What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-12 compared with 2024-08-09 · 817 added, 914 removed, 1147 unchanged (60% of the section changed)

Financial Statements.

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except share and per share data)

September 30,

2024 December 31, 2023

ASSETS (Unaudited)

Real estate investments, at cost:

10 unchanged sentences

Operating lease right-of-use assets 7,553 7,713

Prepaid expenses and other assets (including $ 46 due from related parties as of June 30, 2024)

Prepaid expenses and other assets (including $ 22 due from related parties as of September 30, 2024)

32,874 35,781

3 unchanged sentences

Mortgage notes payable, net $ 816,988 $ 808,995

Credit facilities, net 365,101 361,026

Credit facilities

363,659 361,026

Market lease intangible liabilities, net 6,910 8,165

Accounts payable and accrued expenses (including $ 98,334 and $ 295 due to related parties as of June 30, 2024 and December 31, 2023, respectively)

Accounts payable and accrued expenses (including $ 30,293 and $ 295 due to related parties as of September 30, 2024 and December 31, 2023, respectively)

84,472 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 June 30, 2024 and December 31, 2023

3,977,144 issued and outstanding as of September 30, 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 June 30, 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 June 30, 2024 and December 31, 2023, respectively

3,630,000 issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 28,296,439 shares and 27,886,255 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,533,697 2,509,303

5 unchanged sentences

Total liabilities and equity $ 1,997,670 $ 2,145,159

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

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

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except share and per share data)

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

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

2024 2023 2024 2023

4 unchanged sentences

Operating fees to related parties

6,391 6,397 19,181 19,153

Termination fees to related parties

8,409 — 106,650 —

Acquisition and transaction related 5,187 173 5,686 384

2 unchanged sentences

Total expenses 111,445 86,425 389,896 256,940

Operating (loss) income before loss on sale of real estate investments ( 100,215 ) 1,119 ( 101,335 ) 2,944

Loss on sale of real estate investments ( 225 ) ( 306 ) ( 225 ) ( 191 )

Operating (loss) income before gain (loss) on sale of real estate investments

( 22,505 ) ( 739 ) ( 123,840 ) 2,205

Gain (loss) on sale of real estate investments

1,579 ( 173 ) 1,354 ( 364 )

Operating (loss) income ( 20,926 ) ( 912 ) ( 122,486 ) 1,841

2 unchanged sentences

Interest and other income 548 258 1,077 576

Gains on non-designated derivatives 882 286 2,833 104

(Loss) gain on non-designated derivatives

( 2,384 ) 406 449 510

Total other expenses ( 19,843 ) ( 15,056 ) ( 50,616 ) ( 49,122 )

12 unchanged sentences

$ ( 1.56 ) $ ( 0.69 ) $ ( 6.47 ) $ ( 2.05 )

(1) Retroactively adjusted for the effects of the stock dividends (see Note 1 ).

(1) Retroactively adjusted for the effects of previous stock dividends (see Note 1 — Organization ).

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

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

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except share data)

Six Months Ended June 30, 2024

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

Par Value Number of

Shares Par Value Additional

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

Nine Months Ended September 30, 2024

Series A Preferred Stock Series B Preferred Stock Common Stock

Number of Shares

Par Value Number of Shares

Par Value Number of Shares Par Value Additional Paid-in Capital Accumulated Other Comprehensive Income Distributions in excess of accumulated earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, December 31, 2023 3,977,144 40 3,630,000 $ 36 27,886,255 $ 1,115 $ 2,509,303 $ 23,464 $ ( 1,639,804 ) $ 894,154 $ 6,429 $ 900,583

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

Share-based compensation

— — — — — — 613 — — 613 — 613

Distributions declared in common stock, $ 0.21 per share

8 unchanged sentences

Rebalancing of ownership percentage — — — — — — 103 — — 103 ( 103 ) —

Balance, September 30, 2024 3,977,144 $ 40 3,630,000 $ 36 28,296,439 $ 1,132 $ 2,533,697 $ 14,301 $ ( 1,846,558 ) $ 702,648 $ 5,658 $ 708,306

Three Months Ended September 30, 2024

Series A Preferred Stock Series B Preferred Stock Common Stock

Number of Shares

Par Value Number of Shares

Balance, June 30, 2024 3,977,144 $ 40 3,630,000 $ 36 28,309,545 $ 1,132 $ 2,533,484 $ 24,468 $ ( 1,802,415 ) $ 756,745 $ 5,842 $ 762,587

Three Months Ended June 30, 2024

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

Par Value Number of

Shares Par Value Additional

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

Balance, March 31, 2023 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

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

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

Share-based compensation

— — — — — — 153 — — 153 — 153

Distributions declared in common stock, $ 0.21 per share

— — — — ( 13,106 ) — — — — — — —

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

4 unchanged sentences

Net loss — — — — — — — — ( 40,693 ) ( 40,693 ) ( 77 ) ( 40,769 )

Unrealized gain on designated derivatives — — — — — — — ( 1,276 ) — ( 1,276 ) — ( 1,276 )

Unrealized loss on designated derivatives

— — — — — — — ( 10,167 ) — ( 10,167 ) — ( 10,167 )

Rebalancing of ownership percentage — — — — — — 60 — — 60 ( 60 ) —

Balance, June 30, 2024 3,977,144 $ 40 3,630,000 $ 36 113,238,180 $ 1,132 $ 2,533,484 $ 24,468 $ ( 1,802,415 ) $ 756,745 $ 5,842 $ 762,587

Balance, September 30, 2024 3,977,144 $ 40 3,630,000 $ 36 28,296,439 $ 1,132 $ 2,533,697 $ 14,301 $ ( 1,846,558 ) $ 702,648 $ 5,658 $ 708,306

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

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

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except share data)

Six Months Ended June 30, 2023

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

Nine Months Ended September 30, 2023

Series A Preferred Stock Series B Preferred Stock Common Stock

Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income 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 26,270,133 $ 1,051 $ 2,417,059 $ 36,910 $ ( 1,462,457 ) $ 992,639 $ 6,551 $ 999,190

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

Share-based compensation

— — — — — — 689 — — 689 — 689

Distributions declared in common stock, $ 1.68 per share

6 unchanged sentences

Net loss — — — — — — — — ( 47,480 ) ( 47,480 ) ( 45 ) ( 47,525 )

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

Unrealized loss on designated derivatives

— — — — — — — ( 1,570 ) — ( 1,570 ) — ( 1,570 )

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

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

Balance, September 30, 2023 3,977,144 $ 40 3,630,000 $ 36 27,469,303 $ 1,098 $ 2,485,745 $ 35,340 $ ( 1,588,261 ) $ 933,998 $ 6,583 $ 940,581

Three Months Ended September 30, 2023

Series A Preferred Stock Series B Preferred Stock Common Stock

Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Additional Paid-in Capital Accumulated Other Comprehensive Income 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 27,071,109 $ 1,082 $ 2,462,523 $ 34,945 $ ( 1,545,708 ) $ 952,918 $ 6,660 $ 959,578

Three Months Ended June 30, 2023

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

Shares Par Value Number of

Shares Par Value Additional

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

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

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

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

Share-based compensation

— — — — — — 229 — — 229 — 229

Distributions declared in common stock, $ 0.84 per share

7 unchanged sentences

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

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

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

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

Balance, September 30, 2023 3,977,144 $ 40 3,630,000 $ 36 27,469,303 $ 1,098 $ 2,485,745 $ 35,340 $ ( 1,588,261 ) $ 933,998 $ 6,583 $ 940,581

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

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

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Equity-based compensation 613 689

Gain on sale of real estate investments, net 225 191

(Gain) loss on sale of real estate investments

( 1,354 ) 364

Cash received from non-designated derivative instruments 5,405 3,866

4 unchanged sentences

Prepaid expenses and other assets ( 1,338 ) ( 4,180 )

Termination fees payable to related parties 98,241 —

Deferred tax allowance

Accounts payable, accrued expenses and other liabilities 6,314 ( 1,504 )

Deferred rent ( 364 ) 979

Net cash provided by operating activities 8,935 10,677

Net cash (used in) provided by operating activities

( 86,300 ) 16,358

Cash flows from investing activities:

3 unchanged sentences

Proceeds from sales of real estate investments 82,278 4,803

Net cash used in investing activities ( 15,578 ) ( 34,360 )

Net cash provided by (used in) investing activities

58,563 ( 49,036 )

Cash flows from financing activities:

5 unchanged sentences

Payments of deferred financing costs ( 199 ) ( 7,774 )

Proceeds from promissory note

Contributions from non-controlling interests — 284

Dividends paid on Series A Preferred stock ( 3,668 ) ( 3,666 )

Dividends paid on Series B Preferred stock ( 3,232 ) ( 3,233 )

Distributions paid on Series A Preferred Stock

( 5,501 ) ( 5,500 )

Distributions paid on Series B Preferred Stock

( 4,849 ) ( 4,849 )

Distributions to non-controlling interest holders ( 139 ) ( 138 )

Net cash provided by (used in) financing activities ( 3,700 ) 52,650

Net cash provided by financing activities

21,333 47,426

Net change in cash, cash equivalents and restricted cash ( 6,404 ) 14,748

1 unchanged sentence

Cash, cash equivalents and restricted cash, end of period $ 84,912 $ 91,286

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash and cash equivalents, end of period $ 32,858 $ 51,041

11 unchanged sentences

Amounts outstanding under the prior credit facility repaid with proceeds from real estate sales

$ — $ ( 5,167 )

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

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

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 1 — Organization

Healthcare Trust, Inc.

(including, as required by context, Healthcare Trust Operating Partnership, L.P.

(the “OP”) and its subsidiaries, the “Company”), is an externally managed entity that for U.S.

federal income tax purposes has qualified as a real estate investment trust (“REIT”).

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

As of June 30, 2024, the Company owned 207 properties located in 32 states and comprised of 9.0 million rentable square feet.

National Healthcare Properties, Inc.

(formerly known as Healthcare Trust, Inc.) (including, as required by context, National Healthcare Properties Operating Partnership, L.P.

(the “OP”) and its subsidiaries, the “Company”) is a real estate investment trust (“REIT”) for U.S.

federal income tax purposes.

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

As of September 30, 2024, the Company owned 198 properties located in 32 states and comprised of 8.6 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.

The Company’s advisor, Healthcare Trust Advisors, LLC (the “Advisor”) manages its day-to-day business with the assistance of its property manager, Healthcare Trust Properties, LLC (the “Property Manager”).

The Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global” or the “Advisor Parent”), and these related parties receive compensation and fees for providing services to the Company.

The Company also reimburses these entities for certain expenses they incur in providing these services to the Company.

Prior to the consummation of the Internalization (as defined below) on September 27, 2024, the Company’s former advisor, Healthcare Trust Advisors, LLC (the “Advisor”), managed its day-to-day business with the assistance of its property manager, Healthcare Trust Properties, LLC (the “Property Manager”).

Prior to the consummation of the Internalization, the Advisor and Property Manager were under common control with AR Global Investments, LLC (“AR Global” or the “Advisor Parent”), and these related parties received compensation and fees for providing services to the Company.

See the “ Internalization ” section in this Note for additional information regarding the Internalization.

The Company also reimbursed, and in the case of the Property Manager, continues to reimburse, these entities for certain expenses they incur in providing these services to the Company.

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

As of June 30, 2024, the Company owned 45 SHOPs using the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure in its SHOP segment.

As of September 30, 2024, the Company owned 44 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.

The Company operates in two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

OMFs and SHOPs.

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

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

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

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

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

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

As of June 30, 2024, the Company had four eligible independent contractors operating 45 SHOPs.

As of September 30, 2024, the Company had four eligible independent contractors operating 44 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.

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

Since October 2020, the Company has issued an aggregate of approximately 5.2 million shares as stock dividends (as adjusted to reflect the Reverse Stock Split (as defined below)).

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 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.

See Note 8 — Stockholders’ Equity for additional information on the stock dividends.

On March 27, 2024, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2023.

3 unchanged sentences

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

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Intent to Internalize Management

On July 1, 2024, the Company announced that, in anticipation of a potential future listing of the Company’s common stock on a national securities exchange, it provided notice to the Advisor in June 2024 of its intent to transition to self-management and internalize management functions.

On August 6, 2024, the Company entered into a merger agreement (the “Internalization Agreement”) with HTI Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub”), the Advisor and the Advisor Parent.

The transactions contemplated by the Internalization Agreement are referred to as the “Internalization.”

Consummation of the transactions contemplated by the Internalization Agreement will result in the internalization of the Company’s management immediately following consummation of the merger (the “Internalization Merger”) of the Advisor with and into Merger Sub, with the Advisor being the surviving entity (under the name “Healthcare Trust Advisors, LLC”), including by terminating (i) the Company’s existing arrangement for advisory management services provided by the Advisor pursuant to the Second A&R Advisory Agreement (as defined in Note 9 — Related Party Transactions and Arrangements ), by and among the Company, the OP, and the Advisor and (ii) the Company’s existing arrangement for property management services provided by the Property Manager, pursuant to the A&R Property Management Agreement (as defined in Note 9 — Related Party Transactions and Arrangements ).

All assets, contracts (including leases) and employees necessary for the Company to conduct its business will be contributed by Advisor Parent (and/or its affiliates) to the Advisor, including all of the equity interests in the Property Manager, prior to the effective time of the Internalization Merger.

Pursuant to the Internalization Agreement, at closing of the Internalization (the “Closing”), the outstanding membership interest of the Advisor will be converted into the right to receive from the Company (i) a $ 98.2 million self-management termination fee pursuant to the formula set forth in the Second A&R Advisory Agreement, which was recommended and approved by a special committee of the Company’s board of directors, consisting entirely of independent directors, in February 2017, (ii) an asset management fee of $ 10.9 million, representing the aggregate Base Management Fee (as defined in the Second A&R Advisory Agreement) that the Company would have been required to pay to the Advisor during the six month notice period required to terminate the Second A&R Advisory Agreement (assuming the Closing occurs on or prior to December 25, 2024) which began on June 25, 2024 when the Company delivered notice to the Advisor of its intention to effect the Internalization, and (iii) a property management fee of $ 3.9 million, representing the aggregate Management Fees (as defined in the A&R Property Management Agreement) that the Company would have been required to pay to the Property Manager through the current term of the Property Management Agreement, subject to certain closing adjustments to the extent the amount of such asset management and property management fees exceed or are less than the amount required to be paid by Advisor Parent to employees placed with the Company pursuant to the Internalization prior to the Closing and the amounts due under the contracts acquired by the Company in the Internalization relating to the pre-Closing period (collectively, the “Closing Payments”).

Advisor Parent will also deliver cash to the Company at Closing in order for the Company to pay any unpaid employee bonuses for calendar year 2023 and any accrued bonuses for calendar year 2024 to the extent that the Company has previously reimbursed Advisor Parent for, but Advisor Parent has not paid, such bonuses.

To the extent the Closing Payments exceed the Company’s Available Cash (as defined in the Internalization Agreement), the Company has agreed to pay Advisor Parent aggregate cash consideration equal to at least $ 60.0 million (such cash amount, the “Closing Date Cash Consideration”), and the Company shall issue to Advisor Parent a promissory note in a principal amount equal to the difference between the Closing Date Cash Consideration and the Closing Payments, as may be adjusted for any post-Closing true-ups on the Closing Payments.

The Company intends to fund the Closing Date Cash Consideration through a combination of cash on hand and the net proceeds from certain anticipated strategic dispositions.

The Company expects the Internalization to close no later than the fourth quarter of 2024, subject to the satisfaction or waiver of certain conditions in the Internalization Agreement.

The Internalization Agreement may be terminated, subject to certain limitations set forth in the Internalization Agreement, (i) by mutual written agreement by the parties thereto, (ii) by any party if a final and non-appealable order is entered that permanently restrains or otherwise prohibits the Internalization, or (iii) by any party should the Effective Time (as defined in the Internalization Agreement) not have occurred on or before June 28, 2025.

There can be no assurance that the Internalization will close within the anticipated time frame, or at all, or that the Company will be able to list its shares of common stock on a national securities exchange.

HEALTHCARE TRUST, INC.

September 30, 2024

Internalization

On September 27, 2024 (the “Closing Date”), the Company consummated (the “Closing”) the transactions (the “Internalization”) contemplated by that certain merger agreement dated August 6, 2024 (the “Internalization Agreement”) by and among the Company, HTI Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub”), the Advisor and the Advisor Parent.

Consummation of the Internalization resulted in the internalization of the Company’s management through the merger of the Advisor with and into Merger Sub, with the Advisor being the surviving entity (under the name “Healthcare Trust Advisors, LLC”) and the termination of the Company’s prior arrangement for advisory management services provided by the Advisor pursuant to the Advisory Agreement (as defined in Note 9 — Related Party Transactions and Arrangements ).

All assets, contracts and employees necessary for the Company to conduct its business were contributed by the Advisor Parent (and/or its affiliates) to the Advisor prior to the Closing Date, including all of the equity interests in the Property Manager, which became a wholly-owned subsidiary of the Company following the Internalization.

Pursuant to the Internalization Agreement, on the Closing Date, (i) the outstanding membership interests of the Advisor were converted into the right to receive from the Company an internalization fee of $ 98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $ 5.5 million, representing the aggregate Base Management Fee (as defined in the Advisory Agreement) that the Company would have been required to pay to the Advisor during the remaining three month notice period required to terminate the Advisory Agreement, and (y) a property management fee of $ 2.9 million, representing the aggregate Management Fees (as defined in the Property Management Agreement) that the Company would have been required to pay to the Property Manager through the current term of the Property Management Agreement, in each case, as adjusted to the extent the amount of such asset management and property management fees exceed or are less than the amount required to be paid by the Advisor Parent to employees placed with the Company pursuant to the Internalization prior to the Closing and the amounts due under contracts acquired by the Company in the Internalization relating to the pre-Closing period (collectively, the “Closing Payments” in an aggregate amount of $ 106.6 million).

The Advisor Parent also delivered cash to the Company at Closing in order for the Company to pay any unpaid employee bonuses for calendar year 2023 and any accrued bonuses for calendar year 2024 to the extent that the Company has previously reimbursed the Advisor Parent for, but the Advisor Parent has not paid, such bonuses.

Pursuant to the Internalization Agreement, because the Closing Payments exceeded the Company’s Available Cash (as defined in the Internalization Agreement), the Company paid the Advisor Parent an aggregate cash consideration of $ 75.0 million (such cash amount, the “Closing Date Cash Consideration”), and the Company issued to the Advisor Parent an unsecured promissory note (the “Promissory Note”) (as further defined in Note 9 — Related Party Transactions and Arrangements ) in a principal amount of $ 30.3 million, equal to the difference between the Closing Date Cash Consideration and the Closing Payments .

Reverse Stock Split

On September 26, 2024, following approval by the Board and in accordance with Maryland General Corporate Law, the Company filed Articles of Amendment to the Company’s articles of amendment and restatement (as amended to date, the “Charter”) with the State Department of Assessments and Taxation of Maryland (“SDAT”) to effect a reverse stock split of the Company’s common stock, par value $ 0.01 per share (the “common stock”), at a ratio of one-for-four, which became effective on September 30, 2024 (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, the par value of the common stock adjusted to $ 0.04 per share.

The number of authorized shares of common stock under the Charter remains unchanged.

All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.

Name Change and Common Stock Par Value Adjustment

On September 26, 2024, following approval by the Board, the Company filed Articles of Amendment (the “Second Charter Amendment”) to the Company’s Charter with the SDAT to (i) change the Company’s name to “National Healthcare Properties, Inc.” from “Healthcare Trust, Inc.” and (ii) adjust the par value of the Company’s common stock back to $ 0.01 per share following the Reverse Stock Split, both of which became effective on September 30, 2024.

In connection with its name change, the Company, as the general partner of the OP, caused the name of the OP to be changed to “National Healthcare Properties Operating Partnership, L.P.” from “Healthcare Trust Operating Partnership, L.P.”

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 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 three and six months ended June 30, 2024 and 2023 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

The results of operations for the three and nine months ended September 30, 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 six months ended June 30, 2024.

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.

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 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 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 stabilized and has begun recovering.

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.

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 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 June 30, 2024, these leases had a weighted average remaining lease term of 4.5 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.

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

As of September 30, 2024, these leases had a weighted average remaining lease term of 4.3 years.

Rent from tenants in the Company’s OMF 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.

Because many of the leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable for, and include in revenue from tenants on a straight-line basis, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease.

3 unchanged sentences

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

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

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

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

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

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The Company’s revenues also include resident services and fee income primarily related to rent derived from lease contracts with residents in the Company’s SHOP segment, held using a structure permitted under RIDEA.

4 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 as of June 30, 2024.

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 September 30, 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.

5 unchanged sentences

Total $ 783,917

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

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

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

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

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

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

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

The Company recorded reductions in revenue of $ 0.6 million and $ 0.8 million for uncollectable amounts during the three and six months ended June 30, 2024, respectively, and $ 0.4 million and $ 0.7 million for uncollectable amounts during the three and six months ended 2023, respectively.

Cost recoveries from tenants are included in operating revenue from tenants, in accordance with current 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 $ 0.1 million and $ 0.9 million for uncollectable amounts during the three and nine months ended September 30, 2024, respectively, and $ 0.2 million and $ 0.9 million for uncollectable amounts during the three and nine months ended September 30, 2023, respectively.

Investments in Real Estate

6 unchanged sentences

See the “ Purchase Price Allocation” section in this Note for a discussion of the initial accounting for investments in real estate.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

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 six months ended June 30, 2024 and 2023.

No properties were presented as discontinued operations during the nine months ended September 30, 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 June 30, 2024 or December 31, 2023.

There were no real estate investments held for sale as of September 30, 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 six months ended June 30, 2024 were asset acquisitions.

The Company acquired four properties during the six months ended June 30, 2024.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

All acquisitions during the nine months ended September 30, 2024 were asset acquisitions.

The Company acquired four properties during the nine months ended September 30, 2024.

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.

10 unchanged sentences

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The aggregate value of intangible assets related to customer relationships, as applicable, is measured based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the tenant.

Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors.

The Company did not record any intangible asset amounts related to customer relationships during the six months ended June 30, 2024 or 2023.

The Company did not record any intangible asset amounts related to customer relationships during the three and nine months ended September 30, 2024 or 2023.

Accounting for Leases

Lessor Accounting

In accordance with the lease accounting standard, all of the Company’s leases as lessor prior to adoption were accounted for as operating leases.

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

The Company evaluates new leases (by the Company or by a predecessor lessor/owner) pursuant to ASC 842:

Leases to determine lease classification.

A lease is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant.

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

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

As of June 30, 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 of September 30, 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

June 30, 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 June 30, 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 six months ended June 30, 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.

1 unchanged sentence

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.

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 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.

For additional information and disclosures related to the Company’s operating leases, see Note 16 — Commitments and Contingencies .

3 unchanged sentences

These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statements of operations and comprehensive income to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held for use.

If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss in the consolidated statements of operations and comprehensive loss to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held for use.

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 loss because recording an impairment loss results in an immediate negative adjustment to earnings.

For additional information, see Note 3 — Real Estate Investments, Net.

Reportable Segments

The Company has determined that it has two reportable segments, with activities related to investing in MOBs and SHOPs.

Management evaluates the operating performance of the Company’s investments in real estate and seniors housing properties on an individual property level.

The Company has determined that it has two reportable segments, with activities related to investing in OMFs and SHOPs.

Management evaluates the operating performance of the Company’s investments in OMFs and SHOPs on an individual property level.

For additional information, see Note 15 — Segment Reporting .

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Depreciation and Amortization

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, 7 to 10 years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, seven to 10 years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

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

4 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

June 30, 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.

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

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

12 unchanged sentences

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

As of June 30, 2024, the Company owned 45 seniors housing properties which are leased and operated through its TRS.

As of September 30, 2024, the Company owned 44 seniors housing properties which are leased and operated through its TRS.

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

5 unchanged sentences

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

Significant components of the deferred tax assets and liabilities as of June 30, 2024 and December 31, 2023 consisted of deferred rent and net operating loss carryforwards.

Significant components of the deferred tax assets and liabilities as of September 30, 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 $ 9.0 million as of June 30, 2024.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Because of the TRS’s historical operating losses and the adverse economic impacts from increases in the rate of inflation in recent years 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 $ 10.2 million as of September 30, 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.

6 unchanged sentences

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

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

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Not yet Fully Adopted as of June 30, 2024:

Application of these expedients preserved the presentation of the Company’s derivatives, which were consistent with the Company’s past presentation.

As of September 30, 2024, the Company had no remaining contracts or hedging relationships that referenced LIBOR.

Not yet Fully Adopted as of September 30, 2024:

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

2 unchanged sentences

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 June 30, 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.

The Company has not adopted this ASU as of September 30, 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

Property Acquisitions

The Company invests in healthcare-related facilities, primarily MOBs and seniors housing properties which expand and diversify its portfolio and revenue base.

The Company owned 207 properties as of June 30, 2024.

During the six months ended June 30, 2024 and 2023, the Company acquired four and five properties, respectively.

All acquisitions in the six months ended June 30, 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 six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

The Company invests in healthcare-related facilities, primarily OMFs and SHOPs.

which expand and diversify its portfolio and revenue base.

The Company owned 198 properties as of September 30, 2024.

During the nine months ended September 30, 2024 and 2023, the Company acquired four and seven properties, respectively.

All acquisitions in the nine months ended September 30, 2024 and 2023 were considered asset acquisitions for accounting purposes.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table presents the allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

(In thousands) 2024 2023

12 unchanged sentences

Significant Concentrations

As of June 30, 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.

The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of June 30, 2024 and 2023:

As of September 30, 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.

September 30,

State 2024 2023

1 unchanged sentence

Pennsylvania 10.3 % 10.6 %

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Georgia 10.2 % *

Intangible Assets and Liabilities

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

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

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

(In thousands) 2024 2023 2024 2023

6 unchanged sentences

(1) Reflected within depreciation and amortization expense.

(2) Reflected within rental income.

(2) Reflected within revenue from tenants.

(3) Reflected within property operating and maintenance expense.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table provides the projected amortization expense and adjustments to revenues for the next five years:

7 unchanged sentences

$ 195 $ 802 $ 682 $ 448 $ 418

Three and Six Months Ended June 30, 2024

The Company disposed of one held-for-use SHOP during the three and six months ended June 30, 2024 for a contract sales price of $ 3.3 million.

This property was impaired during the six months ended June 30, 2024 by $ 0.3 million, and had been previously impaired by a cumulative total of $ 2.3 million in the years ended December 31, 2023 and 2022.

The Company recorded a $ 0.2 million loss on the sale of this SHOP, which is presented in the Company’s consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2024.

Subsequent to June 30, 2024, the Company disposed of seven MOBs in Illinois for a contract sales price of $ 50.5 million.

For additional information, please see Note 1 7 — Subsequent Events.

Three and Six Months Ended June 30, 2023

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

Three and Nine Months Ended September 30, 2024

The Company disposed of seven held-for-use OMFs, one held-for-use SHOP and one land parcel during the three months ended September 30, 2024 for an aggregate contract sales price of $ 79.3 million.

These dispositions resulted in an aggregate gain on sale of $ 1.6 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the three months ended September 30, 2024.

The seven held-for-use OMFs were previously impaired by $ 10.6 million in the year ended December 31, 2022.

The Company disposed of seven held-for-use OMFs, two held-for-use SHOPs and one land parcel during the nine months ended September 30, 2024 for an aggregate contract sales price of $ 82.6 million.

These dispositions resulted in an aggregate gain on sale of $ 1.4 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2024.

One held-for-use SHOP was impaired during the nine months ended September 30, 2024 by $ 0.3 million, and had been previously impaired by a cumulative total of $ 2.3 million in the years ended December 31, 2023 and 2022.

The seven held-for-use OMFs had been previously impaired by $ 10.6 million in the year ended December 31, 2022.

Three and Nine Months Ended September 30, 2023

During the three months ended September 30, 2023, the Company did no t dispose of any properties.

During the nine months ended September 30, 2023, the Company disposed of four SHOPs and one OMF for an aggregate contract sales price of $ 13.8 million.

Two of the four disposed SHOPs were previously impaired by $ 15.1 million in the year ended December 31, 2022.

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

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

These dispositions resulted in an aggregate loss on sale of $ 0.4 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2023.

Assets Held for Sale

1 unchanged sentence

If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company’s estimate of the net sales price of the assets.

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

There were no assets held for sale as of June 30, 2024 and December 31, 2023.

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

There were no assets held for sale as of September 30, 2024 and December 31, 2023.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Assets Held for Use

4 unchanged sentences

Where more than one possible scenario exists, the Company uses a probability weighted approach in estimating cash flows.

As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses for impairment may be realized in the future.

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 six months ended June 30, 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 June 30, 2024.

During the nine months ended September 30, 2024 , one OMF 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 September 30, 2024 .

During the nine months ended September 30, 2024, one SHOP property sustained hurricane damage estimated at $ 0.4 million, which the Company anticipates will not be recoverable through its property insurance policy due to its policy’s high deductible.

Accordingly, the Company reduced the carrying value of the damaged property by $ 0.4 million during the nine months ended September 30, 2024 .

Impairment Charges

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

The following table presents impairment charges by segment recorded during the three and six months ended June 30, 2024:

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

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

The following table presents impairment charges by segment recorded during the three and nine months ended September 30, 2024:

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

(In thousands) 2024 2024

$ 2,409 $ — $ 2,409 $ —

Total MOB impairment charges 2,409 — 2,409 —

Acuity Specialty Hospital Mesa (2)

Total OMF impairment charges 8,829 11,238

SHOP Segment:

5 unchanged sentences

This property has been previously impaired by a cumulative total of $ 8.6 million in the years ended December 31, 2023 and 2021.

HEALTHCARE TRUST, INC.

(2) This property was impaired to reduce its carrying value to its contractual sales price of $ 6.0 million as determined by a purchase and sale agreement executed in the nine months ended September 30, 2024.

(3) This property was impaired to its contractual sales price of $ 3.3 million as determined by a purchase and sale agreement executed in the nine months ended September 30, 2024.

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

The property was sold during the nine months ended September 30, 2024.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

(2) This property was impaired to its contractual sales price of $ 3.3 million as determined by a purchase and sale agreement executed in the six months ended June 30, 2024.

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

The property was sold during the three months ended June 30, 2024.

September 30, 2024

Note 4 — Mortgage Notes Payable, Net

The following table reflects the Company’s mortgage notes payable as of June 30, 2024 and December 31, 2023:

The following table reflects the Company’s mortgage notes payable as of September 30, 2024 and December 31, 2023:

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

Portfolio Encumbered Properties June 30,

2024 December 31, 2023 June 30,

Portfolio Encumbered Properties September 30,

2024 December 31, 2023 September 30,

2024 December 31, 2023 Interest Rate Maturity

3 unchanged sentences

Fox Ridge North Little Rock - North Little Rock, AR 1 9,268 9,458 2.95 % 2.95 % Fixed May 2049

Capital One MOB Loan (2)

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

Capital One OMF Loan (2)

41 378,500 378,500 3.71 % 3.71 % Fixed

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

2 unchanged sentences

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

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.

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

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

Gross mortgage notes payable 140 828,000 821,379 4.60 % 4.58 %

4 unchanged sentences

_____________

(1) Calculated on a weighted average basis for all mortgages outstanding as of June 30, 2024 and December 31, 2023.

(2) Variable rate loan, based on daily SOFR (as defined below) as of June 30, 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 June 30, 2024 and December 31, 2023.

(1) Calculated on a weighted average basis for all mortgages outstanding as of September 30, 2024 and December 31, 2023.

(2) Variable rate loan, based on daily SOFR (as defined below) as of September 30, 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 September 30, 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 June 30, 2024, the Company had pledged $ 1.4 billion in total real estate investments, at cost, as collateral for its $ 828.3 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.

As of September 30, 2024, the Company had pledged $ 1.3 billion in total real estate investments, at cost, as collateral for its $ 828.0 million of gross mortgage notes payable.

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

The Company makes payments of principal and interest, or interest only, depending upon the specific requirements of each mortgage note, on a monthly basis.

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

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 June 30, 2024, the Company was in compliance with these financial covenants.

Notably, the Barclays OMF 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 September 30, 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.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Note 5 — Credit Facilities

The Company had the following credit facilities outstanding as of June 30, 2024 and December 31, 2023:

The Company had the following credit facilities outstanding as of September 30, 2024 and December 31, 2023:

Outstanding Facility

1 unchanged sentence

Credit Facilities Encumbered Properties (1)

2024 December 31, 2023 June 30,

September 30,

2024 December 31, 2023 September 30,

2024 December 31, 2023 Interest Rate Maturity

4 unchanged sentences

Total Fannie Mae Master Credit Facilities 21 $ 341,951 $ 346,278

MOB Warehouse Facility 7 21,708 14,748 8.33 % 8.36 % Variable Dec.

OMF Warehouse Facility 7 21,708 14,748 8.20 % 8.36 % Variable Dec.

Total Credit Facilities 28 $ 363,659 $ 361,026 7.91 % 7.90 %

(1) Encumbered properties are as of June 30, 2024.

(2) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of June 30, 2024 with an aggregate carrying value, at cost of $ 352.8 million.

(3) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of June 30, 2024 with an aggregate carrying value, at cost of $ 263.9 million.

(4) Calculated on a weighted average basis for all credit facilities outstanding as of June 30, 2024 and December 31, 2023, respectively.

(1) Encumbered properties are as of September 30, 2024.

(2) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of September 30, 2024 with an aggregate carrying value, at cost of $ 353.6 million.

(3) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of September 30, 2024 with an aggregate carrying value, at cost of $ 264.2 million.

(4) Calculated on a weighted average basis for all credit facilities outstanding as of September 30, 2024 and December 31, 2023, respectively.

(5) The Company has eight active non-designated interest rate cap agreements with an aggregate notional amount of $ 369.2 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 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 June 30, 2024 and December 31, 2023.

As of June 30, 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 $ 649.6 million secured under the credit facilities.

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 loss ( see Note 7 — Derivatives and Hedging Activities for additional details).

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 OMF Warehouse Facility were 5.88 %, 5.93 % and 6.50 %, respectively, as of September 30, 2024 and 5.89 %, 5.95 % and 6.50 %, respectively, as of December 31, 2023.

As of September 30, 2024, the carrying value of the Company’s real estate investments, at cost was $ 2.5 billion, with $ 1.3 billion secured as collateral for mortgage notes payable and $ 650.4 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 June 30, 2024 were $ 621.0 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.

Unencumbered real estate investments, at cost as of September 30, 2024 were $ 523.4 million, although there can be no assurance as to the amount of liquidity the Company would be able to generate from using these une ncumbered assets as collateral for future mortgage loans, future advances under the credit facilities or other future financings.

Prior Credit Facility

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

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

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

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

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

The Company’s prior credit facility (the “Prior Credit Facility”) consisted of two components, a revolving credit facility and a term loan, which 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 Barclays OMF Loan (see Note 4 — Mortgage Notes Payable, Net for details) and the Prior Credit Facility was terminated.

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 year ended December 31, 2023.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

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

Fannie Mae Master Credit Facilities

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

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

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

As of June 30, 2024, $ 343.4 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.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

As of September 30, 2024, $ 342.0 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 minim um debt service coverage and maximum loan-to-value tests.

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.

5 unchanged sentences

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 June 30, 2024, $ 21.7 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 %.

These deposits will be refunded upon 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.

OMF Warehouse Facility

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

As of September 30, 2024, $ 21.7 million was outstanding under the OMF Warehouse Facility.

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

Borrowings under the OMF 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.

Non-Designated Interest Rate Caps

As of June 30, 2024 the Company had eight non-designated interest rate cap agreements with an aggregate current effective notional amount of $ 369.2 million which caps SOFR at 3.50 % with terms through January 2027.

As of September 30, 2024 the Company had eight non-designated interest rate cap agreements with an aggregate current effective notional amount of $ 369.2 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.

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 six months ended June 30, 2024, the Company paid total premiums of $ 1.7 million to renew one cap and to execute a new cap.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

During the nine months ended September 30, 2024, the Company paid total premiums of $ 1.7 million to renew one cap and to execute a new cap.

Future Principal Payments

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to June 30, 2024 and thereafter, on all of the Company’s outstanding mortgage notes payable and credit facilities:

Future Principal

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to September 30, 2024 and thereafter, on all of the Company’s outstanding mortgage notes payable and credit facilities:

Future Principal Payments

(In thousands) Mortgage Notes Payable Credit Facilities Total

6 unchanged sentences

Total $ 828,000 $ 363,659 $ 1,191,659

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The Company’s existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of its operating and administrative expenses, debt service obligations (including principal repayment), the repayment of the Promissory Note and distributions to holders of its Series A Preferred Stock and Series B Preferred Stock.

The Company closely monitors its current and anticipated liquidity position relative to its current and anticipated demands for cash and believes that it has sufficient current liquidity to meet its financial obligations for at least the next twelve months.

The Company expects to fund its future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by its operating activities, potential future advances under its Fannie Mae Master Credit Facilities and OMF Warehouse Facility, net cash provided by its property dispositions and potential new financings utilizing certain of its currently unencumbered properties.

Note 6 — Fair Value of Financial Instruments

12 unchanged sentences

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

However, as of June 30, 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.

However, as of September 30, 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.

2 unchanged sentences

In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

The following table presents information about the Company’s assets and liabilities measured at fair value as of June 30, 2024 and December 31, 2023, aggregated by the level in the fair value hierarchy within which those instruments fall.

September 30, 2024

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

June 30, 2024

September 30, 2024

Derivative assets, at fair value (non-designated) $ — $ 2,864 $ — $ 2,864

7 unchanged sentences

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

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2024.

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

Real Estate Investments - Held for Use

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 June 30, 2024 and December 31, 2023.

As of June 30, 2024, the Company owned 11 held for use properties ( eight MOBs, two 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.

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 nine properties ( eight MOBs and one SHOP) to reduce the carrying values to their estimated fair values.

One held for use property was impaired during the six months ended June 30, 2024.

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

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 September 30, 2024 and December 31, 2023.

As of September 30, 2024, the Company owned 20 held-for-use properties ( 20 OMFs) for which the Company had reconsidered their expected holding periods, all of which 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 one property to reduce the carrying value to its estimated fair value.

See Note 3 — Real Estate Investments, Net - Assets Held for Use and Impairment Charges for additional details.

Real Estate Investments - Held for Sale

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

The Company did not have any real estate investments classified as held for sale as of June 30, 2024 and December 31, 2023.

Financial Instruments Not Measured at Fair Value

The Company did not have any real estate investments classified as held for sale as of September 30, 2024 and December 31, 2023.

Financial Instruments Not Measured at Fair Va lue

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value.

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

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

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

3 unchanged sentences

Total debt $ 1,190,455 $ 1,160,696 $ 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.

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

Note 7 — Derivatives and Hedging Activities

7 unchanged sentences

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

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2024 and December 31, 2023:

(In thousands) Balance Sheet Location June 30,

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2024 and December 31, 2023:

(In thousands) Balance Sheet Location September 30,

2024 December 31, 2023

4 unchanged sentences

Cash Flow Hedges of Interest Rate Risk

As of June 30, 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.

As of September 30, 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 six months ended June 30, 2024 and the year ended December 31, 2023, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

During the nine months ended September 30, 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.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI”) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

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

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

(In thousands) 2024 2023 2024 2023

Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives $ 2,272 $ 10,131 $ 9,319 $ 6,661

Amount of (loss) gain recognized in accumulated other comprehensive income on interest rate derivatives

$ ( 6,588 ) $ 5,418 $ 2,731 $ 12,078

Amount of gain reclassified from accumulated other comprehensive income into income as interest expense $ 3,580 $ 5,023 $ 11,895 $ 13,648

4 unchanged sentences

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 six months ended June 30, 2024 and 2023, the Company reclassified $ 1.2 million and $ 1.1 million, respectively, from AOCI as decreases to interest expense, and no amounts remained in AOCI as of June 30, 2024.

For the nine months ended September 30, 2024 and 2023, the Company reclassifie d $ 1.2 million and $ 2.7 million, respectively, from AOCI as decreases to interest expense, and no amounts remained in AOCI as of September 30, 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 July 1, 2024 through June 30, 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.

During the next 12 months, from October 1, 2024 through September 30, 2025, the Company estimates that $ 8.3 million will be reclassified from AOCI as a decrease to interest expense or other comprehensive income relating to the “pay-fixed” swaps designated as derivatives.

Non-Designated Derivatives

The Company had the following outstanding interest rate derivatives with current effective notional amounts that were not designated as hedges in qualified hedging relationships as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Interest Rate Derivatives Number of Instruments Notional Amount (1)

3 unchanged sentences

8 $ 369,218 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 one-month SOFR to 3.50 % with terms through January 2027.

The actual one-month SOFR rates during the six months ended June 30, 2024, exceeded the strike price rate of 3.50 % and the Company received payments under these agreements.

The actual one-month SOFR rates during the nine months ended September 30, 2024 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 loss.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

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

As of June 30, 2024 and December 31, 2023, the Company had entered into eight and seven SOFR-based interest rate caps, respectively, with notional amounts of $ 369.2 million and $ 364.2 million, respectively, which limited one-month SOFR borrowings to 3.50 % and have varying maturities through January 2027.

In the six months ended June 30, 2024, the Company paid total premiums of $ 1.7 million to renew one cap with an aggregate notional amount of $ 58.1 million and to execute a new cap of $ 7.0 million which matures in January 2027.

As of September 30, 2024 and December 31, 2023, the Company had entered into eight and seven SOFR-based interest rate caps, respectively, with notional amounts of $ 369.2 million and $ 364.2 million, respectively, which limited one-month SOFR borrowings to 3.50 % and have varying maturities through January 2027.

In the nine months ended September 30, 2024, the Company paid total premiums of $ 1.7 million to renew one cap with an aggregate notional amount of $ 58.1 million and to execute a new cap of $ 7.0 million which matures in January 2027.

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

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

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 $ 0.9 million and $ 2.8 million for the three and six months ended June 30, 2024, and were $ 0.3 million and $ 0.1 million for the three and six months ended June 30, 2023.

During the six months ended June 30, 2024 and 2023, the Company received aggregate payments of $ 3.6 million and $ 2.3 million, respectively, related to its effective interest rate caps as LIBOR/SOFR exceeded the effective rates of the capped debt.

The loss on non-de signated derivatives was $ 2.4 million for the three months ended September 30, 2024 and gain on non-designated derivatives was $ 0.4 million for the nine months ended September 30, 2024.

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

During the nine months ended September 30, 2024 and 2023, the Company received aggregate payments of $ 5.4 million and $ 3.9 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 June 30, 2024 and December 31, 2023.

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, 2024 and December 31, 2023.

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

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

June 30, 2024 $ 31,568 $ — $ — $ 31,568 $ — $ — $ 31,568

September 30, 2024 $ 17,177 $ — $ — $ 17,177 $ — $ — $ 17,177

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

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

As of June 30, 2024, there were no derivatives in a net liability position.

As of September 30, 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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Note 8 — Stockholders’ Equity

As of June 30, 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 three months ended June 30, 2024 or the year ended December 31, 2023.

As of September 30, 2024 and December 31, 2023, the Company had 28,296,439 and 27,886,255 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 adjusted to reflect the Reverse Stock Split.

Since October 2020, the Company has issued an aggregate of approximately 5.2 million shares (as adjusted to reflect the Reverse Stock Split) 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, 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.

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.

In addition, 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.

See Note 1 — Organization for additional information.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Share Repurchase Program

Under the Company’s share repurchase program (the “SRP”), as amended from time to time, qualifying stockholders are able to sell their shares to the Company in limited circumstances.

The SRP permits investors to sell their shares back to the Company after they have held them for at least one year, subject to significant conditions and limitations.

Repurchases of shares of the Company’s common stock, when requested, are at the sole discretion of the Board.

Under the SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of the Company’s common stock or received their shares from the Company (directly or indirectly) through one or more non-cash transactions are considered for repurchase.

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

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

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

The Board suspended the SRP in August 2020 and no further repurchase requests under the SRP may be made unless and until the SRP is reactivated.

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

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.

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Pursuant to the DRIP, stockholders may elect to reinvest distributions paid in cash by the Company into shares of common stock.

No dealer manager fees or selling commissions are paid with respect to shares purchased under the DRIP.

The shares purchased pursuant to the DRIP have the same rights and are treated in the same manner as all of the other shares of outstanding common stock.

The Board may designate that certain cash or other distributions be excluded from reinvestment pursuant to the DRIP.

The Company has the right to amend the DRIP or terminate the DRIP with ten days ’ notice to participants.

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

During the six months ended June 30, 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.

During the nine months ended September 30, 2024 and the year ended December 31, 2023, the Company did no t issue any shares of common stock pursuant to the DRIP as the Company did not declare any cash distributions during those periods.

Stockholder Rights Plan

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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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Preferred Stock and Preferred Units

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

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

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

The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of June 30, 2024 and December 31, 2023.

The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of June 30, 2024 and December 31, 2023.

The Company also had 100,000 Series A Preferred Units outstanding as of June 30, 2024 and December 31, 2023, which were accounted for as a component of non-controlling interests.

Riley Principal Capital, LLC and in May 2021, the Board authorized the classification of 2,530,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with an offering in May 2021.

Also, in connection with an underwritten offering in October 2021, the Company classified and designated 3,680,000 shares of its authorized preferred stock in October 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, 2024 and December 31, 2023.

The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of September 30, 2024 and December 31, 2023.

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

From March 1, 2018 until June 30, 2020, the Company paid monthly distributions to stockholders at a rate equivalent to $ 3.40 (as adjusted to reflect the Reverse Stock Split) 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 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:

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

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

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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.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Note 9 — Related Party Transactions and Arrangements

As of June 30, 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 June 30, 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.

As of September 30, 2024 and December 31, 2023, the Special Limited Partner owned 2,678 shares of the Company’s outstanding common stock.

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

In connection with the Internalization, immediately prior to Closing, the Advisor transferred the 90 Common OP Units to the Advisor Parent.

As of September 30, 2024, the Advisor Parent held 90 Common OP Units.

Fees Incurred in Connection with the Operations of the Company

The Second Amended and Restated Advisory Agreement by and among the Company, the OP and the Advisor (as amended the “Second A&R Advisory Agreement”) took effect on February 17, 2017 and is automatically renewable for another ten-year term upon each ten-year anniversary unless the Second A&R Advisory Agreement is terminated (i) with notice of an election not to renew at least 365 days prior to the applicable tenth anniversary, (ii) in accordance with a change of control (as defined in the Second A&R Advisory Agreement) or a transition to self-management, (iii) by 67 % of the independent directors of the Board for cause, without penalty, with 45 days’ notice or (iv) with 60 days’ prior written notice by the Advisor for (a) a failure to obtain a satisfactory agreement for any successor to the Company to assume and agree to perform obligations under the Second A&R Advisory Agreement or (b) any material breach of the Second A&R Advisory Agreement of any nature whatsoever by the Company.

The Second Amended and Restated Advisory Agreement by and among the Company, the OP and the Advisor (as amended, the “Advisory Agreement”) took effect on February 17, 2017.

On July 25, 2019, the Company entered into Amendment No.

1 to the Second A&R Advisory Agreement (the “Advisory Agreement Amendment”) among the Company, the OP, and the Advisor.

The Advisory Agreement Amendment was unanimously approved by the Company’s independent directors.

Additional information on the Advisory Agreement Amendment is included later in this footnote under “ Professional Fees and Other Reimbursements .”

On July 1, 2024, the Company announced that, in anticipation of a potential future listing of the Company’s common stock on a national securities exchange, it provided notice in June 2024 to the Advisor of its intent to transition to self-management.

The Advisory Agreement will be terminated upon the effective date of the Internalization, which is expected to be no later than the fourth quarter of 2024.

Certain expenses have been incurred as a result of the Company’s decision to terminate the Advisory Agreement, which are discussed below in the section “Intent to Internalize Management — Termination Fees”.

1 to the Advisory Agreement (the “Advisory Agreement Amendment”), which was unanimously approved by the Company’s independent directors.

Additional information on the Advisory Agreement Amendment is included later in this Note under “ Professional Fees and Other Reimbursements .”

Immediately following the Closing of the Internalization, the Company and Advisor (now a wholly owned subsidiary of the Company following the Internalization) terminated the Advisory Agreement by mutual agreement.

Certain expenses have been incurred as a result of the Company’s decision to terminate the Advisory Agreement, which are discussed below in the section “Internalization — Termination Fees”.

The following describes certain expenses and fees that the Company was obligated to pay under the Advisory Agreement prior to its termination in connection with the Internalization.

Acquisition Expense Reimbursements

The Advisor may be reimbursed for services provided for which it incurs investment-related expenses, or insourced expenses.

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

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

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

This threshold has not been exceeded through June 30, 2024.

The Advisor was reimbursed for services provided for which it incurred investment-related expenses or insourced expenses.

The amount reimbursed for insourced expenses was not permitted to 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 reimbursed the Advisor for third-party acquisition expenses.

Under the Advisory Agreement, total acquisition expenses were not permitted to 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 was not exceeded through September 27, 2024, the date the Advisory Agreement was terminated.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 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”).

Under the limited partnership agreement of the OP (as amended from time to time, the “LPA”) and the previous 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 to the Advisor partnership units of the OP designated as “Class B Units” (“Class B Units”).

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

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and (z) the Advisor is still providing advisory services to the Company (the “Performance Condition”).

Unvested Class B Units will be forfeited immediately if:

Unvested Class B Units would be forfeited immediately if:

(a) the advisory agreement is terminated for any reason other than a termination without cause;

or (b) the advisory agreement is terminated by an affirmative vote of a majority of the Company’s independent directors without cause before the Economic Hurdle has been met.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Subject to approval by the Board, the Class B Units were issued to the Advisor quarterly in arrears pursuant to the terms of the LPA.

3 unchanged sentences

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

As of June 30, 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.

These cash distributions on Class B Units are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss until the Performance Condition is considered probable to occur.

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

As of September 30, 2024, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

The Advisor received cash distributions on each issued Class B Unit equivalent to the cash distribution paid, if any, on the Company’s common stock.

These cash distributions on Class B Units will be included in general and administrative expenses in the consolidated statements of operations and comprehensive loss if the Performance Condition is considered probable to occur.

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

2 unchanged sentences

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.

Effective February 17, 2017, the Second A&R Advisory Agreement requires the Company to pay the Advisor a base management fee, which is payable on the first business day of each month.

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

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

The base management fee is payable to the Advisor or its assignees in cash, Common OP Units or shares, or a combination thereof, the form of payment to be determined at the discretion of the Advisor and the value of any Common OP Unit or share to be determined by the Advisor acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.

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

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

The variable management/incentive fee is payable to the Advisor or its assignees in cash or shares, or a combination 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 six months ended June 30, 2024 or 2023.

Pursuant to the terms of the Internalization Agreement, the Company has agreed to pay an asset management fee of $ 10.9 million, representing the aggregate base management fees that the Company would have been required to pay to the Advisor during the six month notice period required to terminate the Second A&R Advisory Agreement (assuming the Closing occurs on or prior to December 25, 2024), beginning June 25, 2024 when the Company delivered notice to the Advisor of its intent to effect the Internalization, subject to certain closing adjustments.

HEALTHCARE TRUST, INC.

In connection with the Internalization, immediately prior to Closing, the Advisor transferred 359,250 Class B Units to the Advisor Parent.

Effective February 17, 2017, the Advisory Agreement required the Company to pay the Advisor a base management fee, which was payable on the first business day of each month.

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

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

Upon termination of the Advisory Agreement, the Company is no longer obligated to pay the base management fee.

In addition, the Advisory Agreement required 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 in the Advisory Agreement) 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.

No incentive fee was incurred for the nine months ended September 30, 2024 or 2023.

Upon termination of the Advisory Agreement, the Company is no longer obligated to pay a variable management/incentive fee.

In connection with the Internalization, on the Closing Date, the Advisor Parent received an asset management fee of $ 10.9 million, representing the aggregate Base Management Fee (as defined in the Advisory Agreement) that the Company would have been required to pay to the Advisor during the six month notice period required to terminate the Advisory Agreement, which began on June 25, 2024 when the Company delivered notice to the Advisor of its intention to effect the Internalization, inclusive of $ 5.5 million of Base Management Fees that the Company would have been required to pay to the Advisor during the remaining three month notice period following the Closing Date.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

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 June 30, 2024 and 2023, the Company incurred $ 3.0 million and $ 2.4 million, respectively of reimbursement expenses from the Advisor for providing administrative services.

During the six months ended June 30, 2024 and 2023, the Company incurred $ 7.0 million and $ 4.8 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

The Company reimbursed 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 received a separate fee.

This reimbursement included 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 were both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor.

During the three months ended September 30, 2024 and 2023, t he Company incurred $ 2.7 million and $ 2.5 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

During the nine months ended September 30, 2024 and 2023, the Company incurred $ 9.1 million and $ 6.4 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.

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 and six months ended June 30, 2024, the Company incurred $ 2.0 million and $ 4.9 million, respectively, 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 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 were awarded in May 2024 and are scheduled to be paid by the Advisor to its employees from September 2024 to March 2025.

To the extent that any amounts remain unpaid at the time of the Closing of the Internalization, the Company will receive such amounts from the Advisor as a credit to its Closing Payments.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Reimbursements for the cash portion of 2024 bonuses paid by the Advisor to its employees, or employees of its affiliates, are being expensed and reimbursed on a monthly basis during the year ended December 31, 2024 in accordance with estimates provided by the Advisor.

To the extent that any amounts remain unpaid at the time of the Closing of the Internalization, the Company will receive such amounts from the Advisor as a credit to its Closing Payments.

These amounts were awarded in May 2024 and were scheduled to be paid by the Advisor to its employees from September 2024 to March 2 025.

Following the Internalization, pursuant to the Internalization Agreement, the Advisor Parent remitted the unpaid portion of these amounts to the Company, which subsequently paid out such amounts in October 2024 to the employees who joined the Company from the Advisor as part of the Internalization.

For the cash portion of 2024 accrued bonuses for the Advisor’s employees, or employees of its affiliates, the Company previously reimbursed the Advisor for such amounts in accordance with estimates provided by the Advisor.

Following the Internalization, pursuant to the Internalization Agreement, the Advisor Parent remitted such amounts to the Company for subsequent payment to the employees who joined the Company from the Advisor as part of the Internalization.

Property Management Fees

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

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

In no event will the Company pay the Property Manager or any affiliate of the Property Manager both a property management fee and an oversight fee with respect to any particular property.

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.

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.

The A&R Property Management Agreement automatically renews for successive one-year terms unless any party provides written notice of its intention to terminate the A&R Property Management Agreement.

The Company provided the Property Manager with notice of its intent to self-manage during the three months ended June 30, 2024 and, as a result, the current term of the A&R Property Management Agreement will expire the earlier of the effective date of the Internalization or February 17, 2025.

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.

Pursuant to the terms of the Internalization Agreement, the Company has agreed to pay a property management fee of $ 3.9 million, representing the aggregate property management fees that the Company would have been required to pay to the Property Manager through the current term of the Property Management Agreement, subject to certain closing adjustments.

HEALTHCARE TRUST, INC.

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

The Property Management Agreement automatically renews for successive one-year terms unless any party provides written notice of its intention to terminate the Property Management Agreement.

The Company provided the Property Manager with notice of its intent to self-manage in June 2024, and, in connection with the Internalization, the Advisor Parent contributed all its equity interests in the Property Manager to the Company.

Following the Closing of the Internalization, the Property Management Agreement remains in place as an intercompany agreement.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Promissory Note

In connection with the consideration payable to the Advisor Parent under the Internalization Agreement, the Company issued the Promissory Note in a principal amount of $ 30.3 million to the Advisor Parent on the Closing Date.

The Promissory Note is a senior unsecured obligation of the Company and ranks equal in right of payment with all of the Company’s existing and future indebtedness.

The Promissory Note bears interest per annum of Term SOFR (as defined in the Promissory Note) plus 1.25 % until January 1, 2025 and Term SOFR plus 3.25 % on and after January 1, 2025, with such interest payable monthly.

Beginning on January 2, 2025, the Company will be required to make monthly payments of principal to the extent of its available cash existing on the applicable payment date.

The Promissory Note matures on June 28, 2025 and may be prepaid, in whole or in part, prior to the maturity date without any pre-payment penalties.

The Promissory Note is subject to customary events of default, the occurrence of which shall allow the Advisor Parent to declare all amounts outstanding under the Promissory Note immediately due and payable.

The Promissory Note is included in accounts payable and accrued expenses on the balance sheet as of September 30, 2024,

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

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

2024 2023 2024 2023

(In thousands) Incurred Incurred Incurred

Incurred June 30,

Incurred September 30,

2024 December 31, 2023

7 unchanged sentences

1,069 1,155 3,561 3,132 ( 22 ) 97

Termination fees (3)

Termination fees (including the Promissory Note) (3)

8,409 — 106,650 — 30,267 —

1 unchanged sentence

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

Includes $ 2.0 million and $ 1.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 4.9 million and $ 3.2 million for the six months ended June 30, 2024 and 2023, respectively, subject to the Capped Reimbursement Amount.

(2) The three months ended June 30, 2024 and 2023 includ es $ 0.1 million and $ 49,000 respectively, and the six months ended June 30, 2024 and 2023 includes $ 0.6 million and $ 0.1 million , respectively, of leasing commissions which are capitalized and included in deferred costs, net on the Company’s consolidated balance sheets .

(3) The three and six months ended June 30, 2024 includes an estimate for termination fees of $ 98.2 million, resulting from the Company’s intent to internalize its management functions, which is payable within 30 days of the effective date of the termination of the Advisory Agreement.

Please see the below section “Intent to Internalize Management — Termination Fees” for additional information.

Intent to Internalize Management

On August 6, 2024, the Company entered into the Internalization Agreement with Merger Sub, the Advisor and the Advisor Parent.

The Company expects the Internalization to close no later than the fourth quarter of 2024.

Closing Payments

Pursuant to the terms of the Internalization Agreement, the Company is required to pay the Advisor Payment certain fees in connection with the Internalization.

All fees will be due within 30 days after the Closing.

To the extent the Closing Payments exceed the Company’s Available Cash, the Company has agreed to pay the Advisor Parent the Closing Date Cash Consideration, and the Company shall issue to Advisor Parent a promissory note in a principal amount equal to the difference between the Closing Date Cash Consideration and the Closing Payments, as may be adjusted for any post-Closing true-ups on the Closing Payments.

The Company intends to fund the Closing Date Cash Consideration through a combination of cash on hand and the net proceeds from certain anticipated strategic dispositions.

The Company expects to pay the Advisor such fees in connection with the Closing, but there can be no assurance that the Internalization closes on its anticipated time frame, or subject to the terms described herein, or at all.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Self-Management Termination Fee

Upon a termination by the Company in connection with a transition to self-management, the Company is required to pay the Advisor Parent a self-management termination fee equal to (i) $ 15.0 million plus (ii) the product of four multiplied by the Subject Fees, provided that the transition fee shall not exceed an amount equal to 4.5 multiplied by the Subject Fees.

Such fee is a component of the Closing Payments contemplated by the Internalization Agreement.

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.

The Company has recorded the transition fee agreed upon in the Internalization Agreement of $ 98.2 million, in the three and six months ended June 30, 2024.

Asset Management Fees, Property Management Fees and Other Closing Payments

Pursuant to the terms of the Internalization Agreement, the Company is required to pay to the Advisor Parent (i) an asset management fee of $ 10.9 million, representing the aggregate base management fees that the Company would have been required to pay to the Advisor during the six month notice period required to terminate the Second A&R Advisory Agreement (assuming the Closing occurs on or prior to December 25, 2024), and (ii) a property management fee of $ 3.9 million, representing the aggregate property management fees that the Company would have been required to pay to the Property Manager through the current term of the Property Management Agreement, in each case subject to certain closing adjustments.

Includes $ 2.2 million and $ 2.0 million for the three months ended September 30, 2024 and 2023, respectively, and $ 7.1 million and $ 5.2 million for the nine months ended September 30, 2024 and 2023, respectively.

(2) The three months ended September 30, 2024 and 2023 includ es $ 0.1 million and $ 0.2 million, respectively, and the nine months ended September 30, 2024 and 2023 includes $ 0.8 million and $ 0.4 million, respectively, of leasing commissions which are capitalized and included in deferred costs, net on the Company’s consolidated balance sheets.

(3) The nine months ended September 30, 2024 includes the Closing Payments payable to the Advisor pursuant to the terms of the Internalization, including an internalization fee of $ 98.2 million, an asset management fee of $ 5.5 million and a property management fee of $ 2.9 million.

See Note 1 — Organization — Internalization for additional information.

Also reflects the Promissory Note issued to the Advisor Parent in connection with the Internalization.

Internalization

For details regarding the terms of the Internalization, see Note 1 — Organization — Internalization.

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

1 unchanged sentence

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

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

Subordinated Participation in Net Sales Proceeds

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

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

No such distribution was incurred during the three or nine months ended September 30, 2024 or 2023.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Subordinated Participation in Net Sales Proceeds

No such participation in net sales proceeds became due and payable during the three or nine months ended September 30, 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 will reduce dollar for dollar the amount of the subordinated incentive listing distribution described above.

Termination Fees

Under the operating partnership agreement of the OP, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0 % of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of 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.

The Special Limited Partner is able to elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.

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

Under the LPA, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner was entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0 % of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of 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.

However, in accordance with the terms of the LPA, in connection with the Internalization and the Company’s termination of the Advisory Agreement, the Special Limited Partner deferred its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.

Note 10 — Economic Dependency

Under various agreements, subject to the pending Internalization, the Company has engaged the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company and asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations.

As a result of these relationships, the Company is dependent upon the Advisor and its affiliates.

In the event that the Advisor and its affiliates are unable to provide the Company with the respective services prior to the Internalization, the Company will be required to find alternative providers of these services.

Under various agreements, prior to the Internalization, the Company engaged the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that were essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company and asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations.

As a result of these relationships, the Company was dependent upon the Advisor and its affiliates prior to the Internalization.

Note 11 — Equity-Based Compensation

Restricted Share Plan

The Company has adopted an employee and director incentive restricted share plan (as amended from time to time, the “RSP”), which provides the Company with the ability to grant awards of restricted shares of common stock (“restricted shares”) to the Company’s directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.

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).

The Company adopted an employee and director incentive restricted share plan (as amended from time to time, the “RSP”), which provided the Company with the ability to grant awards of restricted shares of common stock (“restricted shares”) to the Company’s directors, officers and employees, employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.

The RSP expired in accordance with its terms in February 2023.

The total number of shares of common stock that may be subject to awards granted under the RSP could 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 could not exceed 4.2 million shares (as such number may be further adjusted for stock splits, stock dividends, combinations and similar events).

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 June 30, 2024 and activity for the period presented:

The following table reflects the amount of restricted shares outstanding as of September 30, 2024 and activity for the period presented (as adjusted to reflect the Reverse Stock Split):

Number of Shares of Common Stock Weighted Average Issue Price

1 unchanged sentence

Stock dividend 196 56.00

Unvested, June 30, 2024 52,428 $ 16.90

As of June 30, 2024, the Company had $ 0.2 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 0.1 years.

Compensation expense related to restricted shares was $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2024 and 2023.

HEALTHCARE TRUST, INC.

Vested ( 13,107 ) 67.60

Unvested, September 30, 2024 — $ —

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

As of September 30, 2024, the Company did not have any remaining unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

Compensation expense related to restricted shares was $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2024, respectively, and $ 0.2 million and $ 0.7 million for the three and nine months ended September 30, 2023, respectively.

Other Share-Based Compensation

1 unchanged sentence

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

No such shares were issued during the six months ended June 30, 2024 or 2023.

No such shares were issued during the nine months ended September 30, 2024 or 2023.

Note 12 — Accumulated Other Comprehensive Income

4 unchanged sentences

Amount of gain reclassified from accumulated other comprehensive income ( 11,895 )

Balance, June 30, 2024

Balance, September 30, 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.

2 unchanged sentences

Balance as of

(In thousands) June 30, 2024 December 31, 2023

(In thousands) September 30, 2024 December 31, 2023

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

4 unchanged sentences

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

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

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

(in thousands) 2024 2023 2024 2023

4 unchanged sentences

Net loss attributable to non-controlling interests $ 77 $ 14 $ 529 $ 45

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Non-Controlling Interests in the OP

1 unchanged sentence

The securities held by the Company are eliminated in consolidation.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Series A Preferred Units

1 unchanged sentence

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

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

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

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

1 unchanged sentence

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 and six months ended June 30, 2024 and 2023, Series A Preferred Unit holders were paid $ 46,000 and $ 0.1 million, respectively.

During both the three and nine months ended September 30, 2024 and 2023, Series A Preferred Unit holders were paid $ 46,000 and $ 0.1 million, respectively.

Common OP Units

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

As of June 30, 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.

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

In connection with the Internalization, immediately prior to Closing, the Advisor transferred the 90 Common OP Units to the Advisor Parent.

As of September 30, 2024, the Advisor Parent held 90 Common OP Units.

In November 2014, the Company partially funded the purchase of an OMF 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.

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

1 unchanged sentence

Dur ing the six months ended June 30, 2024 and 2023 , Common OP Unit non-controlling interest holders were no t paid any cash distribu tions.

Dur ing the nine months ended September 30, 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 June 30, 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.

The 405,998 Common OP Units outstanding as of September 30, 2024 would be redeemable for 124,161 shares of common stock, giving effect to adjustments for the impact of the stock dividends through January 2024 and the Reverse Stock Split.

Non-Controlling Interests in Property Owning Subsidiaries

4 unchanged sentences

A non-controlling interest is recorded for the investor’s ownership interest in the properties.

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

The following table summarizes the activity related to investment arrangements with the unaffiliated third parties:

Distributions

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

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

Property Name

(Dollar amounts in thousands)

Investment Date June 30, 2024 June 30, 2024 June 30, 2024 December 31, 2023 2024 2023

Plaza Del Rio Medical Office Campus Portfolio (1)

Investment Date September 30, 2024 September 30, 2024 September 30, 2024 December 31, 2023 2024 2023

Plaza Del Rio Outpatient Medical Campus Portfolio (1)

$ 751 6.9 % $ 12,788 $ 12,687 — —

(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.

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

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 June 30, Six Months Ended June 30,

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 and the Reverse Stock Split (see Note 1 — Organization and Note 8 — Stockholders’ Equity for additional details):

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

2024 2023 2024 2023

5 unchanged sentences

$ ( 1.56 ) $ ( 0.69 ) $ ( 6.47 ) $ ( 2.05 )

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

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

1 unchanged sentence

Series A Preferred Units are non-participating.

HEALTHCARE TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

2024 2023 2024 2023

8 unchanged sentences

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

Th ere were 52,428 and 100,221 unvested restricted shares outstanding, respectively, as of June 30, 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 June 30, 2024 and 2023.

Th ere were no and 50,871 unvested restricted shares outstanding as of September 30, 2024 and 2023, respectively.

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

There were 405,998 Common OP Units outstanding as of September 30, 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 June 30, 2024 and 2023.

These Class B Units were unvested as of June 30, 2024 and 2023 (see Note 9 — Related Party Transactions for additional information).

(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 and the Reverse Stock Split (see Note 1 — Organization for additional details).

There were 359,250 Class B Units outstanding as of September 30, 2024 and 2023.

These Class B Units were unvested as of September 30, 2024 and 2023 (see Note 9 — Related Party Transactions and Arrangements for additional information).

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Note 15 — Segment Reporting

The disclosures below for the six months ended June 30, 2024 and 2023 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

MOBs and SHOPs.

The disclosures below for the three and nine months ended September 30, 2024 and 2023 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

OMFs and SHOPs.

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

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

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

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

8 unchanged sentences

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

The following table presents the operating financial information for the Company’s two business segments for the six months ended June 30, 2024 and 2023:

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

The following table presents the operating financial information for the Company’s two business segments for the three and nine months ended September 30, 2024 and 2023:

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

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

Segment income $ 8,886 $ 7,082 $ 26,009 $ 23,952

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

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 June 30, Six Months Ended June 30,

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

(in thousands) 2024 2023 2024 2023

Revenue from tenants:

MOBs $ 34,671 $ 33,920 $ 69,270 $ 67,530

OMFs $ 34,303 $ 33,657 $ 103,573 $ 101,187

SHOPs 54,637 52,029 162,483 157,958

2 unchanged sentences

Segment income:

MOBs $ 24,944 24,482 $ 49,843 49,137

OMFs $ 23,647 24,278 $ 73,490 73,415

SHOPs 8,886 7,082 26,009 23,952

2 unchanged sentences

Operating fees to related parties

( 6,391 ) ( 6,397 ) ( 19,181 ) ( 19,153 )

Termination fees to related parties

( 8,409 ) — ( 106,650 ) —

Acquisition and transaction related ( 5,187 ) ( 173 ) ( 5,686 ) ( 384 )

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Depreciation and amortization ( 20,720 ) ( 20,776 ) ( 63,386 ) ( 61,520 )

Gain on sale of real estate investment ( 225 ) ( 306 ) ( 225 ) ( 191 )

Gain (loss) on sale of real estate investment

1,579 ( 173 ) 1,354 ( 364 )

Interest expense ( 18,007 ) ( 15,720 ) ( 52,142 ) ( 50,208 )

Interest and other income 548 258 1,077 576

Gain (loss) on non-designated derivatives 882 286 2,833 104

Income tax (expense) benefit ( 65 ) ( 41 ) ( 135 ) ( 87 )

(Loss) gain on non-designated derivatives

( 2,384 ) 406 449 510

Income tax expense

— ( 157 ) ( 135 ) ( 244 )

Net loss attributable to non-controlling interests 77 14 529 45

Preferred stock dividends ( 3,450 ) ( 3,449 ) ( 6,900 ) ( 6,899 )

Preferred stock distributions

( 3,450 ) ( 3,450 ) ( 10,350 ) ( 10,349 )

Net loss attributable to common stockholders $ ( 44,142 ) $ ( 19,561 ) $ ( 183,058 ) $ ( 57,829 )

HEALTHCARE TRUST, INC.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

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

(In thousands) June 30, 2024 December 31, 2023

(In thousands) September 30, 2024 December 31, 2023

Investments in real estate, net:

MOB Segment $ 1,102,146 $ 1,114,963

OMF Segment $ 1,040,203 $ 1,114,963

SHOP Segment 774,657 824,694

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

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

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

(In thousands) 2024 2023 2024 2023

MOB Segment $ 2,268 $ 1,742 $ 3,362 $ 2,964

OMF Segment $ 2,764 $ 1,686 $ 6,126 $ 4,650

SHOP Segment 2,477 3,172 10,274 9,348

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Note 16 — Commitments and Contingencies

As of June 30, 2024, the Company had seven operating and six direct financing lease agreements.

As of September 30, 2024, the Company had seven operating and six direct financing lease agreements.

The seven operating leases have durations, including assumed renewals, ranging from 18.1 years to 83.0 years, excluding an adjacent parking lot lease with a term of 2.0 years.

The Company did not enter into any additional ground leases during the six months ended June 30, 2024.

As of June 30, 2024, the Company had ROU assets and liabilities of $ 7.6 million and $ 8.1 million, respectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively on the Company’s consolidated balance sheets.

The Company did not enter into any additional ground leases during the nine months ended September 30, 2024.

As of September 30, 2024, the Company had ROU assets and liabilities of $ 7.6 million and $ 8.1 million, re spectively, 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 33.2 years and a weighted-average discount rate of 7.38 % as of June 30, 2024.

For each of the three months ended June 30, 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.

For each of the six months ended June 30, 2024 and 2023, the Company paid cash of $ 0.4 million and recorded expense of $ 0.4 million.

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 32.4 years and a weighted-average discount rate of 7.35 % as of September 30, 2024.

For each of the three months ended September 30, 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.

For each of the nine months ended September 30, 2024 and 2023, the Company paid cash of $ 0.6 million and recorded expense of $ 0.6 million.

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.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

The following table reflects the base cash rental payments due from the Company for the next five years as of June 30, 2024:

September 30, 2024

The following table reflects the base cash rental payments due from the Company for the next five years as of September 30, 2024:

Future Base Rent Payments

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Total present value of minimum lease payments $ 8,122 $ 4,830

(1) The direct finance lease liability is included in accounts payable and accrued expenses on the balance sheet as of June 30, 2024.

(1) The direct finance lease liability is included in accounts payable and accrued expenses on the balance sheet as of September 30, 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 the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters.

There are no material legal or regulatory proceedings pending or known to be contemplated against the Company or its properties.

As of September 30, 2024, there are no material legal or regulatory proceedings pending or known to be contemplated against the Company or its properties.

Environmental Matters

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

As of June 30, 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.

As of September 30, 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 those listed below:

Property Dispositions

Subsequent to June 30, 2024, the Company disposed of seven MOBs in Illinois for a contract sales price of $ 50.5 million.

These proceeds are available for general and corporate uses, including for the potential partial payment of the Closing Payments when they become payable.

Internalization Agreement

On August 6, 2024, the Company entered into the Internalization Agreement with the Merger Sub, the Advisor and the Advisor Parent.

A summary of the terms of the agreement can be found in Not e 1 — Organization and Note 9 — Related Party Transactions and Agreements .

The Company disposed of one OMF in Indiana subsequent to September 30, 2024 for a contract sales price of $ 2.4 million .

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

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Healthcare Trust, Inc.

and the notes thereto.

As used herein, the terms the “Company,” “we,” “our” and “us” refer to Healthcare Trust, Inc., a Maryland corporation, including, as required by context, Healthcare Trust Operating Partnership, LP (our “OP”), a Delaware limited partnership, and its subsidiaries.

The Company is externally managed by Healthcare Trust Advisors, LLC (our “Advisor”), a Delaware limited liability company.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of National Healthcare Properties, Inc.

(formerly known as Healthcare Trust, Inc.) and the notes thereto.

As used herein, the terms the “Company,” “we,” “our” and “us” refer to National Healthcare Properties, Inc., a Maryland corporation, including, as required by context, National Healthcare Properties Operating Partnership, LP (our “OP”), a Delaware limited partnership, and its subsidiaries.

Prior to consummation of the Internalization (as defined below), the Company was externally managed by Healthcare Trust Advisors, LLC (the “Advisor”), a Delaware limited liability company.

Capitalized terms used herein, but not otherwise defined, have the meaning ascribed to those terms in “Part I — Financial Information” included in the notes to the consolidated financial statements and contained herein.

Forward-Looking Statements

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

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

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

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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

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

We believe these forward-looking statements are reasonable;

however, you should not place undue reliance on any forward-looking statements, which are based on current expectations.

Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

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

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that any potential future acquisitions 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, 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.

federal income tax purposes has qualified as a real estate investment trust (“REIT”).

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

As of June 30, 2024, we owned 207 properties located in 32 states and comprised of 9.0 million rentable square feet.

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

Our Advisor manages our day-to-day business with the assistance of Healthcare Trust Properties, LLC (our “Property Manager”).

Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us.

We also reimburse these entities for certain expenses they incur in providing these services to us.

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

Some of the additional 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 a real estate investment trust (“REIT”) for U.S.

federal income tax purposes.

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

As of September 30, 2024, we owned 198 properties located in 32 states and comprised of 8.6 million rentable square feet.

Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries.

Prior to consummation of the Internalization on September 27, 2024, our former Advisor managed our day-to-day business with the assistance of our property manager, Healthcare Trust Properties, LLC (the “Property Manager”).

Prior to the Internalization, the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”) and these related parties received compensation and fees for providing services to us.

In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce after terminating the Advisory Agreement;

the Property Manager became our wholly-owned subsidiary as a result of the Internalization and the Property Management Agreement remains in place as an intercompany agreement (see Note 9 — Related Party Transactions and Arrangements in Part I, Item 1 in this Quarterly Report on Form 10-Q).

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

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

outpatient medical facilities (“OMFs”) and senior housing operating properties (“SHOPs”).

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

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

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

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

As of June 30, 2024, we had four eligible independent contractors operating 45 SHOPs.

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

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

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

As of September 30, 2024, we had four eligible independent contractors operating 44 SHOPs.

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

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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.

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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.

Since October 2020, we issued an aggregate of approximately 5.2 million shares as stock dividends (as adjusted to reflect the Reverse Stock Split (as defined below)).

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.

Intent to Internalize Management

On July 1, 2024, we announced that, in anticipation of a potential future listing of our common stock on a national securities exchange, we provided notice to the Advisor in June 2024 of our intent to transition to self-management and internalize management functions (the “Internalization”).

On August 6, 2024, we entered into the Internalization Agreement with the Merger Sub, the Advisor and the Advisor Parent (each of such terms as defined in Note 1 — Organization ).

We expect the Internalization to take effect no later than the fourth quarter of 2024.

There can be no assurance that the Internalization will close within the anticipated time frame, or at all, or that we will be able to list our shares of common stock on a national securities exchange.

For additional information about the Internalization, including fees we expect to incur in connection therewith, please see Note 9 — Related Party Transactions and Arrangements.

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.

Further, the significant increase in the rate of inflation in recent years brought about by labor shortages, supply chain disruptions and increases in interest rates have had, and may continue to have, adverse impacts on our 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 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 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 76.4% as of June 30, 2024.

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

As of Number of Properties (1)

Rentable Units Percentage Leased

December 31, 2019 59 4,926 85.1%

March 31, 2020 63 5,198 84.4%

June 30, 2020 63 5,198 79.2%

September 30, 2020 67 5,350 77.4%

December 31, 2020 59 4,878 74.5%

March 31, 2021 55 4,682 72.0%

June 30, 2021 54 4,530 73.2%

September 30, 2021 54 4,494 74.3%

December 31, 2021 54 4,494 74.1%

March 31, 2022 50 4,378 75.9%

June 30, 2022 50 4,374 76.3%

September 30, 2022 50 4,374 75.8%

December 31, 2022 50 4,374 75.1%

March 31, 2023 50 4,374 73.3%

June 30, 2023 (2)

46 4,164 73.3%

September 30, 2023 (2)

46 4,164 74.1%

December 31, 2023 (2)

46 4,164 74.1%

March 31, 2024 (2)

46 4,164 75.3%

June 30, 2024 (2)

45 4,069 76.4%

(1) Exclusive of two land parcels.

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

Contract Labor and Wage Expenses

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

During the year ended December 31, 2022, our third party operators needed to increase their use of temporary contract labor and agencies, and the amount paid for overtime, training and bonus wages, in response to a shortage of workers, the cost of labor generally, lack of qualified personnel that our third party operators are able to employ on a permanent basis and training hours and other onboarding costs for permanent staff which replaced previously utilized contract and agency labor.

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 $0.3 million, from $0.6 million in the three months ended June 30, 2023, to $0.3 million as compared to the three months ended June 30, 2024.

However, these costs were offset by increased wage costs for direct employees of our third party operators of $1.0 million in the three months ended June 30, 2024 compared to the three months ended June 30, 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.

Internalization

On September 27, 2024, we consummated the Internalization after, among other things, terminating the Advisory Agreement with the Advisor.

For more information regarding the Internalization, including the fees paid therewith, see Note 1 — Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q.

As a result of the Internalization, our termination of the Advisory Agreement and the Property Manager becoming our wholly-owned subsidiary, we will no longer incur the asset management, property management and other fees and expenses that we were obligated to pay to the Advisor and its affiliates prior to the Internalization.

With an internalized workforce, we have incurred and will continue to incur costs for employee compensation and other general and administrative expenses.

Reverse Stock Split

Effective September 30, 2024, we effected a reverse stock split of our common stock (the “Reverse Stock Split”).

Upon the effectiveness of the Reverse Stock Split, every four shares of our issued and outstanding common stock automatically combined and reclassified into one issued and outstanding share of common stock.

All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.

Significant Accounting Estimates and Critical Accounting Policies

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Recently Issued Accounting Pronouncements

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

The following table presents certain additional information about the properties we owned as of June 30, 2024:

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, 2024:

Portfolio Number

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(In thousands)

MOB Segment 160 5,193,996 90.3% 4.5 $ 1,478,570

OMF Segment 153 4,867,928 90.3% (5) 4.3 $ 1,416,180

SHOP Segment 45 (4) 3,683,949 79.2% (5) N/A 1,100,145

Total Portfolio 198 8,551,877 $ 2,516,325

(1) Inclusive of leases signed but not yet commenced as of June 30, 2024.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of June 30, 2024.

(3) Gross asset value represents total real estate investments, at cost ($2.6 billion total as of June 30, 2024) net of gross market lease intangible liabilities ($21.0 million total as of June 30, 2024).

(1) Inclusive of leases signed but not yet commenced as of September 30, 2024.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of September 30, 2024.

(3) Gross asset value represents total real estate investments, at cost ($2.5 billion total as of September 30, 2024) net of gross market lease intangible liabilities ($23.5 million total as of September 30, 2024).

Cumulative impairment charges are reflected within gross asset value.

(4) Includes two parcels of land

(5) Weighted by unit count as of June 30, 2024.

As of June 30, 2024, we had 4,069 rentable units in our SHOP segment.

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

N/A Not applicable.

(4) Includes one parcel of land.

As of September 30, 2024, we had 3,919 rentable units in our SHOP segment.

The SHOP segment excludes one closed SHOP with 39 rentable units, one SHOP with 20 units under renovation and land parcel.

(5) Percentage leased for the OMF segment is presented as of the end of the peri od shown;

percentage leased for the SHOP segment is presented for the duration of the period shown.

Same Store Properties

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

As of June 30, 2024, we owned 207 properties.

There were 196 properties owned for the entire year ended December 31, 2023 and the six months ended June 30, 2024 (our “Same Store Properties”), including two vacant land parcels.

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

The following table presents a roll-forward of our properties owned from January 1, 2023 to June 30, 2024:

MOB SHOP Total

As of September 30, 2024, we owned 198 properties.

There were 187 properties owned for the entire year ended December 31, 2023 and the nine months ended September 30, 2024 (our “Same Store Properties”), including one vacant land parcel.

Since January 1, 2023, we acquired 11 properties (our “Acquired Properties”) and disposed of 15 properties (our “Disposed Properties”).

The following table presents a roll-forward of our properties owned from January 1, 2023 to September 30, 2024:

OMF SHOP Total

Number of properties, January 1, 2023

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Number of properties, December 31, 2023

Acquisition activity during the six months ended June 30, 2024

Disposition activity during the six months ended June 30, 2024

Number of properties, June 30, 2024

Acquisition activity during the nine months ended September 30, 2024

Disposition activity during the nine months ended September 30, 2024

Number of properties, September 30, 2024

Number of Same Store Properties 142 45 187

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

Net loss attributable to common stockholders was $119.9 million and $20.8 million, respectively, for the three months ended June 30, 2024, and 2023.

The following table shows our results of operations for the three months ended June 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended June 30, Increase (Decrease)

Comparison of the Three Months Ended September 30, 2024 and 2023

Net loss attributable to common stockholders was $44.1 million and $19.6 million, respectively, for the three months ended September 30, 2024, and 2023.

The following table shows our results of operations for the three months ended September 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended September 30, Increase (Decrease)

(Dollars in thousands) 2024 2023 $

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Operating fees to related parties

6,391 6,397 (6)

Termination fees to related parties

8,409 — 8,409

Acquisition and transaction related 5,187 173 5,014

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Total expenses 111,445 86,425 25,020

Operating (loss) income before loss on sale of real estate investments (100,215) 1,119 (101,334)

Loss on sale of real estate investments (225) (306) 81

Operating (loss) income (100,440) 813 (101,253)

Operating loss before loss on sale of real estate investments

(22,505) (739) (21,766)

Gain (loss) on sale of real estate investments

1,579 (173) 1,752

Operating loss

(20,926) (912) (20,014)

Other income (expense):

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Interest and other income 548 258 290

Gain on non-designated derivatives 882 286 596

(Loss) gain on non-designated derivatives

(2,384) 406 (2,790)

Total other expenses (19,843) (15,056) (4,787)

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Net loss attributable to common stockholders $ (44,142) $ (19,561) $ (24,581)

Segment Results — Medical Office Buildings

The following table presents the revenue and property operating and maintenance expense and the period to period change within our MOB segment for the three months ended June 30, 2024 and 2023:

Segment Results — Outpatient Medical Facilities

The following table presents the revenue and property operating and maintenance expense and the period to period change within our OMF segment for the three months ended September 30, 2024 and 2023:

Same Store (1)

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Segment Total (4)

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

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

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)

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

Revenue from tenants $ 33,804 $ 32,396 $ 1,408 $ 533 $ 7 $ 526 $ (35) $ 1,254 $ (1,289) $ 34,302 $ 33,657 $ 645

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_______________

(1) Our MOB segment included 149 Same Store Properties.

(2) Our MOB segment included 11 Acquired Properties.

(3) Our MOB segment included one Disposed Property.

(4) Our MOB segment included 160 total 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.

(1) Our OMF segment included 142 Same Store Properties.

(2) Our OMF segment included 11 Acquired Properties.

(3) Our OMF segment included eight Disposed Properties.

(4) Our OMF segment included 153 total properties.

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

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

Pursuant to many of our lease agreements in our OMFs, 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 three months ended June 30, 2024, revenue from tenants increased by $0.8 million in our MOB segment as compared to the three months ended June 30, 2023, which was primarily driven by an increase in revenue from tenants of $0.5 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 June 30, 2024 as compared to the three months ended June 30, 2023.

During the three months ended September 30, 2024, revenue from tenants decreased by $0.6 million in our OMF segment as compared to the three months ended September 30, 2023, which was primarily driven by a $1.3 million decrease in revenue from tenants associated with our Disposed Properties, partially offset by an increase in revenue from tenants of $1.4 million from 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 September 30, 2024 as compared to the three months ended September 30, 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.

During the three months ended June 30, 2024, property operating and maintenance expenses increased by $0.3 million in our MOB segment as compared to the three months ended June 30, 2023.

This increase was primarily driven by our Same Store Properties.

During the three months ended September 30, 2024, property operating and maintenance expenses increased by $1.3 million in our OMF segment as compared to the three months ended September 30, 2023.

This increase was primarily driven by our Same Store Properties, partially offset by our Disposed Properties.

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

Segment Results — Seniors Housing Operating Properties

The following table presents the revenue and property operating and maintenance expenses and the period to period change within our SHOP segment for the three months ended June 30, 2024 and 2023:

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, 2024 and 2023:

Same Store (1)

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Segment Total (4)

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

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

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

Revenue from tenants $ 52,731 $ 49,243 $ 3,488 $ — $ — $ — $ 1,906 $ 2,786 $ (880) $ 54,637 $ 52,029 $ 2,608

1 unchanged sentence

Segment income $ 8,594 $ 6,937 $ 1,657 $ — $ — $ — $ 292 $ 145 $ 147 $ 8,886 $ 7,082 $ 1,804

(1) Our SHOP segment included 47 Same Store Properties (including two land parcels).

(1) Our SHOP segment included 45 Same Store Properties (including one land parcel).

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

(3) Our SHOP segment included five Disposed Properties.

(4) Our SHOP segment included 47 total properties (including two land parcels).

(3) Our SHOP segment included seven Disposed Properties.

(4) Our SHOP segment included 45 total properties (including one land parcel).

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

1 unchanged sentence

Revenue from Tenants

During the three months ended June 30, 2024, revenue increased $2.0 million in our SHOP segment as compared to the three months ended June 30, 2023, primarily from an increase in revenue from tenants of $3.0 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $1.0 million from our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, as well as by marginally higher occupancy in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Additionally, we offered more rent concessions to drive occupancy during the three months ended June 30, 2024, which amounted to $1.6 million as compared to $0.8 million during the three months ended June 30, 2023.

During the three months ended September 30, 2024, revenue increased by $2.6 million in our SHOP segment as compared to the three months ended September 30, 2023, primarily from an increase in revenue from tenants of $3.5 million from our Same Store Properties, partially offset by a $0.9 million decrease in revenue from tenants associated with our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates and higher occupancy during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Additionally, we offered more rent concessions to drive occupancy during the three months ended September 30, 2024, which amounted t o $1.9 million as compared to $0.8 million during the three months ended September 30, 2023 .

Property Operating and Maintenance

During the three months ended June 30, 2024, property operating and maintenance expenses increased $1.1 million in our SHOP segment as compared to the three months ended June 30, 2023, primarily due to an increase in property operating and maintenance expenses of $2.1 million in our Same Store Properties, partially offset by a decrease of $1.0 million from our Disposed Properties.

Our Same Store Properties property operating and maintenance expenses increased in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily from $1.4 million of increased costs for wages, including overtime, training and bonus wages paid to employees of our third party operators, $0.5 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 $0.3 million.

During the three months ended September 30, 2024, property operating and maintenance expenses increased by $0.8 million in our SHOP segment as compared to the three months ended September 30, 2023, primarily due to an increase in property operating and maintenance expenses of $1.8 million in our Same Store Properties, partially offset by a decrease of $1.0 million from our Disposed Properties.

Our Same Store Properties property operating and maintenance expenses increased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily from $1.2 million of i ncreased costs for wages, including overtime, training and bonus wages paid to employees of our third party operators, partially offset by decreased costs for contract labor of $0.2 million.

Other Results of Operations

Impairment Charges

We recorded $2.4 million of impairment charges during the three months ended June 30, 2024.

This impairment was recorded to reduce the carrying value of a held-for-use MOB to its estimated fair value .

This MOB has been marketed for sale since September 2021 and had been previously impaired by $8.6 million in the years ended December 31, 2023 and 2021.

We did not record any impairment charges in the three months ended June 30, 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.

We recorded $8.8 million of impairment charges during the three months ended September 30, 2024.

This impairment was recorded to reduce the carrying value of a held-for-use OMF to its estimated fair value .

This OMF has been marketed for sale since June 2024 .

We did not record any impairment charges in the three months ended September 30, 2023.

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

Operating Fees to Related Parties

Operating fees to related parties were consistent at $6.4 million for the three months ended June 30, 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 June 30, 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 June 30, 2024 or 2023.

Property management fees were consistent at $1.0 million for the three months ended June 30, 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.

Prior to the consummation of the Internalization, the Advisor and the Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis.

Operating fees to these related parties were consistent at $6.4 million for the three months ended September 30, 2024 and 2023, including asset management fees of $5.5 million and property management fees of $0.9 million for both the three months ended September 30, 2024 and 2023.

There were no incentive fees incurred in either of the three months ended September 30, 2024 or 2023.

Following the consummation of the Internalization, we no longer have to pay the above-referenced fees to the related parties, but we will incur expenses related to the compensation and benefits of our officers, employees and consultants, as well as overhead expenses, previously paid by the related parties managing our business and operations, which expenses will be recorded in our general and administrative expenses going forward.

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.

Termination Fees to Related Parties

We recorded $98.2 million of termination fees to related parties in the three months ended June 30, 2024 as a result of our intent to terminate the Second A&R Advisory Agreement with the Advisor and transition to self-management through the Internalization.

Pursuant to the terms of the Second A&R Advisory Agreement, the termination fee will be payable to the Advisor within 30 days after the effective date of the termination, and such fee is a component of the Closing Payments contemplated by the Internalization Agreement.

We expect the Closing to occur no later than the fourth quarter of 2024.

We recorded $8.4 million of termination fees to related parties in the three months ended September 30, 2024 as a result of our termination of the Advisory Agreement with the Advisor and transition to self-management through the Internalization.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses increased by $0.3 million to $0.4 million for the three months ended June 30, 2024 as compared to $0.1 million for the three months ended June 30, 2023.

This increase was due to $0.2 million of increased dead deal costs, as well as $0.1 million of legal costs specifically related to our Internalization.

Acquisition and transaction related expenses increased by $5.0 million to $5.2 million for the three months ended September 30, 2024 as compared to $0.2 million for the three months ended September 30, 2023.

This increase was mainly due to $4.7 million of advisory, legal and other professional costs and non-recurring employee transition expenses directly related to the Internalization.

General and Administrative Expenses

General and administrative expenses increased by $0.3 million to $4.7 million for the three months ended June 30, 2024 compared to $4.3 million for the three months ended June 30, 2023, which includes $3.0 million and $2.4 million, respectively, for the three months ended June 30, 2024 and June 30, 2023, incurred in expense reimbursements.

General and administrative expenses increased by $0.7 million to $5.5 million for the three months ended September 30, 2024 compared to $4.8 million for the three months ended September 30, 2023, which includes $3.0 million and $2.8 million, respectively, for the three months ended September 30, 2024 and September 30, 2023, incurred in expense reimbursements.

The increase in general and administrative expenses was also attributable to $0.4 million of employee compensation expenses incurred for the three months ended September 30, 2024.

Depreciation and Amortization Expenses

Depreciation and amortization expense increased $1.3 million to $21.9 million for the three months ended June 30, 2024 from $20.6 million for the three months ended June 30, 2023.

Gain on Sale of Real Estate Investments

During the three months ended June 30, 2024 we disposed of one SHOP for a contract sales price of $3.3 million and recorded a loss on sale of $0.2 million.

This SHOP had been previously impaired by $2.3 million.

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

Two of these SHOPs were previously impaired by $6.2 million.

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

Depreciation and amortization expense decreased by $0.1 million to $20.7 million for the three months ended September 30, 2024 from $20.8 million for the three months ended September 30, 2023.

Gain (Loss) on Sale of Real Estate Investments

During the three months ended September 30, 2024, we disposed of seven OMFs, one SHOP and one land parcel for an aggregate contract sales price of $79.3 million and recorded an aggregate gain on sale of $1.6 million.

These seven OMFs had been previously impaired by $10.6 million in the year ended December 31, 2022.

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

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

Interest Expense

Interest expense decreased by $1.0 million to $17.8 million for the three months ended June 30, 2024 from $18.7 million for the three months ended June 30, 2023.

The decrease in interest expense mainly resulted from $2.9 million of increased deferred financing cost amortization recognized during the three months ended June 30, 2023 as a result of the termination of our Prior Credit Facility, partially offset by higher average rates and higher average balances of our indebtedness during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 and by $0.9 million of terminated swap amortization recognized during the three months ended June 30, 2023.

As of June 30, 2024, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.61% per year.

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

Interest expense increased by $2.3 million to $18.0 million for the three months ended September 30, 2024 from $15.7 million for the three months ended September 30, 2023.

The increase in interest expense was mainly due to higher average balances of our indebtedness during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

As of September 30, 2024, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.61% per year.

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

Continued high 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 $0.5 million and $0.3 million, respectively, for the three months ended June 30, 2024 and 2023.

Interest and other income increased in the three months ended June 30, 2024 due to $0.4 million of excess insurance reimbursement, as well as higher interest rates on, and balances of, our cash accounts.

Gains on Non-Designated Derivatives

The gains in the three months ended June 30, 2024 and 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.

Interest and other income was approximately $0.5 million and $0.3 million, respectively, for the three months ended September 30, 2024 and 2023.

Interest and other income increased in the three months ended September 30, 2024 due to $0.4 million of excess insurance reimbursement, as well as higher interest rates on, and balances of, our cash accounts.

Gain (loss) on Non-Designated Derivatives

The gain (loss) in the three months ended September 30, 2024 and 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 negligible income tax expense for the three months ended June 30, 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.

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 operations and comprehensive loss.

Net Loss Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $0.5 million for the three months ended June 30, 2024 and net loss attributable to non-controlling interests was approximately $22,000 for the three months ended June 30, 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.

The increase in net loss attributable to non-controlling interests in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was due to the increase of our net loss, which primarily resulted from the termination fee to related parties of $98.2 million we recorded in the three months ended June 30, 2024 in connection with our intent to effect the Internalization as described above.

Allocation for Preferred Stock Dividends

Allocation for preferred stock was $3.5 million for the three months ended June 30, 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 Six Months Ended June 30, 2024 and 2023

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 $138.9 million and $38.3 million, respectively, for the six months ended June 30, 2024 and 2023.

The following table shows our results of operations for the six months ended June 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Six Months Ended June 30, Increase (Decrease)

(Dollars in thousands) 2024 2023 $

We recorded an income tax expense of approximately nil and $0.2 million for the three months ended September 30, 2024 and 2023, respectively.

Because of our TRS’s recent operating history of losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of our SHOP assets, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets;

thus we have recorded a 100% valuation allowance on our net deferred tax assets through September 30, 2024.

Allocation for Preferred Stock Distributions

Allocation for preferred stock was $3.5 million for the three months ended September 30, 2024 and 2023.

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

Comparison of the Nine Months Ended September 30, 2024 and 2023

Net loss attributable to common stockholders was $183.1 million and $57.8 million, respectively, for the nine months ended September 30, 2024 and 2023.

The following table shows our results of operations for the nine months ended September 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Nine Months Ended September 30, Increase (Decrease)

(in thousands) 2024 2023

Revenue from tenants $ 266,056 $ 259,145 $ 6,911

3 unchanged sentences

Operating fees to related parties

19,181 19,153 28

Termination fees to related parties

106,650 — 106,650

Acquisition and transaction related 5,686 384 5,302

4 unchanged sentences

Operating (loss) income before loss on sale of real estate investments (123,840) 2,205 (126,045)

Loss on sale of real estate investments (225) (191) (34)

Gain (loss) on sale of real estate investments

1,354 (364) 1,718

Operating (loss) income (122,486) 1,841 (124,327)

2 unchanged sentences

Interest and other income

1,077 576 501

Gain on non-designated derivatives 449 510 (61)

7 unchanged sentences

Net loss attributable to common stockholders $ (183,058) $ (57,829) $ (125,229)

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 six months ended June 30, 2024 and 2023:

Segment Results — Outpatient Medical Facilities

The following table presents the revenue and property operating and maintenance expense and the period to period change within our OMF segment for the nine months ended September 30, 2024 and 2023:

Same Store (1)

2 unchanged sentences

Segment Total

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

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

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)

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

Revenue from tenants $ 98,197 $ 96,231 $ 1,966 $ 2,966 $ 1,176 $ 1,790 $ 2,410 $ 3,780 $ (1,370) $ 103,573 $ 101,187 $ 2,386

$ 67,373 $ 66,815 $ 558 $ 1,897 $ 654 $ 1,243 $ — $ 61 $ (61) $ 69,270 $ 67,530 $ 1,740

Property operating and maintenance 29,943 27,056 2,887 302 108 194 (162) 608 (770) 30,083 27,772 2,311

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_______________

(1) Our MOB segment included 149 Same Store properties.

(2) Our MOB segment included 11 Acquisition properties.

(3) Our MOB segment included one Disposition property.

(4) Our MOB segment included 160 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.

(1) Our OMF segment included 142 Same Store Properties.

(2) Our OMF segment included 11 Acquisition Properties.

(3) Our OMF segment included eight Disposed Properties.

(4) Our OMF segment included 153 total properties.

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

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

Revenue from Tenants

During the six months ended June 30, 2024, revenue from tenants increased by $1.7 million in our MOB segment as compared to the six months ended June 30, 2023, primarily as a result of increased revenue from tenants of $1.2 million due to our Acquired Properties and an increase in revenue from tenants of $0.6 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $0.1 million due to our Disposed Properties.

The increase in our Same Store Properties revenue from tenants was primarily driven by an increase of operating expense reimbursement revenue from increased property, operating and maintenance expenses, as well as from marginally higher occupancy in the six months ended June 30, 2024, as compared to June 30, 2023.

During the nine months ended September 30, 2024, revenue from tenants increased by $2.4 million in our OMF segment as compared to the nine months ended September 30, 2023, primarily as a result of an increase in revenue from tenants of $2.0 million from our Same Store Properties and $1.8 million from our Acquisition Properties, partially offset by a $1.4 million decrease in revenue from tenants associated with 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 higher occupancy in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 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.

During the six months ended June 30, 2024, property operating and maintenance costs in our MOB segment increased by $1.0 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 and our Acquired Properties of $0.1 million, partially offset by a decrease from our Disposed Properties of $0.2 million.

During the nine months ended September 30, 2024, property operating and maintenance costs in our OMF segment increased by $2.3 million as compared to the same period last year, primarily as a result of increased costs from our Same Store Properties of $2.9 million and our Acquired Properties of $0.2 million, partially offset by a decrease from our Disposed Properties of $0.8 million.

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

Segment Results — Seniors Housing - Operating Properties

The following table presents the revenue and property operating and maintenance expense and the period to period change within our SHOP segment for the six months ended June 30, 2024 and 2023:

The following table presents the revenue and property operating and maintenance expense and the period to period change within our SHOP segment for the nine months ended September 30, 2024 and 2023:

Same Store (1)

2 unchanged sentences

Segment Total

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

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

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

Revenue from tenants $ 155,184 $ 147,149 $ 8,035 $ — $ — $ — $ 7,299 $ 10,809 $ (3,510) $ 162,483 $ 157,958 $ 4,525

$ 106,209 $ 101,391 $ 4,818 $ — $ — $ — $ 1,637 $ 4,538 $ (2,901) $ 107,846 $ 105,929 $ 1,917

Property operating and maintenance 129,558 123,417 6,141 — — — 6,916 10,589 (3,673) 136,474 134,006 2,468

1 unchanged sentence

_______________

(1) Our SHOP segment included 47 Same Store properties (including two land parcels).

(1) Our SHOP segment included 45 Same Store Properties (including one land parcel).

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

(3) Our SHOP segment included five Disposed Properties.

(4) Our SHOP segment included 47 total properties (including two land parcels).

(3) Our SHOP segment included seven Disposed Properties.

(4) Our SHOP segment included 45 total properties (including one land parcel).

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.

1 unchanged sentence

Revenue from Tenants

During the six months ended June 30, 2024, revenue from tenants increased by $1.9 million in our SHOP segment as compared to the six months ended June 30, 2023, which was primarily driven by an increase in revenue from tenants of $4.8 million due to our Same Store Properties, partially offset by a decrease in revenue from tenants of $2.9 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 six months ended June 30, 2024, as compared to the six months ended June 30, 2023, as well as by marginally higher occupancy in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

These increases were partially offset by $2.1 million of increased rent concessions offered during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023

During the nine months ended September 30, 2024, revenue from tenants increased by $4.5 million in our SHOP segment as compared to the nine months ended September 30, 2023, primarily from an increase in revenue from tenants of $8.0 million for our Same Store Properties, partially offset by a $3.5 million decrease in revenue from tenants associated with our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates and higher occupancy during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

These increases were partially offset by $3.2 million of increased rent concessions offered to drive occupancy during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Property Operating and Maintenance

During the six months ended June 30, 2024, property operating and maintenance expenses increased $1.7 million in our SHOP segment as compared to the six months ended June 30, 2023, primarily due to an increase in property operating and maintenance expenses of $4.2 million from our Same Store Properties, partially offset by a decrease of $2.5 million from our Disposed Properties.

Our Same Store properties operating and maintenance expenses increased in the six months ended June 30, 2024 compared to the same period last year, primarily from (i) $2.6 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) $1.2 million of higher insurance expense, (iv) the effects of inflation which raised the general costs of food, supplies, and utilities generally.

During the nine months ended September 30, 2024, property operating and maintenance expenses increased by $2.5 million in our SHOP segment as compared to the nine months ended September 30, 2023, primarily due to an increase in property operating and maintenance expenses of $6.1 million from our Same Store Properties, partially offset by a decrease of $3.7 million from our Disposed Properties.

Our Same Store properties operating and maintenance expenses increased in the nine months ended September 30, 2024 compared to the same period last year, primarily from (i) $4.6 million of increased costs for overtime, training and bonus wages paid to employees of our third party operators, (ii) $0.5 million of increased management fees paid to our third party operators, (iii) $1.2 million of higher insurance expense and (iv) 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 $0.6 million.

1 unchanged sentence

Impairment Charges

We recorded $2.7 million of impairment charges during the six months ended June 30, 2024 on one held-for-use MOB and one SHOP which was disposed in the six months ended June 30, 2024.

The held-for-use MOB was impaired by $2.4 million and the disposed SHOP was impaired by $0.3 million.

We did not record any impairment charges during the six months ended June 30, 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 for the six months ended June 30, 2024 and 2023.

We recorded $11.5 million of impairment charges during the nine months ended September 30, 2024 on two held-for-use OMFs and one SHOP which was disposed in the nine months ended September 30, 2024.

Two held-for-use OMFs were impaired by $11.2 million and the disposed SHOP was impaired by $0.3 million.

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

See Note 3 — Real Estate Investments, Net 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, 2024 and 2023.

Operating Fees to Related Parties

Operating fees to related parties were consistent at $12.8 million for each of the six months ended June 30, 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 (see — Results of Operations — Comparison of the Three Months Ended June 30, 2024 and 2023 for additional information).

Asset management fees were $10.9 million for both the six months ended June 30, 2024 and 2023.

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

There were no incentive fees incurred in either of the six months ended June 30, 2024 or 2023.

Property management fees were consistent at $1.9 million and $1.8 million, respectively, for the six months ended June 30, 2024 and 2023.

Prior to the consummation of the Internalization, the Advisor and Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis.

Operating fees to these related parties were consistent at $19.2 million for each of the nine months ended September 30, 2024 and 2023, including asset management fees of $16.4 million for both the nine months ended September 30, 2024 and 2023 and property management fees of $2.8 million and $2.8 million for the nine months ended September 30, 2024 and 2023, respectively.

There were no incentive fees incurred in either of the nine months ended September 30, 2024 or 2023.

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.

Termination Fees to Related Parties

We recorded $98.2 million of termination fees to related parties in the six months ended June 30, 2024 as a result of our intent to terminate the Second A&R Advisory Agreement with the Advisor and transition to self-management through the Internalization.

Pursuant to the terms of the Second A&R Advisory Agreement, the termination fee is payable to the Advisor within 30 days after the effective date of the termination, and such a fee is a component of the Closing Payments contemplated by the Internalization Agreement.

We expect the Closing to occur no later than the fourth quarter of 2024.

We anticipate funding the Closing Payments primarily with net proceeds from strategic dispositions of MOBs, SHOPs and land parcels.

We recorded $106.7 million of termination fees to related parties in the nine months ended September 30, 2024 as a result of our termination of the Advisory Agreement with the Advisor and transition to self-management through the Internalization.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses increased by $0.3 million, to $0.5 million for the six months ended June 30, 2024 from $0.2 million for the six months ended June 30, 2023.

This increase was due to $0.2 million of increased dead deal costs and $0.1 million of legal costs specifically related to our Internalization.

Acquisition and transaction related expenses increased by $5.3 million, to $5.7 million for the nine months ended September 30, 2024 from $0.4 million for the nine months ended September 30, 2023.

This increase was due to $4.7 million of advisory, legal and other professional costs and non-recurring employee transition expenses directly related to the Internalization.

General and Administrative Expenses

General and administrative expenses increased $2.1 million to $11.4 million for the six months ended June 30, 2024 compared to $9.4 million for the six months ended June 30, 2023, which includes $7.0 million and $4.8 million, respectively, for the six months ended June 30, 2024 and 2023, incurred in expense reimbursements.

The increase in general and administrative expenses was primarily attributable to $0.7 million of severance payments incurred in the six months ended June 30, 2024 made to former employees of the Advisor.

General and administrative expenses increased by $2.8 million to $16.9 million for the nine months ended September 30, 2024 compared to $14.1 million for the nine months ended September 30, 2023, which includes $10.0 million and $7.6 million, respectively, for the nine months ended September 30, 2024 and 2023, incurred in expense reimbursements.

The increase in general and administrative expenses was primarily attributable to certain severance and other compensation reimbursement payments incurred in the nine months ended September 30, 2024 made to the Advisor prior to the Internalization, as well as $0.4 million of employee compensation expenses incurred for the nine months ended September 30, 2024 .

Depreciation and Amortization Expenses

Depreciation and amortization expense increased by $2.0 million to $42.7 million for the six months ended June 30, 2024 as compared with $40.7 million for the six months ended June 30, 2023.

Depreciation and amortization expense increased by $1.9 million to $63.4 million for the nine months ended September 30, 2024 as compared with $61.5 million for the nine months ended September 30, 2023.

Gain (Loss) on Sale of Real Estate Investments

During the six months ended June 30, 2024, we disposed of one SHOP for a contract sales price of $3.3 million.

This SHOP had been previously impaired by $2.3 million.

As a result, the Company recorded an aggregate loss on sale of $0.2 million in the six months ended June 30, 2024.

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

Two of the SHOPs were previously impaired by $6.2 million.

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

During the nine months ended September 30, 2024, we disposed of seven OMFs, two SHOPs and one land parcel for an aggregate contract sales price of $82.6 million and recorded an aggregate gain on sale of $1.4 million.

One of the SHOPs was impaired during the nine months ended September 30, 2024 by $0.3 million, and had been previously impaired by a cumulative total of $2.3 million in the years ended December 31, 2023 and 2022.

The seven OMFs had been previously impaired by $10.6 million in the year ended December 31, 2022.

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

Two of the four disposed SHOPs were previously impaired by $15.1 million in the year ended December 31, 2022.

These dispositions resulted in an aggregate loss on sale of $0.4 million for the nine months ended September 30, 2023.

Interest Expense

Interest expense decreased $0.4 million to $34.1 million for the six months ended June 30, 2024 from $34.5 million for the six months ended June 30, 2023.

The increase in interest expense mainly resulted from the acceleration of deferred financing costs of $2.6 million from the termination of our Prior Credit Facility, as well as from higher average rates and higher average balances of amounts outstanding under our indebtedness during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

As of June 30, 2024, our outstanding debt obligations were $1.2 billion, at a weighted average interest rate of 5.61% per year.

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

Interest expense increased by $1.9 million to $52.1 million for the nine months ended September 30, 2024 from $50.2 million for the nine months ended September 30, 2023.

The increase in interest expense was mainly due to higher average balances of amounts outstanding under our indebtedness during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

As of September 30, 2024, our outstanding debt obligations were $1.2 billion, at a weighted average interest rate of 5.61% per year.

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

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.

Continued high 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 $0.5 million for the six months ended June 30, 2024 and approximately $0.3 million for the six months ended June 30, 2023.

Interest and other income increased in the six months ended June 30, 2024 from $0.4 million of excess insurance reimbursement as well as higher interest rates on, and balances of, our cash accounts.

Gain (Loss) on Non-Designated Derivatives

Gain (loss) on non-designated derivative instruments for the six months ended June 30, 2024 and 2023 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.

Income Tax Benefit (Expense)

Interest and other income was approximately $1.1 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Interest and other income increased in the nine months ended September 30, 2024 due to $0.4 million of excess insurance reimbursement, as well as higher interest rates on, and balances of, our cash accounts.

Gain on Non-Designated Derivatives

Gain on non-designated derivative instruments for the nine months ended September 30, 2024 and 2023 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.

Income Tax Expense

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

We recorded an income tax expense of approximately $0.1 million for the six months ended June 30, 2024 and 2023.

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 June 30, 2024.

Net Loss (Income) Attributable to Non-Controlling Interests

Net loss attributable to non-controlling interests was approximately $0.5 million for the six months ended June 30, 2024 and net loss attributable to non-controlling interests was approximately $31,000 for the six months ended June 30, 2023, 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.

The increase in net loss attributable to non-controlling interests in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was due to the increase of our net loss, which primarily resulted from the termination fee to related parties of $98.2 million which we recorded in the six months ended June 30, 2024 in connection with our intent to effect the Internalization as described above.

We recorded an income tax expense of approximately $0.1 million and 0.2 million for the nine months ended September 30, 2024 and 2023, respectively.

thus we have recorded a 100% valuation allowance on our net deferred tax assets through September 30, 2024.

Allocation for Preferred Stock

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

Allocation for preferred stock was $10.4 million for the nine months ended September 30, 2024 and 2023.

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

Cash Flows from Operating Activities

The following table presents a reconciliation of our net cash provided by operations from our net loss for the six months ended June 30, 2024 and 2023:

(in thousands) Six Months Ended June 30,

The following table presents a reconciliation of our net cash provided by operations from our net loss for the nine months ended September 30, 2024 and 2023:

(in thousands) Nine Months Ended September 30,

Cash flows from operating activities:

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Equity-based compensation 613 689

Gain on sale of real estate investments, net 225 191

(Gain) loss on sale of real estate investments (1,354) 364

Cash received from non-designated derivative instruments 5,405 3,866

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Prepaid expenses and other assets (1,338) (4,180)

Termination fees payable to related parties 98,241 —

Deferred tax allowance 2,126 —

Accounts payable, accrued expenses and other liabilities 6,314 (1,504)

Deferred rent (364) 979

Net cash provided by operating activities $ 8,935 $ 10,677

Net cash (used in) provided by operating activities

$ (86,300) $ 16,358

The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses.

Cash Flows from Investing Activities

The following table presents our net cash used in investing activities for the six months ended June 30, 2024 and 2023:

(in thousands) Six Months Ended June 30,

The following table presents our net cash used in investing activities for the nine months ended September 30, 2024 and 2023:

(in thousands) Nine Months Ended September 30,

Cash flows from investing activities:

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Proceeds from sales of real estate investments 82,278 4,803

Cash used in investing activities $ (15,578) $ (34,360)

Cash provided by (used in) investing activities

$ 58,563 $ (49,036)

Cash Flows from Financing Activities

The following table presents our net cash provided by financing activities for the six months ended June 30, 2024 and 2023:

(in thousands) Six Months Ended June 30,

The following table presents our net cash provided by financing activities for the nine months ended September 30, 2024 and 2023:

(in thousands) Nine Months Ended September 30,

Cash flows from financing activities:

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Payments of deferred financing costs (199) (7,774)

Proceeds from promissory note 30,267 —

Contributions from non-controlling interests — 284

Dividends paid on Series A Preferred stock (3,668) (3,666)

Dividends paid on Series B Preferred stock (3,232) (3,233)

Distributions paid on Series A Preferred Stock (5,501) (5,500)

Distributions paid on Series B Preferred Stock (4,849) (4,849)

Distributions to non-controlling interest holders (139) (138)

Net cash (used in) provided by financing activities (3,700) 52,650

Net cash provided by financing activities

21,333 47,426

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.

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), the repayment of the Promissory Note (as discussed below) and distributions to holders of our Series A Preferred Stock and Series B Preferred Stock.

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

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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 June 30, 2024, we had $29.5 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.

Intent to Internalize Management

On July 1, 2024, we announced that, in anticipation of a potential future listing of our common stock on a national securities exchange, we provided notice in June 2024 to the Advisor of our intent to Internalize.

On August 6, 2024, we entered into the Internalization Agreement with the Merger Sub, the Advisor and the Advisor Parent.

We expect the Internalization to take effect no later than the fourth quarter of 2024.

For additional information about the Internalization, please see Note 9 — Related Party Transactions and Arrangements.

Following our transition to self-management, we would no longer be required to pay asset management and property management fees to the Advisor Parent.

We paid total asset management fees of $5.5 million and $10.9 million, respectively, during the three and six months ended June 30, 2024 (which includes a monthly base asset management fee of $1.625 million per month and a monthly variable asset management fee of one-twelfth of 1.25% of the cumulative net proceeds of our equity offerings subsequent to February 17, 2017).

We paid total property management fees, including capitalized leasing commissions, of $1.0 million and $2.5 million, respectively, during the three and six months ended June 30, 2024 which is equal to 1.5% of gross revenues from the our stand-alone single-tenant net leased properties managed and 2.5% of gross revenues from all other types of properties managed.

Certain costs are incurred as a result of our decision to transition to self-management;

including, upon a termination of the Second A&R Advisory Agreement by us in connection with a transition to self-management, we would be required to pay the Advisor a transition fee of $98.2 million.

We would also be required to pay six-months of base asset management fees, which began on June 25, 2024 when we delivered notice to the Advisor of our intention to effect the Internalization, of $10.9 million, and property management fees of $3.9 million, representing the costs we would incur through the current term of the Property Management Agreement.

A portion each of the asset management fees and property management fees have been paid as we continue to pay our monthly operating expense to the Advisor and Property Manager.

Collectively, these payments to the Advisor Parent described above are referred to herein as “Closing Payments”.

To the extent the Closing Payments exceed our Available Cash (as defined in the Internalization Agreement), we have agreed to pay the Advisor Parent aggregate cash consideration equal to at least $60.0 million (such cash amount, the “Closing Date Cash Consideration”), and we will issue to the Advisor Parent a promissory note in a principal amount equal to the difference between the Closing Date Cash Consideration and the Closing Payments, as may be adjusted for any post-Closing true-ups on the Closing Payments.

We intend to fund the Closing Date Cash Consideration through a combination of cash on hand and the net proceeds from certain anticipated strategic dispositions.

The Company expects the Internalization to close no later than the fourth quarter of 2024, subject to the satisfaction or waiver of certain conditions in the Internalization Agreement.

There can be no assurance, however, that we will generate enough net proceeds through these expected strategic dispositions to fully fund the Closing Payments before they are payable, or that these strategic dispositions will occur at all.

As of June 30, 2024, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.5%.

We expect to fund our future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and 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 OMF Warehouse Facility, net cash provided by our property dispositions (as discussed below) and potential new financings utilizing certain of our currently unencumbered properties.

As of September 30, 2024, we had $32.9 million of cash and cash equivalents.

The Barclays OMF Loan Agreement requires us to maintain a minimum balance of cash and cash equivalents of $12.5 million at all times.

Internalization and the Promissory Note

Pursuant to the merger agreement dated August 6, 2024 (the “Internalization Agreement”) effecting the Internalization, (i) the outstanding membership interests of the Advisor were converted into the right to receive from us an internalization fee of $98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $5.5 million, representing the aggregate Base Management Fee (as defined in the Advisory Agreement) that we would have been required to pay to the Advisor during the remaining three month notice period required to terminate the Advisory Agreement, and (y) a property management fee of $2.9 million, representing the aggregate Management Fees (as defined in the Property Management Agreement) that we would have been required to pay to the Property Manager through the current term of the Property Management Agreement, subject to certain other adjustments (collectively, the “Closing Payments” in an aggregate amount of $106.6 million).

Because the Closing Payments exceeded our Available Cash (as defined in the Internalization Agreement), we paid the Advisor Parent aggregate cash consideration of $75.0 million (such cash amount, the “Closing Date Cash Consideration”), and the Company issued to the Advisor Parent an unsecured promissory note (the “Promissory Note”) in a principal amount of $30.3 million, equal to the difference between the Closing Date Cash Consideration and the Closing Payments .

The Promissory Note is a senior unsecured obligation and ranks equal in right of payment with all of our existing and future indebtedness.

The Promissory Note bears interest per annum of Term SOFR (as defined in the Promissory Note) plus 1.25% until January 1, 2025 and Term SOFR plus 3.25% on and after January 1, 2025, with such interest payable monthly.

Beginning on January 2, 2025, we will be required to make monthly payments of principal to the extent of our available cash existing on the applicable payment date.

The Promissory Note matures on June 28, 2025 and may be prepaid, in whole or in part, prior to the maturity date without any pre-payment penalties.

As of September 30, 2024, the full principal amount under the Promissory Note was outstanding.

Following the Internalization, we are no longer required to pay asset management and property management fees to the Advisor Parent.

We paid total asset management fees of $5.5 million and $16.4 million, respectively, during the three and nine months ended September 30, 2024 and total property management fees, including capitalized leasing commissions, of $1.1 million and $3.6 million, respectively, during the three and nine months ended September 30, 2024, exclusive of the asset management fee and property management fee paid to the Advisor Parent as part of the Closing Payments discussed above.

As of September 30, 2024, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 46.1%.

Net debt totaled $1.2 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($32.9 million).

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Cumulative impairment charges are reflected within gross asset value.

As of June 30, 2024, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.61% and a weighted-average remaining term of 4.6 years.

As of September 30, 2024, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.61% and a weighted-average remaining term of 4.4 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 5.01% as of June 30, 2024.

As of June 30, 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 $649.6 million of this asset value pledged to secure advances under our credit facilities.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our total gross borrowings was 5.01% as of September 30, 2024.

As of September 30, 2024, the carrying value of our real estate investments, at cost was $2.5 billion, with $1.3 billion of this asset value pledged as collateral for mortgage notes payable and $650.4 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 June 30, 2024 was $621.0 million.

Unencumbered real estate investments, at cost as of September 30, 2024 was $523.4 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 June 30, 2024, we had $828.3 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 5.6 years.

As of September 30, 2024, we had $828.0 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 5.4 years.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2024 and 2025 are $0.3 million and $13.3 million, respectively.

During the three months ended June 30, 2024, we entered into the CPC Mortgage Loan in connection with a four-property acquisition also completed in the three months ended June 30, 2024.

During the nine months ended September 30, 2024, we entered into the BMO CPC Mortgage Loan in connection with a four-property acquisition also completed in the nine months ended September 30, 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 June 30, 2024, $365.1 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 7.90% and had a weighted-average remaining term of 2.3 years.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.95% as of June 30, 2024.

As of September 30, 2024, $363.7 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 7.91% and had a weighted-average remaining term of 2.1 years.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.94% as of September 30, 2024.

Fannie Mae Master Credit Facilities

As of June 30, 2024, $343.4 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 June 30, 2024.

As of September 30, 2024, $342.0 million was outstanding under our Fannie Mae Master Credit Facilities which bore interest at a weighted-average annual rate of 7.89%.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on the Fannie Mae Master Credit Facilities was 5.90% as of September 30, 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.

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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.

We provided an additional deposit of $0.3 million during the nine months ended September 30, 2024, bringing the total deposit to $12.1 million as of September 30, 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

These deposits will be refunded upon 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.

OMF 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 June 30, 2024, $21.7 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 June 30, 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%.

As of September 30, 2024, $21.7 million was outstanding under the OMF Warehouse Facility which bore interest at an annual rate of 8.20%.

Inclusive of our non-designated interest rate caps, the economic interest rate on our OMF Warehouse Facility was 6.50% as of September 30, 2024.

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

Borrowings under the OMF 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.

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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 June 30, 2024, we had eight SOFR-based interest rate caps with an aggregate notional amount of $369.2 million, which limits one-month SOFR to 3.50% and have varying maturities through January 2027.

As of September 30, 2024, we had eight SOFR-based interest rate caps with an aggregate notional amount of $369.2 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 $3.6 million in the three months ended June 30, 2024.

We received $2.3 million of cash payments in the three months ended June 30, 2023.

As SOFR has increased beyond 3.50%, we received cash payments of $5.4 million in the three months ended September 30, 2024.

We received $3.9 million of cash payments in the three months ended September 30, 2023.

We paid total premiums of $1.7 million to renew one cap with an aggregate notional amount of $58.1 million which matures in April 2024, and to execute a new cap of $7.0 million, which matures in January 2027.

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Capital Expenditures

During the six months ended June 30, 2024, our capital expenditures were $11.2 million, of which $3.4 million related to our MOB segment and $7.8 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 — Six Months Ended June 30, 2024

During the six months ended June 30, 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 June 30, 2024

We have not acquired any properties subsequent to June 30, 2024.

Dispositions — Six Months Ended June 30, 2024

We disposed of one SHOP during the six months ended June 30, 2024 for a contract sales price of $3.3 million.

These proceeds are available for general corporate purposes.

Dispositions — Subsequent to June 30, 2024

We disposed of seven MOBs in Illinois subsequent to June 30, 2024 for a contract sales price of $50.5 million.

These proceeds are available for general and corporate uses, including for the potential partial payment of the Closing Payments at the Closing.

We have also signed a letter of intent to dispose of one SHOP in California for a contract sales price of $21.0 million.

There can be no assurance that this signed letter of intent will close on its contemplated terms, or at all.

To fund the amounts necessary to pay the Closing Payments, we anticipate primarily using net proceeds from strategic dispositions to occur before the end of the fourth quarter of 2024.

There can be no assurance that we will generate enough net proceeds through these strategic dispositions to fully fund the Closing Payments before the fee is payable, or that these strategic dispositions will occur at all.

During the nine months ended September 30, 2024, our capital expenditures were $16.4 million, of which $6.1 million related to our OMF segment and $10.3 million related to our SHOP segment.

We anticipate this rate of capital expenditures for the OMF and SHOP segments throughout the remainder of 2024.

Acquisitions — Nine Months Ended September 30, 2024

During the nine months ended September 30, 2024, we acquired four single-tenant OMFs for an aggregate contract purchase price of $12.6 million.

These acquisitions were funded with $7.5 million of new mortgage debt from our BMO CPC Mortgage Loan and the remainder with cash on hand.

Acquisitions — Subsequent to September 30, 2024

We have not acquired any properties subsequent to September 30, 2024.

Dispositions — Nine Months Ended September 30, 2024

We disposed of seven OMFs, two SHOPs and one land parcel during the nine months ended September 30, 2024 for an aggregate contract sales price of $82.6 million.

These proceeds were primarily used to fund a portion of the Closing Payments.

Dispositions — Subsequent to September 30, 2024

Sub sequent to September 30, 2024, we disposed of one OMF in Indiana for a contract sales price of $2.4 million.

These proceeds are availab le for general and corporate uses, including for the potential partial repayment of t he Promissory Note.

We have also signed purchase and sale agreements t o dispose of seven OMFs for an aggregate contract sales price of $49.8 million.

There can be no assurance that these signed agreements will close on their contemplated terms or at all.

We anticipate primarily using net proceeds from these strategic dispositions, which we expect to occur during the fourth quarter of 2024 or the first quarter of 2025, to repay the Promissory Note, which matures on June 28, 2025 and provides for an interest rate step-up to Term SOFR plus 3.25% on and after January 1, 2025.

There can be no assurance that we will generate enough net proceeds through these strategic dispositions to fully repay the Promissory Note before the interest rate step-up becomes effective or that these strategic dispositions will occur on the contemplated terms or at all.

Share Repurchase Program

We did not repurchase any shares during the six months ended June 30, 2024 and 2023.

We did not repurchase any shares during the nine months ended September 30, 2024 and 2023.

Non-GAAP Financial Measures

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While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent, nor are they meant to replace, cash flows from operations and net income or loss as defined by GAAP, and should not be considered alternatives to those measures in evaluating our liquidity or operating performance.

Rather, FFO and AFFO should be reviewed in conjunction with these and other GAAP measurements.

FFO and AFFO also do not consider the costs associated with capital expenditures and leasing commissions, nor do they purport to be indicative of cash available to fund our future cash requirements, including our ability to pay dividends and other distributions to our stockholders.

Additionally, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition, or that interpret the current NAREIT definition or define AFFO differently than we do.

Prior to the quarter ended June 30, 2024, we presented another non-GAAP metric in place of AFFO, Modified Funds From Operations (“MFFO”).

Historically, we calculated MFFO as FFO as defined by NAREIT adjusted for (i) acquisition and transaction related costs, (ii) amortization of market-lease intangible assets and liabilities, (iii) adjustments for straight-line rent, (iv) mark-to-market gains and losses from our non-designated derivatives, (v) net amortization of our mortgage discounts and premiums, (vi) valuation reserves against our deferred tax assets and (vii) similar adjustments for non-controlling interests and unconsolidated entities.

We believe that AFFO is a more meaningful non-GAAP metric to assess our operating performance than MFFO, and as such we intend to present AFFO for each reporting period beginning with the quarter ended June 30, 2024 and each comparable period thereafter.

Rather, FFO and AFFO should be reviewed in conjunction with these and other GAAP measurements and are not necessarily indicative of cash available to fund our future cash requirements, including our ability to pay dividends and other distributions to our stockholders.

Additionally, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition or that interpret the current NAREIT definition or define AFFO differently than we do.

Funds from Operations

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However, we believe that the value of our real estate investments will fluctuate over time based on various market conditions and as such, depreciation under historical cost accounting may be less informative.

FFO is a standard REIT industry metric defined by the National Association of Real Estate Investment Trusts (“NAREIT”), which was most recently restated in a White Paper effective in December 2018 (the “White Paper”).

NAREIT defines FFO as net income or loss (computed in accordance with GAAP), adjusted for (i) real estate-related depreciation and amortization, (ii) impairment charges on depreciable real property, (iii) gains or losses from sales of depreciable real property and (iv) similar adjustments for non-controlling interests and unconsolidated entities.

FFO is a standard REIT industry metric defined by NAREIT as net income or loss (computed in accordance with GAAP), adjusted for (i) real estate-related depreciation and amortization, (ii) impairment charges on depreciable real property, (iii) gains or losses from sales of depreciable real property and (iv) similar adjustments for non-controlling interests and unconsolidated entities.

We believe that the use of FFO provides a more complete understanding of our operating performance to investors and to management, and when compared year-over-year reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, which may not be immediately apparent from net loss.

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We believe that AFFO is a beneficial indicator of our ongoing portfolio performance and isolates the financial results of our operations.

Our adjustments to FFO to arrive at AFFO include removing the impacts of (i) acquisition and transaction related costs, (ii) amortization of market-lease intangible assets and liabilities, (iii) adjustments for straight-line rent, (iv) termination fees to related parties (v) equity-based compensation expense, (vi) depreciation and amortization related to non-real estate related assets, (vii) mark-to-market gains and losses from our non-designated derivatives, (viii) non-cash components of interest expense and (ix) similar adjustments for non-controlling interests and unconsolidated entities.

Our adjustments to FFO to arrive at AFFO include removing the impacts of (i) acquisition and transaction related costs (including certain expenses directly related to the Internalization and the Reverse Stock-Split), (ii) amortization of market-lease intangible assets and liabilities, (iii) adjustments for straight-line rent, (iv) termination fees to related parties (v) equity-based compensation expense, (vi) depreciation and amortization related to non-real estate related assets, (vii) mark-to-market gains and losses from our non-designated derivatives, (viii) non-cash components of interest expense and (ix) similar adjustments for non-controlling interests and unconsolidated entities.

We believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry and is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.

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

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

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

(In thousands) 2024 2023 2024 2023

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(Gain) loss on sale of real estate investments

(1,579) 173 (1,354) 364

Adjustments for non-controlling interests (1)

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Acquisition and transaction related (2)

5,187 173 5,686 384

Termination fees to related parties (3)

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(1) Represents the portion of the adjustments allocable to non-controlling interests.

(2) We provided notice to the Advisor in June 2024 of our intent to transition to self-management, and executed the Internalization Agreement in August 2024.

Upon the Closing of the Internalization, we have agreed to pay the Closing Payments, a component of which is a self-management termination fee, which is payable within 30 days thereof.

We do not consider such termination fees to be indicative of our performance given its unique and non-recurring nature, and accordingly, we have included it as an adjustment to FFO.

(2) Includes certain advisory, legal, accounting, information technology, tax and other professional expenses and other non-recurring employee transition expenses of $4.8 million for each of the three and nine months ended September 30, 2024, respectively, that were directly related to the Internalization and the Reverse Stock Split.

We do not consider these expenses to be indicative of our performance given their unique and non-recurring nature.

(3) Represents the Closing Payments paid in connection with the Internalization.

We do not consider such payments to be indicative of our performance given its unique and non-recurring nature.

(4) Presented as total gains or losses from our non-designated derivatives net of cash received.

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Dividends and Other Distributions

Dividends on our Series A Preferred Stock are declared quarterly in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to holders of Series A Preferred Stock, which is equivalent to 7.375% of per annum in the $25.00 liquidation preference per share of Series A Preferred Stock.

Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.

Dividends on our Series B Preferred Stock are declared quarterly in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to holders of Series B Preferred Stock, which is equivalent to 7.125% of per annum in the $25.00 liquidation preference per share of Series B Preferred Stock.

Dividends on the Series B Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.

Distributions on our Series A Preferred Stock are declared quarterly in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to holders of Series A Preferred Stock, which is equivalent to 7.375% of per annum in the $25.00 liquidation preference per share of Series A Preferred Stock.

Distributions on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.

Distributions 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.

Distributions 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 stock dividends were declared quarterly using a rate of $3.40 (as adjusted to reflect the Reverse Stock Split) 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.

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The Board may reduce the amount of dividends or distributions paid or suspend dividend or distribution payments at any time and therefore dividend and distribution payments are not assured.

Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock or Series B Preferred Stock become part of the liquidation preference thereof.

Any accrued and unpaid distributions payable with respect to the Series A Preferred Stock or Series B Preferred Stock become part of the liquidation preference thereof.

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 three months ended June 30, 2024.

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 September 30, 2024.

Three Months Ended Year-To-Date

March 31, 2024 June 30, 2024 June 30, 2024

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

March 31, 2024 June 30, 2024 September 30, 2024 September 30, 2024

(Dollars in thousands) Amounts Percentage of Distributions Amounts Percentage of Distributions Amounts Percentage of Distributions Amounts Percentage of Distributions

Distributions:

Dividends to holders of Series A Preferred Stock $ 1,834 52.5% $ 1,834 52.5% $ 3,668 52.6%

Dividends to holders of Series B Preferred Stock 1,616 46.2% 1,616 46.2% 3,232 46.2%

Distributions to holders of Series A Preferred Stock

$ 1,834 52.5% $ 1,834 52.5% $ 1,833 52.4% $ 5,501 52.5%

Distributions to holders of Series B Preferred Stock

1,616 46.2% 1,616 46.2% 1,617 46.3% 4,849 46.2%

Distributions paid to holders of Series A Preferred Units 46 1.3% 46 1.3% 47 1.3% 139 1.3%

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Available cash on hand (2)

953 27.3% — —% — —% 96,789 922.8%

Total source of distribution coverage $ 3,496 100.0% $ 3,496 100.0% $ 3,497 100.0% $ 10,489 100.0%

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Each quarter and year-to-date period is evaluated separately for purposes of this table.

For the six months ended June 30, 2024, cash flows provided by operations were $8.9 million.

For the nine months ended September 30, 2024, cash flows provided by operations were $86.3 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 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 but not limited to our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties.

As shown in the table above, we funded distributions 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 distributions 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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Election as a REIT

We elected to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year ended December 31, 2013.

We elected to be taxed as a REIT under the Code, effective for our taxable year ended December 31, 2013.

Commencing with that taxable year, we have been organized and operated in a manner so that we qualify as a REIT under the Code.

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federal income and excise taxes on our undistributed income.

We may be adversely impacted by inflation on the leases with tenants in our MOB segment that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates.

As of June 30, 2024, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.0%.

To help mitigate the adverse impact of inflation, most of our leases with our tenants in our MOB segment contain rent escalation provisions which increase the cash that is due under these leases over time.

We may be adversely impacted by inflation on the leases with tenants in our OMF 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, 2024, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.0%.

To hel p mitigate the adverse impact of inflation, most of our leases with our tenants in our OMF segment contain rent escalation provisions which increase the cash that is due under these leases over time.

These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures).

Although most of our leases with tenants in our MOB segment contain rent escalation provisions, these rates are generally below the current rate of inflation.

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

Although most of our leases with tenants in our OMF segment contain rent escalation provisions, these rates are generally below the current rate of inflation.

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

Property operating and maintenance expenses include common area maintenance costs, real estate taxes and insurance.

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Related-Party Transactions and Agreements

Please see Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related party transactions, agreements and fees.

See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related party transactions, agreements and fees.

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