from non-designated derivative instruments 1,773 926

11 unchanged sentences

Investments in non-designated interest rate caps ( 1,450 ) —

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

Net cash used in investing activities ( 12,216 ) ( 29,077 )

2 unchanged sentences

Proceeds from credit facilities — 20,000

Proceeds from mortgage notes payable 240,000 —

Payments on mortgage notes payable ( 291 ) ( 283 )

3 unchanged sentences

Preferred stock issuance costs — ( 2 )

Contributions from non-controlling interests 284 —

Dividends paid on Series A Preferred stock ( 1,834 ) ( 1,832 )

9 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash and cash equivalents, end of period $ 28,670 $ 35,794

6 unchanged sentences

Common stock issued through stock dividends $ 23,695 $ 22,335

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

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

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

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

Mortgages issued with acquisition of real estate investments $ 7,500 $ —

Net change in accrued capital expenditures for the period $ ( 632 ) $ —

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

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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 September 30, 2023, the Company owned 204 properties located in 33 states and comprised of 9.0 million rentable square feet.

As of March 31, 2024, the Company owned 208 properties located in 33 states and comprised of 9.1 million rentable square feet.

Substantially all of the Company’s business is conducted through the OP and its wholly-owned subsidiaries including taxable REIT subsidiaries.

3 unchanged sentences

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

As of 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.

As of March 31, 2024, the Company owned 46 SHOPs 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.

5 unchanged sentences

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.

As of March 31, 2024, the Company had four eligible independent contractors operating 46 SHOPs.

The Company declared quarterly dividends entirely in shares of its common stock from October 2020 through January 2024.

Dividends payable entirely in shares of common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods.

1 unchanged sentence

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 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.

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 January 2024, and are noted as such throughout the accompanying financial statements and notes.

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

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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

The results of operations for the three months ended March 31, 2024 and 2023 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, 2023, 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 15, 2024.

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 nine months ended September 30, 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.

Continuing Impacts of the COVID-19 Pandemic

Adverse Economic Impacts Since 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.

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

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, 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.

The Company’s MOB segment has been less impacted than its SHOP segment, which continues to be challenged by the post-pandemic operating environment.

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:

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

COVID-19 Impact — MOB Segment

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

The Company took a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, during the year ended December 31, 2020, the Company executed lease amendments providing for deferral of rent.

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

For accounting purposes, in accordance with ASC 842:

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

However, in light of the COVID-19 pandemic in which many leases 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 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, 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.

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

In the Company’s SHOP segment, occupancy trended downward from March 2020 until March 2021 and has since recovered modestly and stabilized.

The Company also experienced lower inquiry volumes and reduced in-person tours in post-pandemic periods as 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.

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

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

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

The Company has since reduced its reliance on this labor source in the 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 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

At the SHOPs, the Company generally bears these cost increases.

In addition, 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.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

March 31, 2024

The persistence of high inflation and labor shortages 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.

Revenue Recognition

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

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

As of March 31, 2024, these leases had a weighted average remaining lease term of 4.7 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.

13 unchanged sentences

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

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

The following table presents future base rent payments on a cash basis due to the Company over the next five years and thereafter as of March 31, 2024.

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

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

As of September 30, 2023:

(In thousands) Future

3 unchanged sentences

Total $ 666,852

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

March 31, 2024

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

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

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 $ 0.2 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.

The Company recorded reductions in revenue of $ 0.2 million and $ 0.3 million for uncollectable amounts during the three months ended March 31, 2024 and 2023, respectively.

Investments in Real Estate

7 unchanged sentences

Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company's operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations.

No properties were presented as discontinued operations during the three months ended September 30, 2023 and 2022.

No properties were presented as discontinued operations during the three months ended March 31, 2024 and 2023.

Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year.

1 unchanged sentence

Properties are no longer depreciated when they are classified as held for sale.

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

There were no real estate investments held for sale as of March 31, 2024 or December 31, 2023.

Purchase Price Allocation

7 unchanged sentences

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

All acquisitions during the nine months ended September 30, 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.

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

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

All acquisitions during the three months ended March 31, 2024 were asset acquisitions.

The Company acquired four properties during the three months ended March 31, 2024.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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 nine months ended September 30, 2023 or 2022.

The Company did not record any intangible asset amounts related to customer relationships during the three months ended March 31, 2024 or 2023.

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 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 of March 31, 2024 and December 31, 2023, 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;

2 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Lessee Accounting

The Company is also the lessee under certain land leases which will continue to be classified as operating leases under transition elections unless subsequently modified.

These leases are reflected on the balance sheets as of 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.

These leases are reflected on the balance sheets as of March 31, 2024 and December 31, 2023, and the rent expense is reflected on a straight-line basis over the lease term in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023.

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

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

6 unchanged sentences

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

These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings.

These assessments have a direct impact on net loss because recording an impairment loss results in an immediate negative adjustment to earnings.

Reportable Segments

10 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

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

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

As of March 31, 2024, 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 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 $ 7.6 million as of September 30, 2023.

Significant components of the deferred tax assets and liabilities as of March 31, 2024 and December 31, 2023 consisted of deferred rent and net operating loss carryforwards.

During the year ended December 31, 2023, the Company modified 26 intercompany leases with the TRS which reduced intercompany rent.

Because of the TRS’s historical operating losses and the continuing adverse economic impacts since 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 $ 8.6 million as of March 31, 2024.

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.

As of December 31, 2023, the Company had a deferred tax asset of $ 8.1 million with a full valuation allowance.

CARES Act Grants

On March 27, 2020, the CARES Act was signed into law and provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic.

Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were 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 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.

Any funding that the Company would receive is recognized as a reduction of property operating and maintenance expenses in the Company’s consolidated statements of operations to offset the negative impacts of COVID-19.

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

Recently Issued Accounting Pronouncements

Adopted as of January 1, 2022:

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815).

The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity.

The standard also amends and makes targeted improvements to the related earnings per share guidance.

The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption was permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

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

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

Not yet Fully Adopted as of September 30, 2023:

Adopted as Required Through December 31, 2023:

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

activities occur.

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

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

1 unchanged sentence

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Not yet Fully Adopted as of March 31, 2024:

In November 2023, the FASB issued ASU 2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures (Topic 280).

The new standard requires a public entity to disclose significant segment expense categories and amounts for each reportable segment.

A significant expense is an expense that (i) is significant to the segment, (ii) regularly provided or easily computed from information regularly provided to management and (iii) included in the reported measure of profit or loss.

The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption of the ASU is permitted, including in an interim period.

If a public entity elects to early adopt the ASU in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period.

The ASU should be adopted retrospectively unless it is impracticable to do so.

The Company has not adopted this ASU as of March 31, 2024, but is currently evaluating the impact on its segment disclosures and intends to adopt ASU 2023-07 during the year ending December 31, 2024.

Note 3 — Real Estate Investments, Net

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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 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,

The Company owned 208 properties as of March 31, 2024.

During the three months ended March 31, 2024 and 2023, the Company acquired four and five properties, respectively.

All acquisitions in the three months ended March 31, 2024 and 2023 were considered asset acquisitions for accounting purposes.

The following table presents the allocation of real estate assets acquired and liabilities assumed during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

(In thousands) 2024 2023

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Total intangible assets and liabilities 2,538 3,918

Mortgage notes payable, net

Cash paid for real estate investments, including acquisitions $ 5,606 $ 25,443

Number of properties purchased 4 5

Significant Tenants

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.

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

September 30,

Significant Concentrations

As of March 31, 2024 and 2023, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis.

State 2024 2023

1 unchanged sentence

Pennsylvania 10.5 % 10.2 %

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

Intangible Assets and Liabilities

The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangible assets, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases, net, for the periods presented:

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

Three Months Ended March 31,

(In thousands) 2024 2023

4 unchanged sentences

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

$ 40 $ 40 $ 120 $ 120

(1) Reflected within depreciation and amortization expense.

10 unchanged sentences

$ 503 $ 796 $ 676 $ 442 $ 413

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.

During the third quarter of 2021, the Company began to actively market the LaSalle Properties for sale, and a non-binding letter of intent was signed in the fourth quarter of 2021 for an aggregate contract sales price of $ 12.4 million.

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

The Company completed the sale of the LaSalle Properties in the first quarter of 2022 and recorded a loss on sale of $ 0.3 million in the first quarter of 2022, wh ich is presented in the Company’s consolidated 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.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

The Company did not dispose of any properties during the three months ended March 31, 2024 and 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 September 30, 2023 and December 31, 2022.

There were no assets held for sale as of March 31, 2024 and December 31, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Assets Held for Use

6 unchanged sentences

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

Property Damage and Insurance Recoveries

During the three months ended March 31, 2024, one MOB property sustained fire damages estimated at $ 2.9 million, which the Company anticipates will be completely recoverable through its property insurance policy during the remainder of 2024.

Accordingly, the Company reduced the carrying value of the damaged property by $ 2.9 million and recorded a receivable of that amount due from the insurance carrier as of March 31, 2024.

Impairment Charges

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,

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

The following table presents impairment charges by segment recorded during the three months ended March 31, 2024:

Three Months Ended March 31,

(In thousands) 2024

Illinois skilled nursing facilities (1)

Total MOB impairment charges — 10,644

SHOP Segment:

Various held for use SHOPs (2)

Copper Springs (1)

Total SHOP impairment charges 260

Total impairment charges $ 260

(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 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.

(1) This property was impaired to its contractual sales price of $ 3.3 million as determined by a purchase and sale agreement executed in the three months ended March 31, 2024.

This property was impaired previously by a cumulative total of $ 2.3 million in the years ended December 31, 2023 and 2022.

The Company expects to accept the final bid price and dispose of the property in the three months ended June 30, 2024.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

Note 4 — Mortgage Notes Payable, Net

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

The following table reflects the Company’s mortgage notes payable as of March 31, 2024 and December 31, 2023:

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

Portfolio Encumbered Properties September 30,

2023 December 31, 2022 September 30,

Portfolio Encumbered Properties March 31,

2024 December 31, 2023 March 31,

2024 December 31, 2023 Interest Rate Maturity

10 unchanged sentences

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

BMO CPC Mortgage 4 7,500 — 6.84 % — % Fixed Mar.

Gross mortgage notes payable 140 828,586 821,379 4.60 % 4.58 %

4 unchanged sentences

_____________

(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 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.

(1) Calculated on a weighted average basis for all mortgages outstanding as of March 31, 2024 and December 31, 2023.

(2) Variable rate loan, based on daily SOFR (as defined below) as of March 31, 2024 and December 31, 2023, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements.

The Company allocated $ 378.5 million of its “pay-fixed” interest rate swaps to this mortgage consistently as of March 31, 2024 and December 31, 2023.

(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 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.

As of March 31, 2024, the Company had pledged $ 1.4 billion in total real estate investments, at cost, as collateral for its $ 828.6 million of gross mortgage notes payable.

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

1 unchanged sentence

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

As of September 30, 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 cessation of LIBOR publication.

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 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

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

As of March 31, 2024, the Company was in compliance with these financial covenants.

See Note 5 — Credit Facilities - Future Principal Payments for a schedule of principal payment requirements of the Company’s mortgage notes and credit facilities.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

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

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

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

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

At the closing of the 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 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 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.

March 31, 2024

Note 5 — Credit Facilities

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

The Company had the following credit facilities outstanding as of March 31, 2024 and December 31, 2023:

Outstanding Facility

1 unchanged sentence

Credit Facilities Encumbered Properties (1)

September 30,

2023 December 31, 2022 September 30,

2024 December 31, 2023 March 31,

2024 December 31, 2023 Interest Rate Maturity

(In thousands) (In thousands)

Prior Credit Facility:

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

— 150,000 — % 5.11 % Fixed (5) Mar.

Deferred financing costs — ( 1,750 )

Term Loan, net

Total Prior Credit Facility — $ — $ 178,250

Fannie Mae Master Credit Facilities:

Capital One Facility

11 (2) $ 207,829 $ 210,483 7.84 % 5.90 % Variable (6) Nov.

KeyBank Facility

10 (3) 139,891 141,564 7.89 % 6.60 % Variable (6) Nov.

Capital One Facility 11 (2) $ 206,059 $ 206,944 7.85 % 7.86 % Variable Nov.

KeyBank Facility 10 (3) 138,776 139,334 7.90 % 7.91 % Variable Nov.

Total Fannie Mae Master Credit Facilities 21 $ 344,835 $ 346,278

21 $ 347,720 $ 352,047

MOB Warehouse Facility (6)

4 14,748 14,748 8.33 % 8.36 % Variable Dec.

Total Credit Facilities 25 $ 359,583 $ 361,026 7.89 % 7.90 %

(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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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).

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

The Company has seven non-designated interest rate cap agreements with an aggregate notional amount of $ 351.6 million which limited 30-day LIBOR (until June 30, 2023, and SOFR thereafter) to 3.50 %.

(1) Encumbered properties are as of March 31, 2024.

(2) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of March 31, 2024 with an aggregate carrying value, at cost of $ 351.7 million.

(3) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of March 31, 2024 with an aggregate carrying value, at cost of $ 263.3 million.

(4) Calculated on a weighted average basis for all credit facilities outstanding as of March 31, 2024 and December 31, 2023, respectively.

(5) The Company has seven active non-designated interest rate cap agreements with an aggregate notional amount of $ 364.2 million which limited one-month SOFR to 3.50 %.

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

Inclusive of the impact of these interest rate caps on these non-designated derivatives, the economic interest rate on the Capital One Fannie Mae Facility and KeyBank Fannie Mae Facility was 5.89 % 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 September 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.

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 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 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.

Inclusive of the impact of these non-designated derivatives, the economic interest rates on the Capital One Fannie Mae Facility, KeyBank Fannie Mae Facility and MOB Warehouse Facility were 5.89 %, 5.95 % and 6.50 %, respectively, as of March 31, 2024 and December 31, 2023.

(6) Subsequent to March 31, 2024, the Company drew an additional $ 7.0 million under the MOB Warehouse Facility.

As of March 31, 2024, the carrying value of the Company’s real estate investments, at cost was $ 2.6 billion, with $ 1.4 billion secured as collateral for mortgage notes payable and $ 637.9 million secured under the credit facilities.

All of the real estate assets pledged to secure mortgages or to secure borrowings under our 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 March 31, 2024 were $ 634.9 million, although there can be no assurance as to the amount of liquidity the Company would be able to generate from using these unencumbered assets as collateral for future mortgage loans, future advances under the credit facilities, or other future financings.

Prior Credit Facility

4 unchanged sentences

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.

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 nine months ended September 30, 2023.

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

Fannie Mae Master Credit Facilities

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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”;

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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 September 30, 2023, $ 347.7 million was outstanding under the Fannie Mae Master Credit Facilities.

As of March 31, 2024, $ 344.8 million was outstanding under the Fannie Mae Master Credit Facilities.

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

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

Until June 30, 2023, borrowings under the Fannie Mae Master Credit Facilities bore annual interest at a rate that varied on a monthly basis and was equal to the sum of the current LIBOR for one month U.S.

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

1 unchanged sentence

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

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

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

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

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).

In the year ended December 31, 2023, the Company provided cash deposits totaling $ 11.8 million to Fannie Mae because the debt service coverage ratios of the underlying properties of each facility were below the minimum required amounts per the debt agreements.

The Company provided an additional deposit of $ 0.3 million during the three months ended March 31, 2024, bringing the total deposits to $ 12.1 million as of March 31, 2024.

These deposits are recorded as restricted cash on the Company’s consolidated balance sheets and are pledged as additional collateral for the Fannie Mae Master Credit Facilities.

These deposits 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.

MOB Warehouse Facility

On December 22, 2023, the Company, through wholly-owned subsidiaries of the OP, entered into a loan agreement with Capital One (the “MOB Warehouse Facility”) to provide up to $ 50.0 million of variable-rate financing.

As of March 31, 2024, $ 14.7 million was outstanding under the MOB Warehouse Facility.

The Company may request future advances under the MOB Warehouse Facility by adding eligible MOBs to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

Borrowings under the MOB Warehouse Facility bear interest at a monthly rate equal to the sum of the current SOFR for one-month denominated deposits and a spread of 3.0 %.

Interest payments are due monthly, with no principal payments due until maturity in December 2026.

Subsequent to March 31, 2024, the Company drew $ 7.0 million under the MOB Warehouse Facility.

Please see Note 17 — Subsequent Events for additional information.

Non-Designated Interest Rate Caps

As of March 31, 2024 the Company had seven non-designated interest rate cap agreements with an aggregate current effective notional amount of $ 364.2 million which caps SOFR at 3.50 % with terms through January 2027.

The Company does not apply hedge accounting to these non-designated interest cap agreements, and changes in value as well as any cash received are presented within (loss) gain on non-designated derivatives in the Company’s consolidated statements of comprehensive loss.

Please see Note 7 — Derivatives and Hedging Activities for additional information regarding the Company’s derivatives.

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 March 31, 2024, the Company prepaid premiums of $ 1.5 million to renew one cap which matured in April 2024.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

Future Principal Payments

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):

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to March 31, 2024 and thereafter, on all of the Company’s outstanding mortgage notes payable and credit facilities:

Future Principal

7 unchanged sentences

Total $ 828,586 $ 359,583 $ 1,188,169

LIBOR Transition

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 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.

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.

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

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

Note 6 — Fair Value of Financial Instruments

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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 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.

However, as of March 31, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives.

As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 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.

March 31, 2024

The following table presents information about the Company’s assets and liabilities measured at fair value as of March 31, 2024 and December 31, 2023, 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

September 30, 2023

March 31, 2024

Derivative assets, at fair value (non-designated) $ — $ 7,738 $ — $ 7,738

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 nine months ended September 30, 2023.

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2024.

Real Estate Investments Measured at Fair Value on a Non-Recurring Basis

Real Estate Investments - Held for Use

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

The Company has impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheets as of March 31, 2024 and December 31, 2023.

As of March 31, 2024, the Company owned 12 held for use properties ( eight MOBs, three SHOPs and one land parcel) for which the Company had reconsidered their expected holding periods, of which four properties ( one MOB and two SHOPs and one land parcel) are being marketed for sale.

One held for use property was impaired during the three months ended March 31, 2024.

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

1 unchanged sentence

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

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

The Company did not have any real estate investments classified as held for sale as of March 31, 2024 and December 31, 2023.

Financial Instruments Not Measured at Fair Value

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

1 unchanged sentence

3 $ 827,337 $ 785,905 $ 820,106 $ 787,665

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

Fannie Mae Master Credit Facilities

3 $ 347,720 $ 348,120 $ 352,047 $ 353,034

Credit facilities 3 359,583 359,971 361,026 361,792

Total debt $ 1,186,920 $ 1,145,876 $ 1,181,132 $ 1,149,457

The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis, based on the Advisor’s experience with similar types of borrowing arrangements, excluding the value of derivatives.

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

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

(In thousands) Balance Sheet Location September 30,

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2024 and December 31, 2023:

(In thousands) Balance Sheet Location March 31,

2024 December 31, 2023

4 unchanged sentences

Cash Flow Hedges of Interest Rate Risk

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

(In thousands) (In thousands)

SOFR-based interest rate “pay-fixed” swaps 1 $ 378,500 7 $ 528,500

LIBOR-based interest rate “pay-fixed” swaps — — 2 50,000

Total interest rate “pay-fixed” swaps 1 $ 378,500 9 $ 578,500

As of March 31, 2024 and December 31, 2023, the Company had one derivative with a notional value of $ 378.5 million designated as a cash flow hedges of interest rate risk.

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 three months ended March 31, 2024 and the year ended December 31, 2023, 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 AOCI and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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

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

Three Months Ended March 31,

(In thousands) 2024 2023

Amount of gain recognized in accumulated other comprehensive income on interest rate derivatives $ 5,418 $ 17,513 $ 12,078 $ 49,522

Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense $ 5,023 $ 565 $ 13,648 $ ( 3,862 )

Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives $ 7,047 $ ( 3,471 )

Amount of gain reclassified from accumulated other comprehensive income into income as interest expense $ 4,767 $ 3,960

Total amount of interest expense presented in the consolidated statements of operations and comprehensive loss $ ( 16,383 ) $ ( 15,785 )

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

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.

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.

MOB Loan Swap Termination

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

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

For the 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 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.

During the year ended December 31, 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 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.

For the three months ended March 31, 2024 and 2023, the Company reclassified $ 1.2 million and $ 0.3 million from AOCI as decreases to interest expense, and no amounts remained in AOCI as of March 31, 2024.

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 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

During the next 12 months, from April 1, 2024 through March 31, 2025, the Company estimates that $ 12.4 million will be reclassified from AOCI as a decrease to interest expense or other comprehensive income relating to the “pay-fixed” swaps designated as derivatives.

Non-Designated Derivatives

The Company had the following outstanding interest rate derivatives with current effective notional amounts that were not designated as hedges in qualified hedging relationships as of September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Interest Rate Derivatives Number of Instruments Notional Amount (1)

3 unchanged sentences

7 $ 364,170 7 $ 364,170

______________

(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, 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.

(2) All of the Company’s interest rate cap agreements limited one-month SOFR to 3.50 % with terms through January 2027.

The actual one-month SOFR rates during the three months ended March 31, 2024, exceeded the strike price rate of 3.50 % and the Company received payments under these agreements.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

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

As of 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.

As of March 31, 2024 and December 31, 2023, the Company had entered into seven SOFR-based interest rate caps, with notional amounts of $ 364.2 million, which limited one-month SOFR borrowings to 3.50 % and have varying maturities through January 2027.

The Company prepaid premiums of $ 1.5 million to renew one cap with an aggregate notional amount of $ 60.0 million which matured in April 2024.

Five interest rate caps with an aggregate notional amount of $ 289.4 million matures in 2025, which represents the next interest rate cap maturity.

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

1 unchanged sentence

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

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.

The gains on non-designated derivatives were $ 2.0 million for the three months ended March 31, 2024, and were $ 0.2 million for the three months ended March 31, 2023.

During the three months ended March 31, 2024 and 2023, the Company received aggregate payments of $ 1.8 million and $ 0.9 million, respectively, related to its effective interest rate caps as LIBOR/SOFR exceeded the effective rates of the capped debt.

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives (both designated and non-designated) as of September 30, 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 March 31, 2024 and December 31, 2023.

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

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

March 31, 2024 $ 33,496 $ — $ — $ 33,496 $ — $ — $ 33,496

December 31, 2023 $ 28,370 $ — $ — $ 28,370 $ — $ — $ 28,370

1 unchanged sentence

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

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

As of March 31, 2024, 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 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.

As of March 31, 2024 and December 31, 2023, the Company had 113,238,180 and 111,545,018 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 20.7 million shares in respect to the stock dividends.

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.

See Note 1 — Organization for additional information.

Except for shares issued as dividends, no additional shares of common stock were issued during the three months ended March 31, 2024 or the year ended December 31, 2023.

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 and are noted as such throughout the accompanying financial statements and notes.

Please see Note 1 — Organization for additional information.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

On March 27, 2024, the Company published a new Estimated Per-Share NAV as of December 31, 2023, which was approved by the Board on March 27, 2024.

9 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

Prior to the suspension of the SRP, the Company repurchased a cumulative total of 4,896,620 shares at an average price of $ 20.60 per share, without giving affect to repurchases through tender offers.

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 September 30, 2023.

Number of Shares Repurchased Average Price per Share

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

Nine months ended September 30, 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 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.

During the three months ended March 31, 2024 and the year ended December 31, 2023, the Company did no t issue any shares of common stock pursuant to the DRIP.

Because shares of common stock are only offered and sold pursuant to the DRIP in connection with the reinvestment of distributions paid in cash, participants in the DRIP will not be able to reinvest in shares thereunder for so long as the Company pays distributions in stock instead of cash.

2 unchanged sentences

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

During the year ended December 31, 2023, The Company extended the expiration date of the stockholders rights plan from May 18, 2023 to May 18, 2026.

Preferred Stock and Preferred Units

4 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 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.

Distributions and Dividends

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of March 31, 2024 and December 31, 2023.

The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of March 31, 2024 and December 31, 2023.

The Company also had 100,000 Series A Preferred Units outstanding as of March 31, 2024 and December 31, 2023, which were accounted for as a component of non-controlling interests.

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

Distributions and Dividends

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

On August 13, 2020, the Board changed the Company’s common stock distribution policy 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:

Under the policy, distributions authorized by the Board on the Company’s shares of common stock were issued 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:

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

12 unchanged sentences

October 2, 2023 October 16, 2023 0.015179

January 3, 2024 January 16, 2024 0.015179

The Company did not declare a quarterly stock dividend in April 2024, and does not intend to declare any further stock dividends in the future.

Note 9 — Related Party Transactions and Arrangements

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.

As of March 31, 2024 and December 31, 2023, the Special Limited Partner owned 10,873 and 10,710 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 September 30, 2023 and December 31, 2022, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

As of March 31, 2024 and December 31, 2023, 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.

In connection with this special allocation, the Advisor has agreed to restore a deficit balance in its capital account in the event of a liquidation of the OP and has agreed to provide a guaranty or indemnity of indebtedness of the OP.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Fees Incurred in Connection with the Operations of the Company

7 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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

third-party acquisition expenses.

Additionally, the Company reimburses the Advisor for 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 September 30, 2023.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Asset Management Fees and Variable Management/Incentive Fees

This threshold has not been exceeded through March 31, 2024.

Asset Management Fees

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

13 unchanged sentences

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

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

As of March 31, 2024, 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.

4 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

On May 12, 2015, the Company, the OP and the Advisor entered into an amendment to the then-current advisory agreement, which, among other things, provided that the Company would cease causing the OP to issue Class B Units to the Advisor with respect to any period ending after March 31, 2015.

4 unchanged sentences

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

Core Earnings is defined as, for the applicable period, net income or loss, computed in accordance with GAAP, excluding non-cash equity compensation expense, the variable management/incentive fee, acquisition and transaction related fees and expenses, financing related fees and expenses, depreciation and amortization, realized gains and losses on the sale of assets, any unrealized gains or losses or other non-cash items recorded in net income or loss for the applicable period, regardless of whether such items are included in other comprehensive income or loss, or in net income, one-time events pursuant to changes in GAAP and certain non-cash charges, impairment losses on real estate related investments and other than temporary impairments of securities, amortization of deferred financing costs, amortization of tenant inducements, amortization of straight-line rent and any associated bad debt

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 months ended March 31, 2024 or 2023.

Professional Fees and Other Reimbursements

The Company reimburses the Advisor’s costs of providing administrative services including personnel costs, except for costs to the extent that the employees perform services for which the Advisor receives a separate fee.

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

During the three months ended March 31, 2024 and 2023, the Company incurred $ 2.5 million and $ 1.9 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.

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

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

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

HEALTHCARE TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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).

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

March 31, 2024

Further, under the Advisory Agreement Amendment, the aggregate amount of expenses relating to salaries, wages, severance and benefits, including for executive officers and all other employees of the Advisor or its affiliates (the “Capped Reimbursement Amount”), is limited to the greater of:

(a) a fixed component (the “Fixed Component”) and (b) a variable component (the “Variable Component”).

Initially, for the year ended December 31, 2019;

(a) the Fixed Component was equal to $ 6.8 million and 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 was then (ii) multiplied by 0.29 %.

Both the Fixed Component and the Variable Component increase by an annual cost of living adjustment equal to the greater of (x) 3.0 % and (y) the CPI, as defined in the Advisory Agreement Amendment for the prior year ended December 31st.

For the fiscal year ended December 31, 2024, the Fixed Component is $ 8.2 million and the Company expects the Variable Component to be approximately $ 9.3 million.

During the three months ended March 31, 2024, the Company incurred $ 3.0 million of expenses subject to the Capped Reimbursement Amount.

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

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

Prior to the COVID-19 pandemic, the Advisor had awarded bonuses to its employees, or employees of its affiliates, in March of each year as an all-cash award, prorated for the amount of time spent providing administrative services relating to the Company.

Such bonus amounts were paid by the Advisor to its employees, or employees of its affiliates, throughout the year subsequent to the year in which such services were rendered.

Reimbursements for the cash portion of 2022 bonuses paid by the Advisor to its employees, or employees of its affiliates, were expensed and reimbursed on a monthly basis during the year ended December 31, 2022 in accordance with estimates provided by the Advisor.

These bonus awards were awarded in June 2023, and were paid to employees over a six-month period from October 2023 to March 2024.

Reimbursements for the cash portion of 2023 bonuses paid by the Advisor to its employees, or employees of its affiliates, were expensed and reimbursed on a monthly basis during the year ended December 31, 2023 in accordance with estimates provided by the Advisor.

These amounts have not yet been awarded or paid by the Advisor to its employees, or employees of its affiliates as of the date of this Quarterly Report on Form 10-Q.

Property Management Fees

5 unchanged sentences

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

On February 17, 2017, the Company entered into the Amended and Restated Property Management and Leasing Agreement (the “A&R Property Management Agreement”) with the OP and the Property Manager.

3 unchanged sentences

The Property Manager may assign the A&R Property Management Agreement to any party with expertise in commercial real estate which has, together with its affiliates, over $ 100.0 million in assets under management.

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

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

Professional Fees and Other Reimbursements

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.

Further, under the Advisory Agreement Amendment, the aggregate amount of expenses relating to salaries, wages and benefits, including for executive officers and all other employees of the Advisor or its affiliates (the “Capped Reimbursement Amount”), is limited to the greater of:

(a) a fixed component (the “Fixed Component”) and (b) a variable component (the “Variable Component”).

Initially, for the year ended December 31, 2020;

(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 %.

Summary of fees, expenses and related payables

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

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

2023 2022 2023 2022

(In thousands) Incurred Incurred Incurred

Incurred September 30,

Summary of Related Party Expenses and Payables

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

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

(In thousands) Incurred Incurred March 31,

2024 December 31, 2023

3 unchanged sentences

Asset management fees 5,458 5,458 — —

Property management and fees (2)

1,155 1,101 3,132 3,058 161 3

Professional fees and other reimbursements (1)

3,958 2,386 615 39

Property management fees (2)

1,470 978 237 3

Total related party operation fees and reimbursements $ 10,906 $ 8,843 $ 872 $ 47

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

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

Includes $ 3.0 million and $ 1.5 million for the three months ended March 31, 2024 and 2023, respectively, subject to the Capped Reimbursement Amount.

(2) The three months ended March 31, 2024 and 2023 includ es $ 0.6 million and $ 49,000 of leasing commissions, respectively, which are capitalized and included in prepaid expenses and other assets.

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

1 unchanged sentence

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

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

No such distribution was incurred during the three months ended March 31, 2024 or 2023.

If the Special Limited Partner or any of its affiliates receives the subordinated incentive listing distribution, the Special Limited Partner and its affiliates will no longer be entitled to receive the subordinated participation in net sales proceeds or the subordinated incentive termination distribution described below.

1 unchanged sentence

Upon a liquidation or sale of all or substantially all of the Company’s assets, including through a merger or sale of stock, the Special Limited Partner will be entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets from the OP equal to 15.0 % of remaining net sale proceeds after return of capital contributions to investors in the Company’s initial public offering of common stock plus payment to investors of a 6.0 % cumulative, pre-tax non-compounded annual return on the capital contributed by investors.

No such participation in net sales proceeds became due and payable during the nine months ended September 30, 2023 or 2022.

No such participation in net sales proceeds became due and payable during the three months ended March 31, 2024 or 2023.

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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Termination Fees

7 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

6 unchanged sentences

The total number of shares of common stock that may be subject to awards granted under the RSP may not exceed 5.0 % of the Company’s outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 4.2 million shares (as such number may be further adjusted for stock splits, stock dividends, combinations and similar events).

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Restricted shares vest on a straight-line basis over periods of three to five years and may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.

1 unchanged sentence

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

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

The following table reflects the amount of restricted shares outstanding as of March 31, 2024 and activity for the period presented:

Number of Shares of Common Stock Weighted Average Issue Price

1 unchanged sentence

Stock dividend 785 14.00

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.

Unvested, March 31, 2024 52,428 $ 16.90

As of March 31, 2024, the Company had $ 0.4 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 0.3 years.

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.

Compensation expense related to restricted shares was $ 0.2 million for the three months ended March 31, 2024 and 2023.

Other Share-Based Compensation

1 unchanged sentence

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

No such shares were issued during the three months ended March 31, 2024 or 2023.

Note 12 — Accumulated Other Comprehensive Income

4 unchanged sentences

Amount of gain reclassified from accumulated other comprehensive income ( 4,767 )

Rebalancing of ownership percentage —

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.

Balance, March 31, 2024

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 , previously designated hedges were terminated and the termination costs are being amortized over the term of the hedged item.

Note 13 — Non-controlling Interests

1 unchanged sentence

Balance as of

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

(In thousands) March 31, 2024 December 31, 2023

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

3 unchanged sentences

Total Non-controlling interests $ 6,362 $ 6,429

Net loss attributable to non-controlling interests on the Company’s consolidated statements of operations and comprehensive loss are comprised of the following:

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Three Months Ended March 31,

(in thousands) 2024 2023

Income attributable to Series A Preferred Units held by third parties $ ( 46 ) $ ( 46 )

Loss attributable to Common OP Units held by third parties 66 62

Net loss attributable to non-controlling interests in the OP 20 16

Income attributable to non-controlling interests in property-owning subsidiaries ( 20 ) ( 7 )

Net loss attributable to non-controlling interests $ — $ 9

Non-Controlling Interests in the OP

8 unchanged sentences

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

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

During both the three months ended March 31, 2024 and 2023, Series A Preferred Unit holders were paid $ 46,000 .

Common OP Units

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

As of September 30, 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

As of March 31, 2024 and December 31, 2023, the Advisor held 90 Common OP Units, which represents a nominal percentage of the aggregate ownership in the OP.

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

2 unchanged sentences

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.

Dur ing the three months ended March 31, 2024 and 2023 , Common OP Unit non-controlling interest holders were no t paid any cash distribu tions.

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

The 405,998 Common OP Units outstanding as of September 30, 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.

The 405,998 Common OP Units outstanding as of March 31, 2024 would be redeemable for 496,644 shares of common stock, giving effect to adjustments for the impact of the stock dividends through January 2024.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

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 September 30,

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

Property Name

(Dollar amounts in thousands)

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

Investment Date March 31, 2024 March 31, 2024 March 31, 2024 December 31, 2023 2024 2023

Plaza Del Rio Medical Office Campus Portfolio (1)

$ 713 6.8 % $ 12,573 $ 12,687 — —

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

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

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 %.

(1) Of the six total properties in the Plaza Del Rio Medical Office Campus Portfolio, three properties were encumbered under the Capital One MOB Loan, two properties were pledged to the MOB Warehouse Facility and one property was encumbered under the Multi-Property CMBS Loan.

Please see Note 4 — Mortgage Notes Payable, Net and Note 5 — Credit Facilities for additional information.

Note 14 — Net Loss Per Share

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Net loss attributable to common stockholders (in thousands)

5 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.

1 unchanged sentence

Series A Preferred Units are non-participating.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

The Company had the following common stock equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share attributable to stockholders as their effect would have been antidilutive.

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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Unvested restricted shares (1)

7 unchanged sentences

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

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

Th ere were 52,428 and 98,736 unvested restricted shares outstanding, respectively, as of March 31, 2024 and 2023.

(2) Weighted average number of antidilutive Common OP Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the stock dividends (see Note 1 — Organization for additional details).

There were 405,998 Common OP Units outstanding as of September 30, 2023 and 2022.

There were 405,998 Common OP Units outstanding as of March 31, 2024 and 2023.

The securities held by the Company are eliminated in consolidation.

(3) Weighted average number of antidilutive Class B Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the stock dividends (see Note 1 — Organization for additional details).

There were 359,250 Class B Units outstanding as of September 30, 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).

There were 359,250 Class B Units outstanding as of March 31, 2024 and 2023.

These Class B Units were unvested as of March 31, 2024 and 2023 (see Note 9 — Related Party Transactions for additional information).

Note 15 — Segment Reporting

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

The disclosures below for the three months ended March 31, 2024 and 2023 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

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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

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

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

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

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

The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net loss.

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.

Segment Income

The Company evaluates the performance of the combined properties in each segment based on total revenues from tenants, less property operating costs.

As such, this excludes all other items of expense and income included in the financial statements in calculating net loss.

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

The Company believes that segment income is useful as a performance measure because, when compared across periods, segment income reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net loss.

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

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

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

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

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

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

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

HEALTHCARE TRUST, INC.

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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 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

March 31, 2024

The following table presents the operating financial information for the Company’s two business segments for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

(in thousands) 2024 2023

Revenue from tenants $ 34,599 $ 33,609

$ 33,657 $ 52,029 $ 85,686 $ 33,185 $ 50,275 $ 83,460

Property operating and maintenance 9,700 8,955

9,379 44,947 54,326 9,377 41,821 51,198

$ 24,278 $ 7,082 31,360 $ 23,808 $ 8,454 32,262

Impairment charges

Operating fees to related parties

( 6,397 ) ( 6,333 )

Acquisition and transaction related

( 173 ) ( 199 )

General and administrative

( 4,753 ) ( 4,471 )

Depreciation and amortization

( 20,776 ) ( 20,854 )

Interest expense

( 15,720 ) ( 13,284 )

Interest and other income

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

Gain on non-designated derivatives 406 1,826

Income tax expense ( 157 ) ( 77 )

Net loss attributable to non-controlling interests 14 22

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

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

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

Segment income $ 24,899 $ 24,654

Revenue from tenants $ 53,700 $ 53,746

$ 101,187 $ 157,958 $ 259,145 $ 98,026 $ 152,910 $ 250,936

Property operating and maintenance 45,445 44,928

27,772 134,006 161,778 26,417 130,463 156,880

$ 73,415 $ 23,952 97,367 $ 71,609 $ 22,447 94,056

Segment income $ 8,255 $ 8,818

Reconciliation to Consolidated Financial Information

A reconciliation of the total reportable segments’ revenue from tenants to consolidated revenue from tenants and the total reportable segments’ income to consolidated net loss attributable to common stockholders is presented below:

Three Months Ended March 31,

(in thousands) 2024 2023

Revenue from tenants:

MOBs $ 34,599 $ 33,609

SHOPs 53,700 53,746

Total consolidated revenue from tenants $ 88,299 $ 87,355

Net loss attributable to common stockholders:

Segment income:

MOBs $ 24,899 24,654

SHOPs 8,255 8,818

Total segment income 33,154 33,472

Impairment charges ( 260 ) —

Operating fees to related parties ( 6,366 ) ( 6,387 )

( 19,153 ) ( 19,003 )

Acquisition and transaction related ( 142 ) ( 63 )

( 384 ) ( 1,153 )

General and administrative ( 6,768 ) ( 5,021 )

( 14,105 ) ( 13,369 )

Depreciation and amortization ( 20,738 ) ( 20,176 )

( 61,520 ) ( 61,525 )

Gain on sale of real estate investment — 115

Interest expense ( 16,383 ) ( 15,785 )

( 50,208 ) ( 37,098 )

Interest and other income 72 5

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

Gain on non-designated derivatives 510 3,212

Income tax expense ( 244 ) ( 159 )

Gain (loss) on non-designated derivatives 1,951 ( 182 )

Income tax (expense) benefit ( 70 ) ( 46 )

Net loss attributable to non-controlling interests — 9

Allocation for preferred stock ( 10,349 ) ( 10,349 )

Preferred stock dividends ( 3,450 ) ( 3,450 )

Net loss attributable to common stockholders $ ( 19,000 ) $ ( 17,509 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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

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

(In thousands) March 31, 2024 December 31, 2023

Investments in real estate, net:

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Total investments in real estate, net 1,932,443 1,939,657

1,958,152 1,978,297

Cash and cash equivalents 28,670 46,409

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

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

Three Months Ended March 31,

(In thousands) 2024 2023

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Note 16 — Commitments and Contingencies

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.

As of March 31, 2024, the Company had seven operating and six direct financing lease agreements.

The seven operating leases have durations, including assumed renewals, ranging from 18.6 years to 83.5 years, excluding an adjacent parking lot lease with a term of 0.5 years.

The Company did not enter into any additional ground leases during the three months ended March 31, 2024.

As of March 31, 2024, the Company had ROU assets and liabilities of $ 7.7 million and $ 8.0 million, respectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively on the Company’s consolidated balance sheets.

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 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 September 30, 2023:

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 33.3 years and a weighted-average discount rate of 7.38 % as of March 31, 2024.

For each of the three months ended March 31, 2024 and 2023, the Company paid cash of $ 0.2 million for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million on a straight-line basis in accordance with the current accounting guidance.

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

HEALTHCARE TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

The following table reflects the base cash rental payments due from the Company for the next five years as of March 31, 2024:

Future Base Rent Payments

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Total present value of minimum lease payments $ 8,025 $ 4,833

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

(1) The direct finance lease liability is included in accounts payable and accrued expenses on the balance sheet as of March 31, 2024.

The direct financing lease asset is included as part of building and improvements as the land component was not required to be bifurcated under ASU 840.

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

As of September 30, 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 March 31, 2024, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

Note 17 — Subsequent Events

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

Dividend Declaration

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

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.

Borrowings Under the MOB Warehouse Facility

Subsequent to March 31, 2024, the Company borrowed $ 7.0 million under the MOB Warehouse Facility, which are available for general corporate purposes.

Purchase of Non-Designated Interest Rate Cap

Subsequent to March 31, 2024, the Company purchased a non-designated interest rate cap with a notional amount of $ 7.0 million and a strike price of 3.50 %, which matures in January 2027.

The Company paid premiums of $ 0.3 million for this interest rate cap.

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

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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.

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, 2023 (as amended) as well as Part II — Other Information, Item IA — Risk Factors below.

We are an externally managed entity that for U.S.

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

As of September 30, 2023, we owned 204 properties located in 33 states and comprised of 9.0 million rentable square feet.

As of March 31, 2024, we owned 208 properties located in 33 states and comprised of 9.1 million rentable square feet.

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

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

As of March 31, 2024, we had four eligible independent contractors operating 46 SHOPs.

We declared and issued quarterly dividends entirely in shares of our common stock from October 2020 through January 2024.

We do not intend to declare any further stock dividends in the future.

On March 27, 2024, we published a new Estimated Per-Share NAV equal to $13.00 as of December 31, 2023.

Our previous Estimated Per-Share NAV was equal to $14.00 as of December 31, 2022.

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.

Since October 2020, we issued an aggregate of approximately 20.7 million shares as stock dividends.

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

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.

Seniors Housing Properties

Management Update on the Continuing Adverse economic Impacts Since 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.

Our MOB segment has been less impacted than our SHOP segment, which continues to be challenged by the post-pandemic operating environment.

Specifically, our SHOP segment has suffered challenges with its occupancy levels, cost incurred from labor and conceded rental revenue.

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 our tenants’ ability to pay rent and hence our results of operations and liquidity.

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

Occupancy in our SHOP portfolio trended lower from 85.1% as of December 31, 2019 to a low of 72.0% as of March 31, 2021, and stabilized until December 31, 2022.

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

Occupancy in our SHOP portfolio trended downward from 85.1% as of December 31, 2019 to a low of 72.0% as of March 31, 2021, and has since recovered to 75.3% as of March 31, 2024.

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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46 4,164 74.1%

December 31, 2023 (2)

46 4,164 74.1%

March 31, 2024 (2)

46 4,164 75.3%

(1) Exclusive of two land parcels.

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

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

Contract Labor and Wage Expenses

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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.

These contract and agency costs have declined since then.

In particular, costs incurred from contract labor and agencies for care providers decreased in our SHOP segment by $0.4 million, from $0.7 million in the three months ended March 31, 2023, to $0.3 million as compared to the three months ended March 31, 2024.

However, these costs were offset by increased wage costs for direct employees of our third party operators of $0.7 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

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 $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.

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 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.

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

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

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

Significant Accounting Estimates and Critical Accounting Policies

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

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

The following table presents certain additional information about the properties we owned as of March 31, 2024:

Portfolio Number

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Total Portfolio 208 9,051,648 $ 2,613,108

(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.

(1) Inclusive of leases signed but not yet commenced as of March 31, 2024.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of March 31, 2024.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of March 31, 2024) net of gross market lease intangible liabilities ($23.5 million total as of March 31, 2024).

Cumulative impairment charges are reflected within gross asset value.

(4) Includes two parcels of land

(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.

(5) Weighted by unit count as of March 31, 2024.

As of March 31, 2024, 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.

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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 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:

As of March 31, 2024, we owned 208 properties.

There were 197 properties owned for the entire year ended December 31, 2022 and the three months ended March 31, 2024 (our “Same Store Properties), including two vacant land parcels.

Since January 1, 2023, we acquired 11 properties (our “Acquired Properties”) and disposed of five properties (our “Disposed Properties”).

The following table presents a roll-forward of our properties owned from January 1, 2023 to March 31, 2024:

MOB SHOP Total

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Number of properties, December 31, 2023

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

Acquisition activity during the three months ended March 31, 2024

Disposition activity during the three months ended March 31, 2024

Number of properties, March 31, 2024

Number of Same Store Properties 149 48 197

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Results of Operations

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)

Comparison of the Three Months Ended March 31, 2024 and 2023

Net loss attributable to common stockholders was $19.0 million and $17.5 million, respectively, for the three months ended March 31, 2024, and 2023.

The following table shows our results of operations for the three months ended March 31, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2024 2023 $

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Total expenses 89,419 85,530 3,889

86,425 92,004 (5,579)

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 before gain on sale of real estate investments (1,120) 1,825 (2,945)

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

Operating loss (1,120) 1,940 (3,060)

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Total other expenses (14,360) (15,962) 1,602

(15,056) (11,448) (3,608)

Loss before income taxes (15,480) (14,022) (1,458)

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Net loss attributable to common stockholders $ (19,000) $ (17,509) $ (1,491)

Net Operating Income

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

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

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

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

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

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

NOI excludes certain components from net loss 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.

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

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

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

NOI should not be considered as an alternative

to net loss attributable to common stockholders as an indication of our performance, or to cash flows as a measure of our liquidity or ability to pay distributions.

The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of Same Store Properties, Acquired Properties and Disposed Properties NOI for the three months ended September 30, 2023:

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 11,119 $ (1,423) $ 492 $ — $ (4) $ (141) $ (29,604) $ (19,561)

Operating fees to related parties — — — — — — 6,397 6,397

Acquisition and transaction related — — — — — — 173 173

General and administrative 21 — — — — — 4,732 4,753

Depreciation and amortization 12,152 8,146 478 — — — — 20,776

Interest expense 21 329 — — — — 15,370 15,720

Interest and other income (1) (2) — — — — (255) (258)

Gain on sale of real estate investments — 55 — — — 118 — 173

Loss on non-designated derivative instruments — — — — — — (406) (406)

Income tax (benefit) expense — — — — — — 157 157

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

Net loss attributable to non-controlling interests — — — — — — (14) (14)

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

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 10,696 $ (2,970) $ 170 $ — $ (79) $ (5,545) $ (25,575) $ (23,303)

Impairment charges — 4,108 — — — 4,841 — 8,949

Operating fees to related parties — — — — — — 6,333 6,333

Acquisition and transaction related — — 1 — — — 198 199

General and administrative 22 — — — — — 4,449 4,471

Depreciation and amortization 12,753 7,668 194 — 31 208 — 20,854

Interest expense 21 338 — — — — 12,925 13,284

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)

Income tax (benefit) expense — — — — — — 77 77

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

Net income attributable to non-controlling interests — — — — — — (22) (22)

NOI $ 23,491 $ 9,144 $ 365 $ — $ (48) $ (690) $ — $ 32,262

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 September 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 March 31, 2024 and 2023:

Same Store (1)

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Segment Total (4)

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

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

(Dollars in thousands) 2024 2023 2024 2023 2024 2023 2024 2023

1 unchanged sentence

Property operating and maintenance 9,613 8,919 694 87 10 77 — 26 (26) 9,700 8,955 745

9,282 9,288 (6) 93 38 55 4 51 (47) 9,379 9,377 2

NOI $ 23,312 $ 23,491 $ (179) $ 970 $ 365 $ 605 $ (4) $ (48) $ 44 $ 24,278 $ 23,808 $ 470

Segment income $ 24,119 $ 24,493 $ (374) $ 780 $ 180 $ 600 $ — $ (19) $ 19 $ 24,899 $ 24,654 $ 245

_______________

7 unchanged sentences

Revenue from Tenants

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.

During the three months ended March 31, 2024, revenue from tenants increased by $1.0 million in our MOB segment as compared to the three months ended March 31, 2023, which was primarily driven by an increase in revenue from tenants of $0.7 million due to our Acquired Properties and by an increase in revenue from tenants of $0.3 million due to our Same Store Properties.

The increase in our Same Store properties revenue from tenants was primarily due to increased expense reimbursements from higher expenses in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

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.

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.

During the three months ended March 31, 2024, property operating and maintenance expenses increased by $0.7 million in our MOB segment as compared to the three months ended March 31, 2023.

This increase was primarily driven by our Same Store Properties.

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 September 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 March 31, 2024 and 2023:

Same Store (1)

2 unchanged sentences

Segment Total (4)

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

(Dollars in thousands) 2024 2023 2024 2023 2024 2023 2024 2023

1 unchanged sentence

Property operating and maintenance 45,445 43,007 2,438 — — — — 1,921 (1,921) 45,445 44,928 517

44,929 40,523 4,406 — — — 18 1,298 (1,280) 44,947 41,821 3,126

$ 7,105 $ 9,144 $ (2,039) $ — $ — $ — $ (23) $ (690) $ 667 $ 7,082 $ 8,454 $ (1,372)

Segment income $ 8,255 $ 8,845 $ (590) $ — $ — $ — $ — $ (27) $ 27 $ 8,255 $ 8,818 $ (563)

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

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

(3) Our SHOP segment included eight Disposed Properties.

(3) Our SHOP segment included four Disposed Properties.

(4) Our SHOP segment included 48 total properties (including two land parcels).

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Revenue from Tenants

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.

During the three months ended March 31, 2024 and 2023, revenue from tenants was consistent in our SHOP segment, with an increase in revenue from tenants of $1.8 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $1.9 million from our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, as well as by marginally higher occupancy in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Additionally, we offered more rent concessions to drive occupancy during the three months ended March 31, 2024, which amounted to $1.9 million as compared to $0.6 million during the three months ended March 31, 2023.

Property Operating and Maintenance

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.

During the three months ended March 31, 2024, property operating and maintenance expenses increased $0.5 million in our SHOP segment as compared to the three months ended March 31, 2023, primarily due to an increase in property operating and maintenance expenses of $2.4 million in our Same Store Properties, partially offset by a decrease of $1.9 million from our Disposed Properties.

Our Same Store Properties property operating and maintenance expenses increased in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily from $1.5 million of increased costs for wages, including overtime, training and bonus wages paid to employees of our third party operators, $0.7 million of higher insurance expense and 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 $0.4 million.

1 unchanged sentence

Impairment Charges

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.

We recorded $0.3 million of impairment charges during the three months ended March 31, 2024.

This impairment was recorded to reduce the carrying value of a held-for-use SHOP to its contract sales price of $3.3 million.

We have previously recorded impairment charges of $2.3 million on this SHOP in the years ended December 31, 2023 and 2022.

We did not record any impairment charges in the three months ended March 31, 2023.

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

Operating Fees to Related Parties

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

Operating fees to related parties were consistent at $6.4 million for the three months ended March 31, 2024 and 2023.

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 September 30, 2023 and 2022.

Asset management fees were $5.5 million for both the three months ended March 31, 2024 and 2023.

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 September 30, 2023 or 2022.

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

There were no incentive fees incurred in either of the three months ended March 31, 2024 or 2023.

Property management fees were consistent at $0.9 million for the three months ended March 31, 2024 and 2023.

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

1 unchanged sentence

Acquisition and Transaction Related Expenses

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

Acquisition and transaction related expenses were consistent at $0.1 million for the three months ended March 31, 2024 and 2023.

General and Administrative Expenses

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.

General and administrative expenses increased by $1.7 million to $6.8 million for the three months ended March 31, 2024 compared to $5.0 million for the three months ended March 31, 2023, which includes $4.0 million and $2.4 million, respectively, for the three months ended March 31, 2024 and March 31, 2023, incurred in expense reimbursements.

The increase in expense reimbursements during the three months ended March 31, 2024 is partly attributable to $0.7 million of severance costs not present in the three months ended March 31, 2023.

Depreciation and Amortization Expenses

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.

Depreciation and amortization expense increased $0.5 million to $20.7 million for the three months ended March 31, 2024 from $20.2 million for the three months ended March 31, 2023.

Gain on Sale of Real Estate Investments

During the three months ended March 31, 2024 and 2023, we did not dispose of any properties.

However, we did record a gain on sale of $0.1 million in the three months ended March 31, 2023, related to various settlements of liens and accruals on formerly disposed properties.

Interest Expense

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.

Interest expense increased by $0.6 million to $16.4 million for the three months ended March 31, 2024 from $15.8 million for the three months ended March 31, 2023.

The increase in interest expense mainly resulted from higher average rates and higher average balances of our indebtedness during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

This increase was partially offset by the amortization of our terminated swaps, which reduced interest expense in the three months ended March 31, 2024 by $1.0 million compared to March 31, 2023, as well as by a decrease in deferred financing cost amortization of $0.6 million in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

As of March 31, 2024, there are no unamortized amounts remaining related to terminated swaps.

As of March 31, 2024, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.60% per year.

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

3 unchanged sentences

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

Interest and other income was approximately $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.

Interest and other income was approximately $0.1 million and $5,000, respectively, for the three months ended March 31, 2024 and 2023.

Interest income increased in the three months ended March 31, 2024 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 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 gain in the three months ended March 31, 2024 and the loss in the three months ended March 31, 2023 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 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.

1 unchanged sentence

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

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.

We recorded negligible income tax expense for the three months ended March 31, 2024 and 2023.

Because of our TRS’s historical operating losses and the continuing adverse economic impacts since the COVID-19 pandemic on the results of operations of our SHOP assets, we have not been able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets, and accordingly we have retained a full valuation allowance on our deferred tax assets.

Net Loss Attributable to Non-Controlling Interests

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.

Net loss attributable to non-controlling interests was approximately $0 for the three months ended March 31, 2024 and net loss attributable to non-controlling interests was approximately $9,000 for the three months ended March 31, 2023.

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 $3.5 million for the three months ended September 30, 2023 and 2022.

Allocation for preferred stock was $3.5 million for the three months ended March 31, 2024 and 2023.

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 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 $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 $

Revenue from tenants $ 259,145 $ 250,936 $ 8,209

Operating expenses:

Property operating and maintenance 161,778 156,880 4,898

Impairment charges — 25,786 (25,786)

Operating fees to related parties 19,153 19,003 150

Acquisition and transaction related 384 1,153 (769)

General and administrative 14,105 13,369 736

Depreciation and amortization 61,520 61,525 (5)

Total expenses

256,940 277,716 (20,776)

Operating income (loss) before loss on sale of real estate investments 2,205 (26,780) 28,985

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

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

Other income (expense):

Interest expense (50,208) (37,098) (13,110)

Interest and other income

Gain on non-designated derivatives 510 3,212 (2,702)

Total other expenses

(49,122) (33,862) (15,260)

Loss before income taxes (47,281) (60,751) 13,470

Income tax expense (244) (159) (85)

Cash Flows from Operating Activities

The following table presents a reconciliation of our net cash provided by operations from our net loss for the three months ended March 31, 2024 and 2023:

(in thousands) Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ (15,550) $ (14,068)

Net loss attributable to non-controlling interests 45 100 (55)

Allocation for preferred stock (10,349) (10,349) —

Net loss attributable to common stockholders $ (57,829) $ (71,159) $ 13,330

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 nine months ended September 30, 2023:

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 34,463 $ (349) $ 1,324 $ — $ (352) $ (511) $ (92,404) $ (57,829)

Operating fees to related parties — — — — — — 19,153 19,153

Acquisition and transaction related — — — — — — 384 384

General and administrative 97 26 — — — — 13,982 14,105

Depreciation and amortization 36,208 23,744 1,292 — 63 213 — 61,520

Interest expense 64 995 — — — — 49,149 50,208

Interest and other income (4) (270) — — — — (302) (576)

Loss on sale of real estate investments — 43 — — 260 61 — 364

Gain on non-designated derivative instruments — — — — — — (510) (510)

Income tax (benefit) expense — — — — — — 244 244

Allocation for preferred stock — — — — — — 10,349 10,349

Net loss attributable to non-controlling interests — — — — — — (45) (45)

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

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

MOBs SHOPs MOBs SHOPs MOBs SHOPs

Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 22,870 $ (3,861) $ 218 $ — $ (249) $ (13,755) $ (76,382) $ (71,159)

Impairment charges 10,644 4,108 — — — 11,034 — 25,786

Operating fees to related parties — — — — — — 19,003 19,003

Acquisition and transaction related 212 — 1 — — — 940 1,153

General and administrative 65 2 — — — 2 13,300 13,369

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 20,738 20,176

Interest expense 95 1,050 — — — — 35,953 37,098

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

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

Amortization of deferred financing costs 743 1,382

(Accretion) amortization of terminated swap (1,218) (257)

Amortization of mortgage premiums and discounts, net 23 23

Accretion of market lease and other intangibles, net (460) (211)

Bad debt expense 238 265

Equity-based compensation 230 230

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

Cash received from non-designated derivative instruments 1,773 926

Gain on non-designated derivative instruments (1,951) 182

Income tax (benefit) expense — — — — — — 159 159

Allocation for preferred stock — — — — — — 10,349 10,349

Net loss attributable to non-controlling interests — — — — — — (100) (100)

NOI $ 71,332 $ 24,083 $ 443 $ — $ (166) $ (1,636) $ — $ 94,056

Segment Results — Medical Office Buildings

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

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

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 $

Revenue from tenants

$ 98,282 $ 97,557 $ 725 $ 2,844 $ 485 $ 2,359 $ 61 $ (16) $ 77 $ 101,187 $ 98,026 $ 3,161

Property operating and maintenance 27,454 26,225 1,229 228 42 186 90 150 (60) 27,772 26,417 1,355

NOI $ 70,828 $ 71,332 $ (504) $ 2,616 $ 443 $ 2,173 $ (29) $ (166) $ 137 $ 73,415 $ 71,609 $ 1,806

_______________

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

(2) Our MOB segment included 11 Acquisition properties.

(3) Our MOB segment included one Disposition property.

(4) Our MOB segment included 156 properties.

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

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

Pursuant to many of our lease agreements in our MOBs, tenants are required to pay their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, in addition to base rent.

Revenue from Tenants

During the 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 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.

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

Segment Results — Seniors Housing - Operating Properties

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

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

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

Revenue from tenants

$ 155,197 $ 147,057 $ 8,140 $ — $ — $ — $ 2,761 $ 5,853 $ (3,092) $ 157,958 $ 152,910 $ 5,048

Property operating and maintenance 131,008 122,974 8,034 — — — 2,998 7,489 (4,491) 134,006 130,463 3,543

$ 24,189 $ 24,083 $ 106 $ — $ — $ — $ (237) $ (1,636) $ 1,399 $ 23,952 $ 22,447 $ 1,505

_______________

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

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

(3) Our SHOP segment included eight Disposed Properties.

(4) Our SHOP segment included 48 total properties (including two land parcels).

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

Property operating

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 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 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 260 —

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 $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 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.

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

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses decreased by $0.8 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 $0.7 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 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 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 $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.

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

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

Interest and Other Income

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

Interest and other income was approximately $0.6 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 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 $0.2 million for the nine months ended September 30, 2023 and 2022.

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 through September 30, 2023.

Net Loss (Income) Attributable to Non-Controlling Interests

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 $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.

Cash Flows from Operating Activities

Changes in assets and liabilities:

Straight-line rent receivable 188 (217)

Prepaid expenses and other assets (2,905) 538

Accounts payable, accrued expenses and other liabilities (28) (4,389)

Deferred rent 462 524

Net cash provided by operating activities $ 2,543 $ 4,989

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 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:

(i) depreciation and amortization of tangible and intangible assets, (ii) amortization of deferred financing costs, (iii) accretion of terminated swaps, (iv) net amortization of mortgage premiums and discounts, (v) accretion of market lease intangibles, (vi) bad debt expense, (vii) equity-based compensation, (viii) loss on sale of real estate investments, (ix) gain on non-designated derivatives and (x) impairment charges), cash received from non-designated derivative instruments of $3.9 million, and a decrease in prepaid expenses and other assets of $4.2 million.

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 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.

These cash inflows were partially offset by a decrease in accounts payable and accrued expenses of $4.9 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees, a decrease in deferred rent and other liabilities of $2.2 million and by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $1.2 million.

Cash Flows from Investing Activities

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 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.

The following table presents our net cash used in investing activities for the three months ended March 31, 2024 and 2023:

(in thousands) Three Months Ended March 31,

Cash flows from investing activities:

Property acquisitions $ (5,606) $ (25,443)

Capital expenditures (5,160) (3,634)

Investments in non-designated interest rate caps (1,450) —

Cash used in investing activities $ (12,216) $ (29,077)

Cash Flows from Financing Activities

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 $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.

The following table presents our net cash provided by financing activities for the three months ended March 31, 2024 and 2023:

(in thousands) Three Months Ended March 31,

Cash flows from financing activities:

Payments on credit facilities (1,442) (1,442)

Proceeds from credit facilities — 20,000

Payments on mortgage notes payable (291) (283)

Proceeds from termination of derivative instruments — 1,946

Payments of deferred financing costs — (44)

Payments for derivative instruments — (7,783)

Preferred stock issuance costs — (2)

Dividends paid on Series A Preferred stock (1,834) (1,832)

Dividends paid on Series B Preferred stock (1,616) (1,616)

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

Net cash (used in) provided by financing activities (5,229) 8,898

Liquidity and Capital Resources

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

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

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

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

Supply chain disruptions and increases in interest rates may also impact our tenants’ ability to pay rent and hence our results of operations and liquidity.

We expect to fund our future short-term operating liquidity requirements, including dividends to holders of Series A Preferred Stock and holders of Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our property operations, potential borrowings secured by currently unencumbered real estate assets (see below), potential future advances under our Fannie Mae Master Credit Facilities and net cash provided by our dispositions.

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

Our future liquidity requirements, and available liquidity, however, depend on many factors, such as recent and continuing increases in inflation, labor shortages, supply chain disruptions and higher property insurance, property tax and interest rates, all of which have and may continue to have adverse impacts on our results of operations and thus ultimately our liquidity.

Moreover, these adverse impacts, as well as the ongoing wars in Ukraine, Israel and related sanctions, may also impact our tenant and residents’ ability to pay rent and thus our cash flows..

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 operating activities, potential future advances under our Fannie Mae Master Credit Facilities and MOB Warehouse Facility, net cash provided by our property dispositions and potential new financings utilizing certain of our currently unencumbered properties.

As of March 31, 2024, we had $28.7 million of cash and cash equivalents.

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.

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 to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information).

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 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%.

As of March 31, 2024, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.4%.

Net debt totaled $1.2 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($28.7 million).

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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 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.

As of March 31, 2024, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.60% and a weighted-average remaining term of 4.9 years.

The weighted-average interest rate includes 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).

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our total gross borrowings was 5.00% as of March 31, 2024.

As of March 31, 2024, the carrying value of our real estate investments, at cost was $2.6 billion, with $1.4 billion of this asset value pledged as collateral for mortgage notes payable and $637.9 million of this asset value pledged to secure advances under our 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 associated with the property is satisfied or the property is removed from the borrowing base of the credit facilities, which would impact availability thereunder.

Unencumbered real estate investments, at cost as of March 31, 2024 was $634.9 million.

There can be no assurance as to the amount of liquidity we would be able to generate from leveraging these unencumbered real estate investments, if we are able to leverage them at all.

Mortgage Notes Payable

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.

As of March 31, 2024, we had $828.6 million in mortgage notes payable outstanding, all of which is either fixed-rate or effectively fixed through our interest rate swap at a weighted-average annual interest rate of 4.60% and a weighted-average remaining term of 5.9 years.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2024 and 2025 are $0.9 million and $13.3 million, respectively.

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

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

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

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

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

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

Prior Credit Facility

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

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

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

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

During the three months ended March 31, 2024, we entered into the CPC Mortgage Loan in connection with a four-property acquisition also completed in the three months ended March 31, 2024.

The mortgage has a principal balance of $7.5 million, bears interest at an annual fixed rate of 6.84% and matures in February 2034 with no principal amounts due until that time.

Credit Facilities

As of March 31, 2024, $359.6 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 7.89% and had a weighted-average remaining term of 2.6 years.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.93% as of March 31, 2024.

Fannie Mae Master Credit Facilities

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.

As of March 31, 2024, $344.8 million was outstanding under our Fannie Mae Master Credit Facilities which bore interest at a weighted-average annual rate of 7.87%.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on the Fannie Mae Master Credit Facilities was 5.91% as of March 31, 2024.

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.

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Future scheduled principal payments on our Fannie Mae Master Credit Facilities for the remainder of 2024 and 2025 are $4.3 million and $5.8 million, respectively.

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.

In the year ended December 31, 2023, we provided cash deposits totaling $11.8 million to Fannie Mae because the debt service coverage ratios of the underlying properties of each facility were below the minimum required amounts per the debt agreements.

We provided an additional deposit of $0.3 million during the three months ended March 31, 2024, bringing the total deposit to $12.1 million as of March 31, 2024.

These deposits are recorded as restricted cash on our consolidated balance sheet, and are pledged as additional collateral for the Fannie Mae Master Credit Facilities.

These deposits will be refunded the earlier of the our 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.

MOB Warehouse Facility

On December 22, 2023, we, entered into a loan agreement with Capital One to provide up to $50.0 million of variable-rate financing.

As of March 31, 2024, $14.7 million was outstanding under the MOB Warehouse Facility which bore interest at an annual rate of 8.33%.

Inclusive of our non-designated interest rate caps, the economic interest rate on our MOB Warehouse Facility was 6.50% as of March 31, 2024.

We may request future advances under the MOB Warehouse Facility by adding eligible MOBs to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

Borrowings under the MOB Warehouse Facility bear interest at a monthly rate equal to the sum of the current SOFR for one-month denominated deposits and a spread of 3.0%.

Interest payments are due monthly, with no principal payments due until maturity in December 2026.

Subsequent to March 31, 2024, we drew $7.0 million under the MOB Warehouse Facility.

Please see Note 17 — Subsequent Events for additional information.

Non-Designated Interest Rate Caps

As of March 31, 2024, we had seven SOFR-based interest rate caps with an aggregate notional amount of $364.2 million, which limits one-month SOFR to 3.50% and have varying maturities through January 2027.

Although these interest rate caps are not designated hedging instruments, we consider them economically related to our variable-rate credit facility borrowings.

As SOFR has increased beyond 3.50%, we received cash payments of $1.8 million in the three months ended March 31, 2024.

We received $0.9 million of cash payments in the three months ended March 31, 2023.

We prepaid premiums of $1.5 million to renew one caps with an aggregate notional amount of $60.0 million which matures in April 2024.

We have five interest rate caps with a notional amount of $289.4 million which mature in 2025, which represents the next maturing interest rate caps.

During the year ended December 31, 2023, we paid premiums of $10.0 million to renew expiring interest rate cap contracts.

Subsequent to March 31, 2024, we purchased a new non-designated interest rate cap with a notional amount of $7.0 million and a strike price of 3.50%, which matures in January 2027.

We paid premiums of $0.3 million for this interest rate cap.

Capital Expenditures

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 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 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 September 30, 2023

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

During the three months ended March 31, 2024, our capital expenditures were $5.2 million, of which $1.1 million related to our MOB segment and $4.1 million related to our SHOP segment.

We anticipate this rate of capital expenditures for the MOB and SHOP segments throughout the remainder of 2024.

Acquisitions — Three Months Ended March 31, 2024

During the three months ended March 31, 2024, we acquired four single-tenant MOBs for an aggregate contract purchase price of $12.6 million.

These acquisitions were funded with $7.5 million of new mortgage debt from our CPC Mortgage Loan and the remainder with cash on hand.

Acquisitions — Subsequent to March 31, 2024

We have not acquired any properties subsequent to March 31, 2024.

Dispositions — Three Months Ended March 31, 2024

We did not dispose of any properties during the three months ended March 31, 2024.

Dispositions — Subsequent to March 31, 2024

We have not disposed of any properties subsequent to March 31, 2024.

We have entered into a purchase and sale agreement to dispose of one SHOP for a contract sales price of $3.3 million.

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

Share Repurchase Program

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

We did not repurchase any shares during the three months ended March 31, 2024 and 2023.

Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”) and Modified Funds from Operations (“MFFO”).

For additional information on Net Operating Income, another non-GAAP financial measure we use to evaluate our performance, see Results of Operations — Net Operating Income above.

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

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

MFFO is based on our total performance as a company and therefore reflects the impact of interest expense, general and administrative expenses and operating fees to related parties.

A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net loss, are provided below:

Funds from Operations and Modified Funds from Operations

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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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2024 2023

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Impairment charges 260 —

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

Gain on sale of real estate investments — (115)

Adjustments for non-controlling interests (3)

(97) (124) (298) (386)

FFO (as defined by NAREIT) attributable to stockholders

475 5,689 1,720 14,658

Acquisition and transaction related 142 63

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Straight-line rent adjustments

(352) (183) (938) (1,236)

Amortization (accretion) of mortgage premiums and discounts, net 23 23 69 28

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

Amortization of mortgage premiums and discounts, net 23 23

(Gain) loss on non-designated derivatives (1,951) 182

Cash received from non-designated derivative instruments 1,773 926

Deferred tax asset valuation allowance (2)

(265) 216 726 1,358

Adjustments for non-controlling interests (3)

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(1) Excludes non-real estate depreciation and amortization.

(2) This is a non-cash item and is added back as it is not considered a part of operating performance.

(2) Represents additional non-cash reserves against our deferred tax asset, which we do not consider relevant to our operations.

(3) Represents the portion of the adjustments allocable to non-controlling interests.

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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.

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.

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 we issued stock dividends to the holders from October 2020 until January 2024.

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

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

We do not intend to declare further stock dividends in the future.

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.

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 September 30, 2023 September 30, 2023

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

No cash distributions were made to common stockholders, restricted shareholders, holders of Common OP Units or holders of Class B Units in the three months ended March 31, 2024.

Three Months Ended

March 31, 2024

(In thousands) Amounts Percentage of Distributions

Distributions:

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Available cash on hand 953 27.3%

— —% — —% — —% — —%

Total source of distribution coverage $ 3,496 100.0%

Cash flows provided by operations (in accordance with GAAP) $ 2,543

$ 4,989 $ 5,688 $ 5,681 $ 16,358

Net loss (in accordance with GAAP) $ (15,550)

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

For the nine months ended September 30, 2023, cash flows provided by operations were $16.4 million.

For the three months ended March 31, 2024, cash flows provided by operations were $2.5 million.

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

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

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

Our ability to pay dividends on our Series A Preferred Stock, Series B Preferred Stock and Series A Preferred Units and other distributions depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties.

Our ability to pay dividends on our Series A Preferred Stock, Series B Preferred Stock and Series A Preferred Units and other distributions depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including but not limited to our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties.

There can be no assurance that we will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all.

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We may be adversely impacted by inflation on the leases with tenants in our MOB segment that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates.

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

As of March 31, 2024, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.5%.

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