UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 20182021
 OR
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number: 000-55201001-39153
hct-20211231_g1.jpg
Healthcare Trust, Inc.
(Exact name of registrant as specified in its charter) 
Maryland38-3888962
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
650 Fifth Ave., 30th Floor, New York, NY                 10019
______________________________________________________________________________________ _________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (212) 415-6500
405 Park Ave., 3rd Floor New York, NY
 10022
(Address of principal executive offices)(Zip Code)
(212) 415-6500
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act: None
Title of each classTrading Symbol(s)Name of each exchange on which registered
7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share
HTIAThe Nasdaq Global Market
7.125% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per shareHTIBThe Nasdaq Global Market
Securities registered pursuant to section 12(g)12 (g) of the Act:
Common stock, $0.01 par value per share (Title
(Title of class)
Common Share Purchase Rights
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitionthe definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company"company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
Emerging growth company¨



If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
There is no established public market for the registrant'sregistrant’s shares of common stock.
As of February 28, 2019,March 11, 2022, the registrant had 91,879,977100,735,691 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant'sregistrant’s definitive proxy statement to be delivered to stockholders in connection with the registrant's 2019registrant’s 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K. The registrant intends to file its proxy statement within 120 days after its fiscal year end.



HEALTHCARE TRUST, INC.


FORM 10-K
Year Ended December 31, 20182021




Page
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Table of Contents
Forward-Looking Statements
Certain statements included in this Annual Report on Form 10-K are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of Healthcare Trust, Inc. ("(“we," "our"” “our” or "us"“us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should"“may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. 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.
The followingThese forward-looking statements are somesubject 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. 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:
Certainstatements are set forth in “Risk Factors” (Part I, Item 1A of our executive officersthis Annual Report on Form 10-K), “Quantitative and directors are also officers, managers, employees or holders of a direct or indirect controlling interest in Healthcare Trust Advisors, LLC (our "Advisor") and other entities affiliated with AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global"Qualitative Disclosures about Market Risk” (Part II, Item 7A), the parentand “Management’s Discussion and Analysis of our sponsor. As a result, certainFinancial Condition and Results of our executive officers and directors, our Advisor and its affiliates face conflictsOperations” (Part II, Item 7).
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Table of interest, including significant conflicts created by our Advisor's compensation arrangements with us and other investment programs advised by affiliates of AR Global and conflicts in allocating time among these investment programs and us. These conflicts could result in unanticipated actions that adversely affect us.Contents
Due to a dispute with the developer, we have funded excess development costs at our development property in Jupiter, Florida and have not yet received any rental income from the property. There can be no assurance as to when we will begin to generate cash from this investment, if at all.PART I
Because investment opportunities that are suitable for us may also be suitable for other investment programs advised by affiliates of AR Global, our Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.
Although we intend to seek a listing of our shares of common stock on a national stock exchange when we believe market conditions are favorable to do so, there is no assurance that our shares of common stock will be listed. No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid.
We focus on acquiring and owning a diversified portfolio of healthcare-related assets located in the United States and are subject to risks inherent in concentrating investments in the healthcare industry.
If our Advisor loses or is unable to obtain qualified personnel, our ability to continue to achieve our investment strategies could be delayed or hindered.
The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could result in the inability of tenants to make lease payments to us.Item 1. Business
We are depending on our Advisor to select investments and conduct our operations. Adverse changes in the financial condition of our Advisor and its affiliates or our relationship with our Advisor could adversely affect us.
We are obligated to pay fees, which may be substantial, to our Advisor and its affiliates.
Our revenue is dependent upon the success and economic viability of our tenants, as well as our ability to collect rent from defaulting tenants, which has and may continue to adversely impact our results of operations, and replace them with new tenants, which we may not be able to do on a timely basis, or at all.
We may not be able to achieve our rental rate objectives on new and renewal leases and our expenses could be greater than we anticipate, which may impact our results of operations.
Increases in interest rates could increase the amount of our debt payments and limit our ability to pay distributions.
Provisions in our revolving credit facility (our "Revolving Credit Facility") and the related term loan facility (our "Term Loan"), which together comprise our senior secured credit facility (our "New Credit Facility"), currently restrict us from increasing the rate we pay distributions to our stockholders, and there can be no assurance that we will be able to continue paying distributions at the current rate, or at all.
We have not generated, and in the future may not generate, operating cash flows sufficient to fund all of the distributions we pay to our stockholders, and, as such, we may be forced to fund distributions from other sources, including borrowings, which may not be available on favorable terms, or at all.

Any distributions, especially those not covered by our cash flows from operations, may reduce the amount of capital available for other purposes, including investment in properties and other permitted investments and may negatively impact the value of our stockholders' investment.
We are subject to risks associated with any dislocations or liquidity disruptions that may exist or occur in the credit markets of the United States from time to time.
We are subject to risks associated with changes in general economic, business and political conditions including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of United States or international lending, capital and financing markets.
We may fail to continue to qualify to be treated as aan externally managed real estate investment trust for U.S. federal income tax purposes ("REIT"(“REIT”) that focuses on acquiring and managing a diversified portfolio of healthcare-related real estate focused on medical office and other healthcare-related buildings and senior housing operating properties. Prior to December 31, 2021, we had three reportable segments: 1) medical office and outpatient buildings (“Former MOBs”), which would result in higher taxes, may adversely affect our operations and would reduce the value of an investment in our common stock and the cash available for distributions.
The offering price and repurchase price for our shares under our distribution reinvestment plan ("DRIP"2) triple-net lease healthcare properties (“Former NNN”) and our share repurchase program (as amended, the "SRP") may not, among other things, accurately reflect the value of our assets and may not represent what a stockholder may receive on a sale of the shares, what they may receive upon a liquidation of our assets and distribution of the net proceeds or what a third party may pay to acquire us.
In addition, we describe risks and uncertainties that could cause actual results and events to differ materially in "Risk Factors" (Part I, Item 1A), "Quantitative and Qualitative Disclosures about Market Risk" (Part II, Item 7A), and "Management's Discussion and Analysis" (Part II, Item 7) of this Annual Report on Form 10-K.

PART I
Item 1. Business
We invest in healthcare real estate, focusing on seniors3) senior housing operating properties and medical office buildings ("MOB"(“SHOPs”), located. Culminating in the United States. As of December 31, 2018, we owned 191 properties located in 31 states and comprised of 9.1 million rentable square feet.
We were incorporated on October 15, 2012 as a Maryland corporation that elected to be taxed as a REIT beginning with our taxable year ended December 31, 2013. Substantially all of our business is conducted through Healthcare Trust Operating Partnership, L.P. (our "OP").
In February 2013, we commenced our initial public offering ("IPO") on a "reasonable best efforts" basis of up to $1.7 billion of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts. We closed our IPO in November 2014 and as of such date we had received cumulative proceeds of $2.0 billion from our IPO. As of December 31, 2018,2021, we have received total proceedscompleted several strategic property divestitures in our Former NNN segment, and transitioned certain properties reported in our Former NNN segment into our SHOP segment. The remaining Former NNN properties are similar in nature, cash flows, and risk structure with the Former MOB segment, and are managed operationally and reported collectively. Accordingly, in the fourth quarter of $2.3 billion, net of shares repurchased under2021, we reevaluated our segments and concluded that we now have two reportable segments. We have combined the SRP (see Note 8 — Common Stockproperties in our Former NNN segment with the properties in our Former MOB segment for segment reporting purposes and we now have two reportable segments, with activities related to our consolidated financial statements includedinvesting in MOBs and SHOPs. All prior periods presented in this Annual Report on Form 10-K) and including $292.0 million in proceeds received under10-K have been conformed to the DRIP.presentation of our new reportable segment structure.
On April 3, 2018, we published a new estimate of per share asset value ("Estimated Per-Share NAV") equal to $20.25 asAs of December 31, 2017. Our previous Estimated Per-Share NAV was equal to $21.45 as2021, we owned 202 properties located in 33 states and comprised of December 31, 2016. 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.
We have no employees. The Advisor has been retained by us to manage our affairs on a day-to-day basis. We have retained the Healthcare Trust Properties, LLC (the "Property Manager") to serve as our property manager. The Advisor and Property Manager are under common control with AR Global, and these related parties receive compensation, fees and expense reimbursements for services related to managing our business and investments. 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.
On December 22, 2017, we purchased all of the membership interests in indirect subsidiaries of American Realty Capital Healthcare Trust III, Inc. (“HT III”) that own the 19 properties which comprised substantially all of HT III’s assets (the “Asset Purchase”), pursuant to a purchase agreement (the “Purchase Agreement”), dated as of June 16, 2017. HT III was sponsored and advised by an affiliate of our Advisor.
Portfolio Summary
9.2 million rentable square feet. The following table summarizes our portfolio of properties as of December 31, 2018:2021:
Asset TypeNumber of PropertiesRentable Square Feet
Gross
Asset Value (2)
Gross Asset Value %
(In thousands)
Medical Office and Other Healthcare-Related Buildings (1)
146 5,018,036 $1,424,581 55.0 %
Seniors Housing — Operating Properties (3)
56 (4)4,133,166 1,164,543 45.0 %
Total202 9,151,202 $2,589,124 100.0 %
Asset Type Number of Properties Rentable Square Feet 
Gross
Asset Value (1)
 Gross Asset Value %
      (In thousands)  
Medical office and outpatient 111
 3,886,201
 $1,055,873
 40.9%
Seniors housing 62
 4,254,960
 1,155,763
 44.8%
Hospitals, post-acute and other 18
 1,001,278
 367,599
 14.3%
Total 191
 9,142,439
 $2,579,235
 100.0%
________
_______________(1)    Includes other triple-net leased properties which were previously presented as a separate reportable segment in prior years.
(1)
Gross Asset Value represents the total real estate investments, at cost, assets held for sale at carrying value, net of gross market lease intangible liabilities.

(2) Gross asset value represents total real estate investments, at cost ($2.6 billion total at December 31, 2021), net of gross market lease intangible liabilities ($23.5 million total at December 31, 2021). Impairment charges are already reflected within gross asset value.
(3) As of December 31, 2021, we had 4,494 rentable units in our SHOP segment.
(4) Includes two land parcels.
In constructing our portfolio, we are committed to a strategy dedicated to diversification of geography.diversifying our assets by geographic region. The following table details the geographic distribution, by region, of our portfolio as of December 31, 2018:2021:
Geographic RegionNumber of Properties
Annualized Rental Income (1)
Rentable
Square Feet
Rentable Units in SHOP Segment
(In thousands)
Northeast24 $32,947 1,598,989 257 
South72 123,456 3,280,923 1,642 
Midwest75 107,479 2,785,073 2,001 
West31 44,633 1,486,217 594 
Total202 $308,515 9,151,202 4,494 
Geographic Region Number of Properties 
Annualized Rental Income (1)
 
Rentable
Square Feet
    (In thousands)  
Northeast 17
 $40,862
 1,572,523
South 70
 138,278
 3,498,134
Midwest 74
 121,453
 2,653,337
West 30
 48,019
 1,418,445
Total 191
 $348,612
 9,142,439
________
_______________(1)    Annualized rental income on a straight-line basis for the leases in place in the property portfolio as of December 31, 2021, which includes tenant concessions such as free rent, as applicable, as well as annualized gross revenue from our SHOPs (as defined below) for the fourth quarter of 2021.
(1)Annualized rental income on a straight-line basis for the leases in place in the property portfolio as of December 31, 2018, which includes tenant concessions such as free rent, as applicable, as well as gross revenue from our SHOPs (as defined below).
BusinessInvestment Strategy
We seek to protect and enhance long-term stockholder value by creating stable, reliable and growing income streams generated through the ownership of a balanced and diversified portfolio of healthcare real estate. Our investment strategy is guided by three core principles: (1) maintaining a balanced, well-diversified portfolio of high qualityhigh-quality assets; (2) pursuing accretive and opportunistic investment opportunities; and (3) maintaining a strong and flexible capital structure.
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We have invested, and expect to continue investing, primarily in MOBs and seniors housing properties.properties, primarily structured as SHOPs. In addition, we may invest in facilities leased to hospitals, including rehabilitation hospitals, long-term acute care centers, surgery centers, inpatient rehabilitation facilities, special medical and diagnostic service providers, laboratories, research firms, pharmaceutical and medical supply manufacturers and health insurance firms. While we may invest in facilities across the healthcare continuum, our primary investment focus going forward is MOBs and Seniors Housing — Operating Properties ("SHOP"). Our SHOP investments are held through a structure permitted under the provisionsREIT Investment Diversification and Empowerment Act of RIDEA (as defined below)2007 ("RIDEA"). We generally acquire a fee interest in any property we acquire (a "fee interest"“fee interest” is the absolute, legal possession and ownership of land, property, or rights), although we may also acquire a leasehold interest (a "leasehold interest"“leasehold interest” is a right to enjoy the exclusive possession and use of an asset or property for a stated definite period as created by a written lease). We have and may continue to acquire properties through a joint venture or the acquisition of substantially all of the interests of an entity which in turn owns the real property. We also may make preferred equity investments in an entity.
We have, and mayHealthcare is the single largest industry in the future, enter into management agreements with healthcare operatorsUnited States based on contribution to manage communities that are placed in a structure permittedGross Domestic Product (“GDP”). According to the National Health Expenditures Projections, 2019 - 2028 report by the REIT Investment Diversification Empowerment ActCenters for Medicare and Medicaid Services (“CMS”): (i) national health expenditures are projected to grow 5.4% for 2021 through 2023 and at an average annual growth rate of 2007 ("RIDEA"). Under5.6% per year from 2024 through 2028 and (ii) the provisionshealthcare industry is projected to increase from 17.7% of RIDEA, a REIT may lease "qualifiedU.S. GDP in 2018 to 19.7% by 2028. This growth in expenditures is projected to lead to significant growth in 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." We view RIDEA as a structure primarily to be used on properties that present attractive valuation entry points with long term growth prospects or drive growth by: (i) transitioning the asset to a new operator that can bring scale, operating efficiencies, or ancillary services; or (ii) investing capital to reposition the asset.
A smaller part of our business may involve originating or acquiring loans secured by or relatedemployment. According to the same typesU.S. Department of Labor’s Bureau of Labor Statistics, the healthcare industry was one of the largest industries in the United States, providing approximately 20.2 million seasonally adjusted jobs as of December 31, 2021. According to the Bureau of Labor Statistics, employment of healthcare occupations (healthcare practitioners and technical occupations and healthcare support) is projected to grow 16% from 2020 to 2030, adding approximately 2.6 million new jobs. This growth is expected due to an aging population and the projected increase in the number of individuals who have access to health insurance. We believe that the continued growth in employment in the healthcare industry will lead to growth in demand for MOBs and other facilities that serve the healthcare industry.
In addition to the growth in national health expenditures and corresponding increases in employment in the healthcare sector, the nature of healthcare delivery continues to evolve due to the COVID-19 pandemic, impact of government programs, regulatory changes and consumer preferences. We believe these changes have increased the need for capital among healthcare providers and increased incentives for these providers to develop more efficient real estate solutions in order to enhance the delivery of quality healthcare.
The aging of the U.S. population has a direct effect on the demand for healthcare as older persons generally utilize healthcare services at a rate well in excess of younger people. According to the Centers for Disease Control and Prevention (the “CDC”), 7.0% of all adults aged 65 years and over during 2018 needed help with personal care from another person. For both sexes combined, adults aged 85 years and over (21.1%) were nearly three times as likely as adults aged 75 to 84 (8.0%) to need help with personal care from other persons; adults aged 85 and over were nearly six times as likely as adults aged 65 to 74 (3.9%) to need help with personal care from other persons.
We believe that the aging population, improved chronic disease management, technological advances and healthcare reform will positively affect the demand for MOBs, seniors housing properties and other healthcare-related facilities and generate attractive investment opportunities. The first wave of Baby Boomers, the largest segment of the U.S. population, began turning 65 in 2011. According to the U.S. Census Bureau, the U.S. population over 65 will grow to 94.7 million in 2060, up from 49.2 million in 2016. This group will grow more rapidly than the overall population. Thus, its share of the population will increase to 23% in 2060, from 15% in 2016. Patients with diseases that were once life threatening are now being treated with specialized medical care and an arsenal of new pharmaceuticals. Advances in research, diagnostics, surgical procedures, pharmaceuticals and a focus on healthier lifestyles have led to people living longer. Finally, we believe that healthcare reform in the United States will continue to drive an increase in demand for medical services, and in particular, in the post-acute and long-term services which we may invest directly. Likewise, weour tenants and operators provide. We may invest in securities of publicly-tradedhealthcare assets through development and private companies primarily engaged in real estate businesses, including REITs and other real estate operating companies, and securities issued by pass-through entities of which substantially all of the assets consist of qualifying assets or real estate-related assets. For example, we may purchase the common stock, preferred stock, debt, or other securities of these entities or options to acquire these securities. Examples of loans we may invest in include, but are not limited to, investments in first, second and third mortgage loans, wraparound mortgage loans, construction mortgage loans on real property and loans on leasehold interest mortgages. We also may invest in participations in mortgage, bridge or mezzanine loans unsecured loans.
Maintaining a Balanced, Well Diversified Portfolio of High Quality Assets
We seek balance and diversity within our portfolio. This extends to the mix of tenancy, geography, operator/managers and payors within our facilities.

joint venture partnerships.
As of December 31, 2018, 20172021, 2020 and 2016,2019, none of our tenants (together with their affiliates) had annualized rental income on a straight-line basis representing 10% or greater of total annualized rental income on a straight-line basis for the portfolio.
The following table lists the states where we 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 December 31, 2018, 20172021, 2020 and 2016:2019:
December 31,
State202120202019
Florida (1)
17.7%20.6%25.2%
Michigan (2)
**10.9%
Pennsylvania*10.4%*
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  December 31,
State 2018 2017 2016
Florida 16.6% 17.5% 19.3%
Georgia 10.1% 10.7% 10.2%
Iowa * * 10.5%
Michigan 13.1% 11.6% *
Pennsylvania 10.2% 10.8% 12.0%
________
_______________
*State's*    State’s annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income on a straight-line basis for all portfolio properties as of the period specified.
Investing in Healthcare-related Facilities
Healthcare-related facilities include MOBs and outpatient facilities, seniors housing properties, such as assisted and independent living and memory care facilities, as well as hospitals, inpatient rehabilitation hospitals, long-term acute care centers, surgery centers,(1)In May 2021, the Company’s skilled nursing facilities, specialty medicalfacility in Wellington, Florida, and diagnostic facilities, research laboratoriesthe Company’s development property in Jupiter, Florida were sold. In December 2020, the Company’s skilled nursing facility in Lutz, Florida was sold.
(2) During the year ended December 31, 2020, the Company sold 11 SHOPs located in Michigan, seven of which were transferred to the buyer during the fourth quarter of 2020 and pharmaceutical buildings. While we may invest in facilities across the healthcare continuum, our primary investment focus going forward is MOBs and SHOPs.remaining four of which were transferred to the buyer during the first quarter of 2021.
Medical Office Building and Outpatient FacilitiesOther Healthcare-Related Buildings
As of December 31, 2018,2021, we owned 111146 MOBs and outpatient facilitiesother health care related buildings under lease totaling 3.95.0 million square feet. These facilitiesproperties are leased to tenants that provide healthcare services that typically contain physicians'consist of:
physicians’ offices and examination rooms, and may also include
pharmacies,
hospital ancillary service space and outpatient services such as diagnostic imaging centers, rehabilitation clinics and ambulatory surgery centers. Thesecenters,
hospitals,
post-acute care facilities,
skilled nursing facilities (“SNFs”) and;
other facilities.
Certain of our properties can be located on or near hospital campuses and require significant plumbing, electrical and mechanical systems to accommodate diagnostic imaging equipment such as x-rays or other imaging equipment, and may also have significant plumbing to accommodate physician exam rooms. In addition, MOBs are often built to accommodate higher structural loads for certain equipment and may contain specialized construction such as cancer radiation therapy vaults for cancer treatment.
Hospitals can include general acute care hospitals, inpatient rehabilitation hospitals, long-term acute care hospitals and surgical and specialty hospitals. These facilities provide inpatient diagnosis and treatment, both medical and surgical, and provide a broad array of inpatient and outpatient services including surgery, rehabilitation therapy as well as diagnostic and treatment services. Post-acute facilities offer restorative, rehabilitative and custodial care for people not requiring the more extensive and complex treatment available at acute care hospitals. We include these types of assets in our MOB and other health care related segment when the property is leased to a tenant that operate the property.
There are a variety of types of MOBs: on campus, off campus, affiliated and non-affiliated. On campus MOBs are physically located on a hospital'shospital’s campus, often on land leased from the hospital. A hospital typically creates strong tenant demand which leads to high tenant retention. Off campus properties are located independent of a hospital'shospital’s location. Affiliated MOBs may be located on campus or off campus, but are affiliated with a hospital or health system. In some respects, affiliated MOBs are similar to on campus MOBs because the hospital relationship drives tenant demand and retention. Finally, non-affiliated MOBs are not affiliated with any hospital or health system, but may contain physician offices and other healthcare services. We favor affiliated MOBs versus non-affiliated MOBs because of the relationship and synergy with the sponsoring hospital or health system and buildings not affiliated with the hospital or health system but anchored or entirely occupied by a long-tenured physician practice.
The following table reflects the on campus, off campus, affiliated and non-affiliated MOB composition of our portfolio as of December 31, 2018:2021:
MOB Classification Number of Buildings Rentable Square FeetMOB ClassificationNumber of PropertiesRentable Square Feet
On Campus 21
 1,248,668
On Campus127 3,906,782 
Off Campus 90
 2,637,533
Off Campus19 1,111,254 
Total 111
 3,886,201
Total146 5,018,036 
    
Affiliated 84
 3,141,339
Affiliated72 2,921,151 
Non-affiliated 27
 744,862
Non-affiliated74 2,096,885 
Total 111
 3,886,201
Total146 5,018,036 
Seniors Housing Properties
As of December 31, 2018,2021, we owned 5854 seniors housing properties under athe RIDEA structure permitted by RIDEA,in our SHOP segment, and four seniors housing properties under long term leases, which are included within our triple net leased healthcare facilities segment. Under RIDEA, a REIT may lease qualified healthcare properties on an arm'sarm’s length basis to a TRStaxable REIT subsidiary (“TRS”) if the property is operated on behalf of such subsidiary by a person who qualifies as an eligible independent contractor. SeniorsOur seniors housing properties primarily consist of independent living facilities, assisted living facilities and memory care facilities.
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These facilities cater to different segments of the elderly population based upon their personal needs and need for assistance with the activities of daily living. Services provided by our operators or tenants in these facilities are primarily paid for by the residents directly and are less reliant on government reimbursement programs such as Medicaid and Medicare.
Assisted Living and Memory Care Facilities
Assisted living facilities are licensed care facilities that provide personal care services, support and housing for those who need help with activities of daily living, such as bathing, eating and dressing, yet require limited medical care. The programs and services may include transportation, social activities, exercise and fitness programs, beauty or barber shop access, hobby and craft activities, community excursions, meals in a dining room setting and other activities sought by residents. ALFsAssisted living facilities are often in apartment-like buildings with private residences ranging from single rooms to large apartments. Certain ALFsassisted living facilities may offer a separate facility that provides a higher level of care for residents requiring memory care as a result of Alzheimer'sAlzheimer’s disease or other forms of dementia. Levels of personal assistance are based in part on local regulations. As of December 31, 2018,2021, our seniors housing properties included approximately 2,4252,352 assisted living units and 1,1391,229 memory care units.
Independent Living Facilities
Independent living facilities are designed to meet the needs of seniors who choose to live in an environment surrounded by their peers with services such as housekeeping, meals and activities. These residents generally do not need assistance with activities of daily living, however, in some of our facilities, residents have the option to contract for these services. As of December 31, 2018,2021, our seniors housing properties included 1,012882 independent living units. However, independent living facilities on their own are not treated as qualified health care properties eligible to be held through a RIDEA structure.
Hospitals, Post-Acute Care and Other Facilities
Our hospitals, post-acute care and other facilities are leased to tenants that provide healthcare services. As of December 31, 2018, we owned 18 other healthcare-related assets, including hospitals and post-acute care facilities. Hospitals can include general acute care hospitals, inpatient rehabilitation hospitals, long-term acute care hospitals and surgical and specialty hospitals. These facilities provide inpatient diagnosis and treatment, both medical and surgical, and provide a broad array of inpatient and outpatient services including surgery, rehabilitation therapy as well as diagnostic and treatment services. Post-acute facilities offer restorative, rehabilitative and custodial care for people not requiring the more extensive and complex treatment available at acute care hospitals. TRS.
Ancillary revenues and revenues from sub-acute care services are derived from providing services beyond room and board and include occupational, physical, speech, respiratory and intravenous therapy, wound care, oncology treatment, brain injury care and orthopedic therapy, as well as sales of pharmaceutical products and other services. Certain facilities provide some of the foregoing services on an outpatient basis. Our post-acute care services may be provided by SNFs which offer licensed therapy services, nutrition services, social services, activities, housekeeping, laundry services, medical services prescribed by physicians and rehabilitative services to residents in need of nursing care, but who do not require hospitalization. Inpatient rehabilitation services provided by our operators and tenants in these facilities are primarily paid for by private sources or through the Medicare and Medicaid programs.
Healthcare Industry
Healthcare is During the single largest industryyears ended December 31, 2021 and 2020, we have undertaken efforts to divest from SNFs through our property dispositions, and we have also converted many SNF units to memory care units in the United States based on Gross Domestic Product ("GDP"). According to the National Health Expenditures Projections, 2018 - 2027 report by the Centers for Medicare and Medicaid Services ("CMS"): (i) national health expenditures are projected to grow 4.8% in 2019 and at an average annual growth rate of 5.5% for 2018 through 2027 and (ii) the healthcare industry is projected to increase from 17.9% of U.S. GDP in 2017 to 19.4% by 2027. This growth in expenditures is projected to lead to significant growth in healthcare employment. According to the U.S. Department of Labor's Bureau of Labor Statistics, the healthcare industry was one of the largest industries in the United States, providing approximately 20.2 million seasonally adjusted jobs asour existing properties, which have significantly reduced our SNF operations. As of December 31, 2018. According2021 our seniors housing properties included 31 SNF units.
Impact of COVID-19 Pandemic
The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across many sectors and areas of the global economy and financial markets, leading to significant adverse impacts on economic activity including volatility in financial markets. The impact of the BureauCOVID-19 pandemic has evolved rapidly. In many states and cities where our properties are located, measures including “shelter-in-place” or “stay-at-home” orders issued by local, state and federal authorities for much of Labor Statistics, employment of healthcare occupations (healthcare practitioners and technical occupations and healthcare support) is projected to grow 18% from 2016 to 2026, adding approximately 2.4 million new jobs. This growth is expected due to an aging population2020 and the projectedearly part of 2021 and social distancing measures have resulted in closure and limitations on the operations of many businesses and organizations. While strict “shelter-in-place” and similar orders have generally been lifted, continued limitations on indoor occupancy or other restrictions applicable to in-person operations have been and may in future be re-instituted in some jurisdictions as rates of infection increase in those locations, including in light of the numberspread of individuals whothe Delta and Omicron variants and other potentially more contagious variants of the SARS-CoV-2 virus. As the COVID-19 pandemic continues, it is highly uncertain to what extent and when any such continuing restrictions will be lifted in various jurisdictions and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against these variants and the response by governmental bodies and regulators. Our tenants and SHOP properties operate businesses that require in-person interactions with their patients and residents. Even for businesses that have accessnot closed or have closed and reopened, concern regarding the transmission of COVID-19 has impacted, and will likely continue to health insurance. We believe thatimpact, the continued growthwillingness of persons to, among other things, live in employmentor use facilities at our properties, and impact the revenues generated by our tenants which may further impact the ability of our tenants to pay their rent obligations to us when due.
The COVID-19 pandemic has impacted global economic activity. Our ability to lease space and negotiate and maintain favorable rents and the results of operations at our SHOPs could also continue to be negatively impacted by a prolonged recession in the healthcare industry will leadU.S. economy as could the rates charged to growth in demand for medical office buildings and other facilities that serve the healthcare industry.

In addition to the growth in national health expenditures and corresponding increases in employment in the healthcare sector, the nature of healthcare delivery continues to evolve due to the impact of government programs, regulatory changes and consumer preferences. We believe these changes have increased the need for capital among healthcare providers and increased incentives for these providers to develop more efficient real estate solutions in order to enhance the delivery of quality healthcare. In particular, we believe the following demographic factors and trends are creating an attractive environment in which to invest in healthcare properties.
Demographics
The aging of the U.S. population has a direct effect onresidents at our SHOPs. Moreover, the demand for healthcareleasing space at our MOB properties could decline further negatively impacting occupancy percentage, revenue and net income. Additionally, downturns or stagnation the U.S. housing market as older persons generally utilize healthcarea result of an economic downturn could adversely affect the ability, or perceived ability, of seniors to afford the resident fees and services at our seniors housing properties.
Starting in March 2020, the COVID-19 pandemic and measures to prevent its spread began to affect us in a rate wellnumber of ways that vary by operating segment.

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COVID-19 Impact — MOB Segment
The financial stability and overall health of our tenants is critical to our business. The negative effects that the global pandemic has had on the economy includes the closure or reduction in excessoccupancy activity at some of younger people. Accordingour MOBs. The economic impact of the pandemic has impacted the ability of some of our tenants to pay their monthly rent either temporarily or in the Centerslong term. We experienced delays in rent collections in the second, third and fourth quarters of 2020, although collections have been approximately 100% of original cash rent for Disease Controlthe MOB segment throughout the year ended December 31, 2021. We have taken a proactive approach to achieve mutually agreeable solutions with its tenants and Prevention (the "CDC"), 6.9% of all adults aged 65 years and overin some cases, during the first halfyear ended December 31, 2020, we executed lease amendments providing for deferral of 2018 needed helprent. During the year ended December 31, 2021, we did not enter into any rent deferral agreements with personal care from another person. For both sexes combined, adults aged 85 years and over (19.6%) were nearly three times as likely as adults aged 75 to 84 (8.7%) to need help with personal care from other persons; adults aged 85 and over were nearly six times as likely as adults aged 65 to 74 (3.7%) to need help with personal care from other persons.  Also, according to the CDC, symptomsany of Alzheimer’s disease generally do not appear until after the age of 60. Starting at age 65, the risk of developing the disease doubles every five years, and is the sixth leading cause of death among all adults and the fifth leading cause for those aged 65 or older. Up to 5 million Americans currently have Alzheimer’s disease and by 2060 the number is expected to more than triple to 14 million due to the aging of the population.
We believe that the aging population, improved chronic disease management, technological advances and healthcare reform will positively affect the demand for medical office buildings, seniors housing properties and other healthcare-related facilities and generate attractive investment opportunities. The first wave of Baby Boomers, the largest segment of the U.S. population, began turning 65 in 2011. According to the U.S. Census Bureau, the U.S. population over 65 will grow to 1.6 billion in 2050, up from 47 million in 2015. This group will grow more rapidly than the overall population.  Thus, its share of the population will increase to 16.7% in 2050, from 8% in 2015. Patients with diseases that were once life threatening are now being treated with specialized medical care and an arsenal of new pharmaceuticals. Advances in research, diagnostics, surgical procedures, pharmaceuticals and a focus on healthier lifestyles have led to people living longer. Finally, we believe that healthcare reform in the United States will continue to drive an increase in demand for medical services, and in particular, in the post-acute and long term services which our tenants, and all amounts previously deferred under prior rent deferral agreements have been collected.
COVID-19 Impact — SHOP Segment
In our SHOP portfolio, occupancy had trended lower since March 2020 and the declines only recently began to level off in June 2021. Government policies and implementation of infection control best practices materially limited or closed communities to new resident move-ins which has affected our ability to fill vacancies. We also experienced lower inquiry volumes and reduced in-person tours during the pandemic. In addition, starting in mid-March 2020, operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies, as our operators provide.
Pursuing Accretivetook appropriate actions to protect residents and Opportunistic Investment Opportunities
Depending upon market conditions,caregivers. At the SHOP facilities, we believe that new investments will be availablegenerally bear these cost increases, which were partially offset by funds received under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and to a lesser extent, cost recoveries for personal protective equipment from residents. See below for additional information on the CARES Act. These trends accelerated beginning in the future which will be accretivesecond quarter of 2020, continued into early 2021 until stabilizing in the third quarter, and are expected to improve in 2022. Future developments in the course of the pandemic may cause further adverse impacts to our earningsoccupancy and will generate attractive returnscost levels, and these trends may continue to impact us and have a material adverse effects on our stockholders. We investrevenues and income in medical office buildings, seniors housingthe other quarters. While the development of COVID vaccines may limit that effect, the effectiveness of vaccines and certain other healthcare real estate primarily through acquisitions, although we may also do so through developmentthe willingness to receive vaccines are highly uncertain and joint venture partnerships. In determining whether to invest in a property, we focus on the following: (1) the experiencecannot be predicted with confidence.
The financial impact of the obligor's/partner's management team; (2)COVID-19 pandemic on us has been partially offset by funds received under the historicalCARES Act. We received $5.1 million and projected financial$3.6 million in these funds during the years ended December 31, 2021 and operational performance2020, respectively. We consider these funds to be a grant contribution from the government. The full amounts received were recognized as a reduction of property operating expenses in our consolidated statement of operations for the property; (3)years ended December 31, 2021 and 2020, respectively, to offset the credit of the obligor/partner; (4) the security for any lease or loan; (5) the real estate attributes of the building, its age and location; (6) the capital committed to the property by the obligor/partner; and (7) the operating fundamentals of the applicable industry. We conduct market research and analysis for all potential investments.incurred COVID-19 expenses. In addition, we reviewhave applied for additional funds, however, those applications have not yet been approved. There can be no assurance that the valueprogram will be extended or any further amounts received under currently effective or potential future government programs.
Organizational Structure
Substantially all of all properties,our business is conducted through Healthcare Trust Operating Partnership, L.P. (the “OP”), a Delaware limited partnership, and its wholly owned subsidiaries. Our Advisor manages our day-to-day business with the assistance of our property manager, Healthcare Trust Properties, LLC (the “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, has an interest rates and covenant requirementsin us through ownership of any facility-level debtinterests in our OP.
We own our SHOPs through the RIDEA structure, pursuant to which, a REIT may lease “qualified healthcare properties” on an arm’s length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor.” We view this as a structure primarily to be assumed atused on properties that present attractive valuation entry points with long term growth prospects or drive growth by: (i) transitioning the time ofasset to a new third-party operator that can bring scale, operating efficiencies, or ancillary services; or (ii) investing capital to reposition the acquisitionasset.
Financing Strategies and the anticipated sources of repayment of any existing debt that is not to be assumed at the time of the acquisition.
We monitor our investments through a variety of methods determined by the type of property. Our proactive and comprehensive asset management process generally includes review of monthly financial statements and other operating data for each property, review of obligor/partner creditworthiness, property inspections, and review of covenant compliance relating to licensure, real estate taxes, letters of credit and other collateral. Our Advisor's internal asset managers actively manage and monitor the medical office building portfolio with a comprehensive process including tenant relations, lease expirations, the mix of health service providers, hospital/health system relationships, property performance, capital improvement needs, and market conditions among other things. In monitoring our portfolio, our Advisor's personnel use a proprietary database to collect and analyze property-specific data. Additionally, we conduct extensive research to ascertain industry trends.
Maintaining a Strong and Flexible Capital StructurePolicies
We utilize a combination of debt and equity to fund our investment activity. Our debt and equity levels are determined by management in consultation with the Board. For short-term purposes, we may borrow from our Revolvingrevolving credit facility (our “Revolving Credit FacilityFacility”) and our Fannie Mae Master Credit Facilities, which include a secured credit facility (the "KeyBank Facility") with KeyBank together withNational Association (the “KeyBank Facility”) and a secured credit facility (the "Capital One Facility") with Capital One Multifamily Finance, LLC, an affiliate of Capital One, National Association (the “Capital One Facility”). (The KeyBank Facility and Capital One Facility and the KeyBank Facility are referred to herein individually as a "Fannie“Fannie Mae Master Credit Facility"Facility” and together as the "Fannie“Fannie Mae Master Credit Facilities"Facilities”). On March 13, 2019, we amended and restated our existing if additional properties are added to the collateral pool. Our senior secured revolving credit facility (the “Prior Creditwith KeyBank National Association (our “Credit Facility”), which was scheduled to mature on March 21, 2019, by entering into our New Credit Facility with primarily the same lenders that were lenders under the Prior Credit Facility, with Keybank National Association

remaining as agent for the lenders. Our New Credit Facility consists of two components, theour Revolving Credit Facility and our Term Loan. At the closing under our New Credit Facility, we had a total borrowing capacity thereunder of $263.1 million based on the value of the borrowing base thereunder. Of this amount, $233.6 million was outstanding including $150.0 million outstanding under our Term Loan, and $83.6 million was outstanding under the Revolving Credit Facility, while $29.5 million remained available for future borrowings under the Revolving Credit Facility. Like the Prior Credit Facility, our Newterm loan (our “Term Loan”). Our Credit Facility is secured by a pledged pool of the equity interests and related rights in wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base thereunder. As of December 31, 2018, the Fannie Mae Master Credit Facilities are secured by mortgages on 22 properties, in aggregate. We may seek and even replace current borrowings with longer-term capital such as senior secured or unsecured notes or other forms of long-term financing. We may invest in properties subject to existing mortgage indebtedness, which we assume as part of the
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acquisition. In addition, we may obtain financing secured by previously unencumbered properties in which we have invested or may refinance properties acquired on a leveraged basis. In our agreements with our lenders, we are subject to restrictions with respect to secured and unsecured indebtedness, including restrictions on permitted investments, distributions and maintenance of a maximum leverage ratio, a minimum fixed charge coverage ratio, among other things. As of December 31, 2018,2021 we were in compliance with these covenants. As of December 31, 2021, our total debt leverage ratio (total(net debt divided by total assets)gross asset value) was approximately 45.2%40.1%. Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and we hadcash equivalents ($59.7 million). Gross asset value totaled $2.6 billion, which represents total borrowingsreal estate investments, at cost ($2.6 billion), net of $1.1 billion.gross market lease intangible liabilities ($23.5 million). Impairment charges are already reflected within gross asset value.
Tax Status
We elected to be taxed as a REIT under Sections 856 through 860 of Internal Revenue Code of 1986, as amended (the "Code"“Code”), commencing with 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 for taxation as a REIT under the Code. We intend to continue to operate in such a manner, but can provide no assurance can be given that we will operate in a manner so as to remain qualified as a REIT. In order toTo continue to qualify for taxation as a REIT, we must, among other things, distribute at least 90% of our REIT taxable income, (whichwhich does not equal net income as calculated in accordance with accounting principles generally accepted in the United States ("GAAP")(“GAAP”), determined without regard to the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to U.S. federal corporate income tax on thatthe portion of our REIT taxable income that we distribute to our stockholders. Even if we continue to qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as U.S. federal income and excise taxes on our undistributed income.
Certain limitations are imposed on REITs with respect to the ownership and operation of seniors housing properties. Generally, to qualify as a REIT, we cannot directly or indirectly operate seniors housing properties. Instead, such facilities may be either leased to a third-party operator or leased to a TRS and operated by a third party on behalf of the TRS. Accordingly, we have 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 December 31, 2021, we owned 54 seniors housing properties, excluding two land parcels, which we lease to our TRS. The TRS is a wholly-owned subsidiary of the OP.
Competition
The market for MOBs, seniors housingMOB and other healthcare-relatedSHOP real estate is highly competitive. We compete in all of our markets based on a number of factors that include location, rental rates, security, suitability of the property'sproperty’s design to prospective tenants'tenants’ needs and the manner in which the property is operated and marketed. In addition, we compete with other entities engaged in real estate investment activities to locate suitable properties to acquire, tenants to occupy our properties and purchasers to buy our properties. These competitors include other REITs, private investment funds, specialty finance companies, institutional investors, pension funds and their advisors and other entities. There are also other REITs with asset acquisition objectives similar to ours, and others may be organized in the future. Some of these competitors, including larger REITs, have substantially greater marketing and financial resources than we have and generally may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of tenants. In addition, these same entities seek financing through similar channels.
Healthcare Regulation
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Overview
The healthcare industry is one of the most regulated industries in the United States and is currently experiencing rapid regulatory change and uncertainty. The legal challenges and legislative initiatives to roll back the Patient Protection and Affordable Care Act (the "Affordable Care Act" or "ACA") continue and the outcomes are uncertain. The regulatory uncertainty and the potential impact on our tenants and operators could have an adverse material effect on their ability to satisfy their contractual obligations.
Our tenants and operators must comply with a wide-rangewide range of complex federal, state, and local laws and regulations, and the healthcare industry, in general, is the subject to increased enforcement and penalties in all areas. Fraud and abuse continues to be an enforcement priority at both the federal and state levels including, but not limited to, the Federal Anti-Kickback Statute, the Federal Physician Self-Referral Statute (commonly known as the "Stark Law"“Stark Law”), the FCA,False Claims Act (“FCA”), the Civil Monetary Penalties Law ("CMPL"(“CMPL”), and a range of other federal and state regulations relating to waste, cost control, and healthcare management. The business and operations of our tenants and therefore our business could be materially impacted by, among other things, a significant expansion of applicable federal, state or local laws and regulations, continued judicial and legislative changes or new judicial challenges to the ACA,Patient Protection and Affordable Care Act (the “Affordable Care Act” or “ACA”), future attempts to reform healthcare, new interpretations of existing laws and regulations, and changes or increased emphasis on certain enforcement priorities.

Additionally, the ongoing political and legal challenges to the ACA leave its future uncertain. In December 2018, a Texas federal judge ruled that the ACA's individual mandate violates the Constitution and therefore the entire ACA violates the Constitution. The decision will most likely be appealed. The U.S. Department of Health and Human Services ("HHS") responded by clarifying that the US District Court decision did not halt the enforcement of the ACA. The confusion around the state of the ACA, the shift towards less comprehensive health insurance coverage, higher deductibles, and increased consumer cost-sharing on health expenditures could have a material adverse effect on our tenants’ financial conditions and results of operations and, in turn, their ability to satisfy their contractual obligations.
Our tenants and operators are subject to extensive federal, state, and local laws, regulations and industry standards which govern business operations, physical plant and structure, patient and employee health and safety, access to facilities, patient rights - including privacy, price transparency, fewer restrictions on access to care - and security of health information. Our tenants’ and operators’ failure to comply with any of these laws could result in loss of licensure, denial of reimbursement, imposition of fines or other penalties, suspension or exclusion from the government sponsored Medicare and Medicaid programs, loss of accreditation or certification, reputational damage orand closure of a facility. In addition, both government and private third-party payors will likely continue their efforts to drive down reimbursement. The Medicare and Medicaid programs have adopted a variety of initiatives which have been incorporated and expanded by private insurance carriers, including health maintenance organizations and other health plans, to extract greater discounts and impose more stringent cost controls upon healthcare provider operations. Examples include, but are not limited to, changes in reimbursement rates and methodologies such as bundled payments, capitation payments, and discounted fee structures. Our tenants and operators may also face significant limits on the scope of services reimbursed and on reimbursement rates and fees. All of these changes could impact our operators’ and tenants’ ability to pay rent or other obligations to us.
Licensure, Certification and Certificate of Need
Our tenants operate hospitals, assisted living facilities, skilled nursing facilities and other healthcare facilities that receive reimbursement for services from third-party payors, including the government sponsored Medicare and Medicaid programs and private insurance carriers. To participate in the Medicare and Medicaid programs, operators of healthcare facilities must comply with the regulations previously referenced, as well as with licensing, certification and, in 35some states, plus the District of Columbia, with certificate of need (“CON”) requirements. Licensing and certification requirements also subject our tenants to compliance surveys and audits which are critical to the ongoing operations of the facilities.
In granting and renewing these licenses and certifications, the state regulatory agencies consider numerous factors relating to a facility’s operations, including, but not limited to, the plant and physical structure, admission and discharge standards, staffing, training, patient and consumer rights, medication guidelines and other rules. If an operator fails to maintain or renew any required license, certification or other regulatory approval, or to correct serious deficiencies identified in compliance surveys, the operator could be prohibited from continuing operations at a facility.
A loss of licensure or certification, as well as a change in participation status, could also adversely affect an operator'soperator’s ability to receive payments from the Medicare and Medicaid programs, which, in turn, could adversely affect the operator'soperator’s ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of, its leases with us. In addition, if we have to replace an operator, we may experience difficulties in finding a replacement because our ability to replace the operator may be affected by federal and state laws governing changes in control and ownership.
Similarly, in order to receive Medicare and Medicaid reimbursement, our healthcare facilities must meet the applicable conditions of participation established by HHS the U.S. Department of Health and Human Services (“HHS”)relating to the type of facility and its equipment, personnel and standard of medical care, as well as comply with other federal, state and local laws and regulations. Healthcare facilities undergo periodic on-site licensure surveys, which generally are limited if the facility is accredited by The Joint Commission or other recognized accreditation organizations. A loss of licensure or certification could adversely affect a facility'sfacility’s ability to receive payments from the Medicare and Medicaid programs, which, in turn, could adversely affect its ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with, the terms of the operator'soperator’s or facility'sfacility’s leases with us.
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In mostsome states, skilled nursinghealthcare facilities and hospitals are subject to various state CON laws requiring governmental approval prior to the development or expansion of healthcare facilities and services. The approval process in these states generally requires a facility to demonstrate the need for additional or expanded healthcare facilities or services. CONs, where applicable, can also be conditions to regulatory approval of changes in ownership or control of licensed facilities, addition of beds, investment in major capital equipment, introduction of new services, termination of services previously approved through the CON process and other control or operational changes.
In CON states, regulators are increasingly concentrating their activities on outpatient facilities and long-term care as those are expanding sectors of the health care industry. CON laws and regulations may restrict an operator'soperator’s ability to expand properties and grow the operator'soperator’s business in certain circumstances, which could have an adverse effect on the operator'soperator’s or tenant'stenant’s revenues and, in turn, negatively impact their ability to make rental payments under, and otherwise comply with the terms of their leases with us.

Fraud and Abuse Enforcement
Various federal and state laws and regulations are aimed at actions that may constitute fraud and abuse by healthcare entities and providers who participate in, submit or cause to be submitted claims for payment to, or make or receive referrals in connection with government-funded healthcare programs, including Medicare and Medicaid. The federal laws include, for example, the following:
The Federal Anti-Kickback Statute (42 USC Section 1320a-7b(b)(b) of the Social Security Act) which prohibits the knowing and willful solicitation, offer, payment or acceptance of any remuneration, directly or indirectly, overtly or covertly, in cash or in kind in return for: (i) referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a federal health care program; or (ii) purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in party under a federal health care program;
The Federal Physician Self-Referral ProhibitionStark Law (42 USC Section 1395nn which is commonly referred as the "Stark Law")1395nn), which prohibits referrals by physicians of Medicare patients to providers of a broad range of designated healthcare services in which the physicians (or their immediate family members) have ownership interests or certain other financial arrangements, unless an exception applies, and prohibits the designated health services entity from submitting claims to Medicare for those services resulting from a prohibited referral;
The False Claims Act ("FCA") (13FCA (31 USC Sections 3729-3733) creates liability for any person who submits a false claim to the government or causes another to submit a false claim to the government or knowingly makes a false record or statement to get a false claim paid by the government. In what is known as reverse false claims, the FCA imposes liability where a person acts improperly to avoid having to pay money to the government. The FCA also creates liability for people who conspire to violate the FCA; and
The CMPL (42 USC 1320a-7a for healthcare) authorizes HHS to impose civil penalties administratively for fraudulent acts. The scope of the Office of the Inspector General'sGeneral’s authority to enforce the CMPL was increased in 2016.
Courts have interpreted the fraud and abuse laws broadly. Sanctions for violating these federal laws include substantial criminal and civil penalties such as punitive sanctions, damage assessments, monetary penalties, imprisonment, denial of Medicare and Medicaid payments, and exclusion from the Medicare and Medicaid programs. These laws also impose an affirmative duty on operators to ensure that they do not employ or contract with persons excluded from the Medicare and other government programs. Many states have adopted laws similar to, or more expansive than, the federal fraud and abuse laws. States have also adopted and are enforcing laws that increase the regulatory burden and potential liability of healthcare entities including, but not limited to, patient protections, such as minimum staffing levels, criminal background checks, sanctions for employing excluded providers, restrictions on the use and disclosure of health information, and these state laws have their own penalties which may be in addition to federal penalties.
In the ordinary course of their business, the operators at our properties are regularly subject to inquiries, audits and investigations conducted by federal and state agencies that oversee applicable laws and regulations. Increased funding for investigation and enforcement efforts, accompanied by an increased pressure to eliminate government waste, has led to a significant increase in the number of investigations and enforcement actions over the past several years, a trend which is not anticipated to decrease considerably. Significant enforcement activity has been the result of actions brought by regulators, who file complaints in the name of the United States (and, if applicable, particular states) under the FCA or equivalent state statutes. Also, the qui tam and whistleblower provisions of the FCA allow private individuals to bring actions on behalf of the government alleging that the government was defrauded. Individuals have tremendous potential financial gain in bringing whistleblower claims as the statute provides that the individual will receive a portion of the money recouped. Additionally, violations of the FCA can result in treble damages.
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Violations of federal or state law or FCA actions against an operator of our properties could have a material adverse effect on the operator'soperator’s liquidity, financial condition or results of operations. Such a negative impact on an operator'soperator’s financial health could adversely affect its ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of, its leases and other agreements with us. Federal and state fraud and abuse laws may also restrict the terms of our rental agreements with our tenants.
Privacy and Security of Health Information
Various federal and state laws protect the privacy and security of health information. For example, the Health Insurance Portability and Accountability Act of 1996, its implementing regulations and related federal laws and regulations (commonly referred to as "HIPAA"“HIPAA”) protect the privacy and security of individually identifiable health information by limiting its use and disclosure. Many states have implemented similar laws to limit the use and disclosure of patient specific health information. The federal government has increased its HIPAA enforcement efforts over the past few years, which has increased the number of audits and enforcement actions, some of which have resulted in significant penalties to healthcare providers. For example, in October

2018, Anthem, Inc. agreed, in addition to implementing various corrective measures, to pay a record $16$16.0 million to HHS’s Office for Civil Rights in settlement of HIPAA violations stemming from the largest healthcare data breach in United States history. In September 2020, Premera Blue Cross agreed to pay a $6.9 million penalty, second only to the $16.0 million paid by Anthem, Inc., stemming from a 2014 data breach affecting over 10.0 million individuals. Violations of federal and state privacy and security laws could have a material adverse effect on the operator’s financial condition or operations, which could adversely affect its ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of, its leases and other agreements with us.
Reimbursement
We and our tenants derive a large portion of our revenues from insurance payments with the remainder coming from Medicare and Medicaid reimbursement and private pay. The reimbursement methodologies for healthcare facilities are constantly changing and federal and state authorities may implement new or modified reimbursement methodologies that may negatively impact healthcare operations. For example, the ACA enacted certain reductions in Medicare reimbursement rates for various healthcare providers, as well as certain other changes to Medicare payment methodologies.
The ACA has faced ongoing legal challenges, including litigation seeking to invalidate some or all of the law or the manner in which it has been interpreted. The uncertain status of the ACA and of the state Medicaid programs, among other things, affect our ability to plan for the future.
Federal and state budget pressures also continue to escalate and, in an effort to address actual or potential budget shortfalls, Congress and many state legislatures may continue to enact reductions to Medicare and Medicaid expenditures through cuts in rates paid to providers or restrictions in eligibility and benefits.
The expansion in health insurance coverage under the ACA is likely going to continue to erode in 2019 as cuts in advertising and outreach during the marketplace open-enrollment periods, shorter open enrollment periods, and other changes have left many Americans uncertain about their ability to access and be eligible for coverage. Additionally, the repeal of the individual mandate penalty included in the Tax Cuts and Jobs Act of 2017 ("TCJA"), recent actions to increase the availability of insurance policies that do not include ACA minimum benefit standards, and support for Medicaid work requirements will likely impact the market. Accordingly, current and future payments under federal and state healthcare programs may not be sufficient to sustain a facility’s operations, which could adversely affect its ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of, the facility’s leases and other agreements with us.
In addition to legislative and executive actions relating to the scope of the ACA, increased enforcement will likely continue to impact the financial framework for healthcare operators and facilities. For example, CMS is focused on reducing what it considers to be payment errors by identifying, reporting, and implementing actions to reduce payment error vulnerabilities. In November 2018,2020, CMS announced its successes in reducing the 20182020 Medicare improper payment rate and specifically called out the successes of its actions to address improper payments in home health and skilled nursing facilitySNF claims. In 2021, CMS again successfully reduced the 2021 Medicare improper payment rate.
In addition, CMS is currently in the midstCMS’s continuing transition of transitioning Medicare from a traditional fee for service reimbursement model to a capitated system, which means medical providers are given a set fee per patient regardless of treatment required, and value-based and bundled payment approaches, whereapproach, which shifts the government pays a set amount for each beneficiary for a defined periodfinancial responsibility of time, based on that person’s underlying medical needs, rather than based on the actual services provided. Providers and facilities are increasing responsiblecertain patients to care for and be financially responsible for certain populations of patients under the population health models and this shift in patient management paradigm is creating andproviders, will continue to create unprecedented challenges for providers.
Another notable Medicare health care reform initiative, the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), permanently repealed the Sustainable Growth Rate formula, and provided for an annual rate increase of 0.5% for physicians through 2019, but imposed a six-year freeze on fee updates from 2020 through 2025. MACRA established a new payment framework, called the Quality Payment Program, which modified certain Medicare payments to “eligible clinicians,” including physicians, dentists, and other practitioners. MACRA represents a fundamental change in physician reimbursement. The implications of MACRA continue to be uncertain and will depend on future regulatory activity and physician activity in the marketplace. MACRA reporting requirements and quality metrics may encourage physicians to move from smaller practices to larger physician groups or hospital employment, leading to further consolidation of the industry. These and other shifts in payment and risk sharing within an outcome-based model are leading to, among other trends, increasing use of management tools to oversee individual providers and coordinate their services. The focus on utilization puts downward pressure on the number and expense of services provided as payors are moving away from a fee for service model. The continued trend toward capitated, value-based, and bundled payment approaches has the potential to diminish the market for certain healthcare providers, particularly specialist physicians and providers of particular diagnostic technologies. This could adversely impact the medical properties that house these physicians and medical technology providers.
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In addition, on July 29, 2021, CMS announced a final rule that projects increased aggregate Medicare payments to SNF by 1.2% for fiscal year 2022. If payments under Medicare to our tenants do not continue or increase, our tenants may have difficulty making rent payments to us.
Under a program facilitated by the CMS known as the Skilled Nursing Facility Value-Based Purchasing Program, CMS began withholding 2% of SNF Medicare payments beginning October 1, 2018, to fund an incentive payment pool. CMS then redistributes 60% of the withheld payments back to high performing SNFs. The lowest ranked 40% of facilities receive payments that are less than what they otherwise would have received without the program. As a result, certain of our tenants could receive less in Medicare reimbursement payments, which could adversely affect their ability to make rent payments to us.
Effective October 1, 2019, CMS finalized a new case-mix classification system, the Patient-Driven Payment Model (“PDPM”). PDPM classifies SNF patients in Medicare Part A-covered stays into payment groups based on clinically relevant factors using diagnosis codes, rather than by the volume of services. This shifts the focus from the amount of care provided to instead use the patient’s condition and resulting care needs to determine Medicare reimbursement. Future changes to payment rates or methodology under the PDPM system could reduce the reimbursement our tenants receive. For example, CMS has indicated that it is working toward a unified payment system for post-acute care services, including those provided by SNFs, home health agencies, and other long-term care providers. During the years ended December 31, 2021 and 2020, we have undertaken efforts to divest from SNFs through our property dispositions, and we have also converted selected SNF units to memory care units in one of our existing properties, which have significantly reduced our SNF operations. As of December 31, 2021 our seniors housing properties included 31 SNF units.
Certain of our facilities are also subject to periodic pre- and post-payment reviews and other audits by governmental authorities, which could result in recoupments, denials, or delay of payments. Additionally, the introduction and explosion of new stakeholders competing with traditional providers in the health market, including companies such as Amazon.com Inc., JPMorgan Chase & Co., Apple Inc., CVS Health Corporation, as well as telemedicine, telehealth and mhealth,mobile health, are disrupting the heath industry and could lead to new trends in payment. All of the factors discussed-recoupment of past payments or denial or delay of future payments-could adversely affect an operator’s ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of its leases and other agreements with us.

Assisted and independent living services generally are not reimbursable under government reimbursement programs, such as Medicare and Medicaid. Most of the resident fee revenues generated by our SHOPs, therefore, are derived from private pay sources consisting of the income or assets of residents or their family members. The rates for these residents are set by the facilities based on local market conditions and operating costs.
We regularly assess the financial implications of reimbursement rule changes on our tenants, but we cannot assure you that current rules or future updates will not materially adversely affect our operators and tenants, which, in turn, could have a material adverse effect on their ability to pay rent and other obligations to us. See “ItemItem 1A. Risk“Risk Factors — Risks Related to the Healthcare Industry — Reductions or changes in reimbursement from third-party payors, including Medicare and Medicaid, or delays in receiving these reimbursements could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us” and “— A reduction in Medicare payment rates for skilled nursing facilities may have an adverse effect on the Medicare reimbursements received by certain of our tenants.”
Other Regulations
Our investments are subject to various federal, state and local laws, ordinances and regulations, including, among other things, the Americans with Disabilities Act of 1990, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. We did not make any material capital expenditures in connection with these regulations during the year ended December 31, 2021 and we do not expect that we will be required to make any such material capital expenditures during 2022. We believe that we have all permits and approvals necessary under current law to operate our investments.
Environmental Regulations
As an owner of real property, we are subject to various federal, state and local laws and regulations regarding environmental, health and safety matters. These laws and regulations address, among other things, asbestos, polychlorinated biphenyls, fuel, oil management, wastewater discharges, air emissions, radioactive materials, medical wastes, and hazardous wastes, and in certain cases, the costs of complying with these laws and regulations and the penalties for non-compliance can be substantial. Even with respect to properties that we do not operate or manage, we may be held primarily or jointly and severally liable for costs relating to the investigation and clean-up of any property from which there is or has been an actual or threatened release of a regulated material and any other affected properties, regardless of whether we knew of or caused the release. Such costs typically are not limited by law or regulation and could exceed the property'sproperty’s value. In addition, we may be liable for certain other costs, such as governmental fines and injuries to persons, property or natural resources, as a result of any such actual or threatened release.
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Under the terms of our lease and management agreements, we generally have a right to indemnification by the tenants, operators and managers of our properties for any contamination caused by them. However, we cannot assure you that our tenants, operators and managers will have the financial capability or willingness to satisfy their respective indemnification obligations to us, and any such inability or unwillingness to do so may require us to satisfy the underlying environmental claims.
We did not make any material capital expenditures in connection with environmental, health, and safety laws, ordinances and regulations in 20182021 and do not expect that we will be required to make any such material capital expenditures during 2019.2022.
EmployeesHuman Capital Resources
We are an externally managed company and thus have no employees. Instead,We have retained the Advisor pursuant to a long-term advisory contract to manage our affairs on a day-to-day basis. We have also entered into agreements with our Property Manager to manage and lease our properties. The employees of ourthe Advisor, Property Manager, and othertheir respective affiliates of AR Global perform a full range of services for us, including acquisitions, property management, accounting, legal, asset management, and investor relations and all general administrative services. We are dependentdepend on these affiliatesthe Advisor and the Property Manager for services that are essential to us, including asset acquisition decisions, property managementus. If the Advisor and other general and administrative responsibilities. In the event that any of these companiesProperty Manager were unable to provide these services to us, we would be required to provide suchthese services ourselves by hiringor obtain them from other sources.
Estimate of Net Asset Value
On March 31, 2021, we published an estimate of per share asset value (“Estimated Per-Share NAV”) equal to $14.50 as of December 31, 2020. Our previous Estimated Per-Share NAV was equal to $15.75 as of December 31, 2019. 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 which is expected in early April 2022. Dividends paid in the form of additional shares of common stock will, all things equal, cause the value of each share of common stock to decline because the number of shares outstanding increase when dividends paid in stock are issued; however, because each stockholder will receive the same number of new shares, the total value of our own workforcecommon stockholder’s investment, all things equal, will not change assuming no sales or obtainingother transfers. We intend to publish Estimated Per-Share NAV periodically at the discretion of board of directors (the “Board”), provided that such services from an unrelated partyestimates will be made at potentially higher costs.least once annually.
Available Information
We electronically file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and all amendments to those filings with the Securities and Exchange Commission ("SEC"(“SEC”). You may read and copy any materials we file with the SEC at the SEC’s Internet address located at http://www.sec.gov. The website contains reports, proxy statements and information statements, and other information, which you may obtain free of charge. In addition, copies of our filings with the SEC may be obtained from theour website maintained for us and our affiliates at www.healthcaretrustinc.com or www.ar-global.com. Access to these filings is free of charge. We are not incorporating our website or any information from these websites into this Annual Report on Form 10-K.

Item 1A. Risk Factors
Set forth below are the risk factors that we believe are material to our investors.investors and a summary thereof. The occurrence of any of the risks discussed in this Annual Report on Form 10-K could have a material adverse effect on our business, financial condition, results of operations and ability to pay dividends and they may also impact other distributions and the value of an investment in our common and preferred stock.

Summary Risk Factors
Risks RelatedOur operating results are affected by economic and regulatory changes that have an adverse impact on the real estate market in general.
Our property portfolio has a high concentration of properties located in Florida.Our properties may be adversely affected by economic cycles and risks inherent to those states.
Our PropertiesCredit Facility restricts us from paying cash distributions on or repurchasing our common stock until we satisfy certain conditions and Operations
We have incurred net losses on a GAAP basis for the years ended December 31, 2018, 2017 and 2016.
We have incurred net losses attributable to stockholders on a GAAP basis for the years ended December 31, 2018, 2017, and 2016 of $52.8 million, $42.5 million and $20.9 million, respectively. Our lossesthere can be attributed, in part,no assurance we will be able to acquisition related expensesresume paying distributions on our common stock, and depreciationat what rate, or continue paying dividends on our 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (the “Series A Preferred Stock”) and amortization. our 7.125% Series B Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 par value per share (the “Series B Preferred Stock”).
Our Credit Facility restricts our ability to use cash that would otherwise be available to us, and there can be no assurance our available liquidity will be sufficient to meet our capital needs.
We are subject to all of the business risks and uncertainties associated with any business,a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, including negative impacts on our tenants and operators and their respective businesses.
Inflation and continuing increases in the inflation rate will have an adverse effect on our investments and results of operations.
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No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid.
In owning properties we may experience, among other things, unforeseen costs associated with complying with laws and regulations and other costs, potential difficulties selling properties and potential damages or losses resulting from climate change.
We focus on acquiring and owning a diversified portfolio of healthcare-related assets located in the United States and are subject to risks inherent in concentrating investments in the healthcare industry.
The healthcare industry is heavily regulated, and we and our tenants may be impacted by new laws or regulations, including the risk thatCARES Act and the valueauditing and reporting requirements instituted by the CARES Act, changes to existing laws or regulations.
Loss of a stockholder's investmentlicensure or failure to obtain licensure could decline substantially. result in the inability of tenants to make lease payments to us.
We were incorporateddepend on October 15, 2012. Astenants for our rental revenue and, accordingly, our rental revenue is dependent upon the success and economic viability of December 31, 2018, we owned 191 properties. We cannot assure you that,our tenants. Lease terminations, tenant default and bankruptcy have adversely affected and could in the future adversely affect our income and cash flow.
We assume additional operating risks and are subject to additional regulation and liability because we depend on eligible independent contractors to manage some of our facilities.
We have substantial indebtedness and may be unable to repay, refinance, restructure or extend our indebtedness as it becomes due. Increases in interest rates could increase the amount of our debt payments.We will be profitable or that we will realize growthlikely incur additional indebtedness in the value of our assets.future.
We depend on our Advisor and our Property Manager to provide us with executive officers, key personnel and all services required for us to conduct our operations and our operating performance may be impacted by anyan adverse changes in the financial health or reputation of our Advisor.Advisor and our Property Manager.
All of our executive officers face conflicts of interest, such as conflicts created by the terms of our agreements with the Advisor and compensation payable thereunder, conflicts allocating investment opportunities to us, and conflicts in allocating their time and attention to our matters. Conflicts that arise may not be resolved in our favor and could result in actions that are adverse to us.
We have no employees. Personnel and services that we require are provided to us under contractslong-term agreements with our Advisor and Property Manager. We depend on our Advisor and our Property Manager to manage our operations and acquire and manage our portfolio of real estate assets. Our Advisor makes all decisions with respect to the management of our company, subject to the supervision of, and any guidelines established by, the Board.
Our success depends to a significant degree upon the contributions of our executive officers and other key personnel of our Advisor and our Property Manager. Neither our Advisor nor its affiliates have an employment agreement with any of these key personnelthat may be terminated only in limited circumstances and we cannot guarantee that all, or any particular one, will remain employed by our Advisor or its affiliates and availablemay require us to continue to perform services for us. If any of our key personnel were to cease their affiliation with our Advisor, our operating results, business and prospects could suffer. Further, we dopay a termination fee in some cases.
Estimated Per-Share NAV may not maintain key person life insurance on any person. We believe that our success depends, in large part, upon the ability of our Advisor to hire, retain or contract for services of highly skilled managerial, operational and marketing personnel. Competition for skilled personnel is intense, and there can be no assurance that our Advisor will be successful in attracting and retaining skilled personnel. If our Advisor loses or is unable to obtain the services of key personnel, our Advisor’s ability to manage our business and implement our investment strategies could be delayed or hindered, andaccurately reflect the value of an investmentour assets and may not represent what a stockholder may receive on a sale of the shares, what they may receive upon a liquidation of our assets and distribution of the net proceeds or what a third party may pay to acquire us.
The stockholder rights plan adopted by our board of directors, our classified board and other aspects of our corporate structure and Maryland law may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
Restrictions on share ownership contained in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.
We may decline.fail to continue to qualify as a REIT.
On March 8, 2017,
Risks Related to Our Properties and Operations

Our property portfolio has a high concentration of properties located in one state. Our properties may be adversely affected by economic cycles and risks inherent to those states.

A total of 10% or more of our consolidated annualized rental income on a straight-line basis for the creditor trust established in connection withfiscal year ended December 31, 2021 was generated from the bankruptcy of RCS Capital Corp. (“RCAP”), which prior to its bankruptcy filing was under common control with our Advisor, filed suit against AR Global, our Advisor, advisors of other entities advised by affiliates of AR Global, and AR Global’s principals. The suit alleges, among other things, certain breaches of duties to RCAP. We are neither a party to the suit, nor are there allegations related to the services our Advisor provides to us. On May 26, 2017, the defendants moved to dismiss. On November 30, 2017, the court issued an opinion partially granting the defendants’ motion. On December 7, 2017, the creditor trust moved for limited reargument of the court's partial dismissal of its breach of fiduciary duty claim, and on January 10, 2018, the defendants filed a supplemental motion to dismiss certain claims. On April 5, 2018, the court issued an opinion denying the creditor trust's motion for reconsideration while partially granting the defendants' supplemental motion to dismiss. On November 5, 2018, the defendants moved for leave to amend their answers and for partial summary judgment on certain of the claims at issuestate below:
StatePercentage of Straight-Line Rental Income
Florida17.7%

Any adverse situation that disproportionately affects operations or investments in the case. The creditor trust opposedstates listed above may have a magnified adverse effect on our portfolio. Real estate markets are subject to economic downturns, as they have been in the motion, past,
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and it was argued beforewe cannot predict how economic conditions will impact this market in both the court on February 6, 2019. The court has not yet ruled onshort and long-term. Declines in the motion. On January 18, 2019,economy or a decline in the defendants requested thatreal estate market in these states could hurt our financial performance and the scheduling order governing the case be modified to bifurcate liability and damages issues for discovery purposes and trial. That request is also pending. Our Advisor has informed us that it believes the suit is without merit and intends to defend against it vigorously.
Our Advisor and our Property Manager depend upon the fees and other compensation that they receive from us in connection with the managementvalue of our properties. Factors that may negatively affect economic conditions include:
business layoffs or downsizing;
industry slowdowns;
relocations of businesses;
climate change;
changing demographics;
increased telecommuting and saleuse of ouralternative workplaces;
infrastructure quality;
��any oversupply of, or reduced demand for, real estate;
concessions or reduced rental rates under new leases for properties where tenants defaulted;
increased insurance premiums;
state budgets and payment to conduct their operations. Any adverse providers under Medicaid or other state healthcare programs; and
changes in the financial condition of, or our relationship with, our Advisor or Property Manager, including any change resultingreimbursement for healthcare services from an adverse outcome in any litigation, could hinder their ability to successfully manage our operations and our portfolio of investments. Additionally, changes in ownership or management practices, the occurrence of adverse events affecting our Advisor or its affiliates or other companies advised by our Advisor and its affiliates could create adverse publicity and adversely affect us and our relationship with lenders, tenants or counterparties.
Our common stock is not traded on a national securities exchange, and we only repurchase shares under our SRP, in the event of death or disability of a stockholder. Our SRP may be suspended or amended at any time and stockholders may have to hold their shares for an indefinite period of time. Our stockholders who sell their shares to us under our SRP may receive less than the price they paid for the shares.

There is no active trading market for our shares. Our SRP includes numerous restrictions that limit a stockholder’s ability to sell shares to us, including that we only repurchase shares in the event of death or disability of a stockholder. Moreover, the total value of repurchases pursuant to our SRP is limited to the amount of proceeds received from issuances of common stock pursuant to the DRIP and repurchases in any fiscal semester are further limited to 2.5% of the average number of shares outstanding during the previous fiscal year, subject to the authority of the Board to identify another source of funds for repurchases under the SRP. The Board may also reject any request for repurchase of shares at its discretion or amend, suspend or terminate our SRP upon notice. Therefore, requests for repurchase under the SRP may not be accepted. Repurchases under the SRP will be based on Estimated Per Share NAV and may be at a substantial discount to the price the stockholder paid for the shares.
We are also restricted from making share repurchases to the extent they would be aggregated with distributions to our stockholders under the covenant in our New Credit Facility that restricts payments of distributions to our stockholders. Although this covenant exempts payments for share repurchases up to $50.0 million during the term of the New Credit Facility from being aggregated in this way, we must maintain cash and cash equivalents of at least $30.0 million and compliance with a leverage ratio after giving effect to those payments.commercial insurers.
We may be unable to enter into contracts for and consummatecomplete property acquisitions on advantageous terms or our property acquisitions may not perform as we expect.
One of our goals is to growincrease assets through acquiring additional properties, and pursuing this investment objective exposes us to numerous risks, including:
competition from other real estate investors with significant capital including both publicly traded REITs and institutional investment funds;resources;
we may acquire properties that are not accretive;
we may not successfully integrate, manage and lease the properties we acquire to meetin a fashion that meets our expectations or market conditions may result in future vacancies and lower-than expected rental rates;
we expect to finance future acquisitions primarily with additional borrowings under our Revolving Credit Facility, and there can be no assurance as to how much borrowing capacity will be available for this purpose;purpose
we may be unable to assume existing debt financing or obtain property-level debt financing or raise equity required to fund acquisitions from other sources on favorable terms, or at all;
we may need to spend more than budgeted amounts to make necessary improvements or renovations to acquired properties;
agreements for the acquisition of properties are typically subject to customary conditions to closing that may or may not be completed, and we may spend significant time and money on potential acquisitions that we do not consummate;
the process of acquiring or pursuing the acquisition of a new property may divert the attention of our management team from our existing business operations; and
we may acquire properties without recourse, or with only limited recourse, for liabilities, whether known or unknown.
We rely upon our Advisor and the real estate professionals affiliated withemployed by affiliates of our Advisor to identify suitable investments, and thereinvestments. There can be no assurance that our Advisor will be successful in obtaining suitable further investmentsdoing so on financially attractive terms or that our objectives will be achieved. If our Advisor is unable to timely locate suitable investments, we may be unable or limited in our ability to pay dividends and we may not be able to meet our investment objectives.
We have not paid our distributions on our common stock in cash since 2020, and there can be no assurance we will pay distributions on our common stock in cash in the future.
All dividends or other distributions on our common stock are paid in the discretion of our board of directors. In August 2020, our board approved a change in our common stock distribution policy, pursuant to which, unless later revised, any future distributions authorized by our board on our shares of common stock, if and when declared, will be paid on a quarterly basis in arrears in shares of our common stock valued at the Estimated Per-Share NAV in effect on the applicable date. We issued a stock dividend on our common stock in October 2020 and in all subsequent quarters since that time. There is no assurance we will continue to do so or when or if we will pay dividends or distributions in cash. We last published an Estimated Per-Share NAV on April 1, 2021. The estimate was as of December 31, 2020 and has not been adjusted since publication and will not be adjusted until the Board determines a new Estimated Per-Share NAV which is expected in early April 2022. Dividends paid in the form of additional shares of common stock will, all things equal, cause the value of each share of common stock to decline because the number of shares outstanding will increase when dividends paid in stock are issued; however, because each common stockholder will receive the same number of new shares, the total value of a common stockholder’s investment, all things equal, will not change assuming no sales or other transfers. We will not be able to pay cash distributions on our common stock until we satisfy certain conditions such as having a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million (giving effect to the aggregate amount of distributions projected to be paid by us during the quarter in which we have elected to commence paying cash distributions on common stock) and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5% and the Commencement Quarter (defined herein) has occurred. We satisfied the conditions during the quarter ended December 31, 2021 in order to elect the quarter ending March 31, 2022 as the Commencement Quarter, but did not make
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the election. As of December 31, 2021, our ratio of consolidated total indebtedness to consolidated total asset value for these purposes was 59.4%. Our ability to make future cash distributions on our common stock will depend on our future cash flows and indebtedness and may changefurther depend on our targeted investments without stockholder consent.ability to obtain additional liquidity, which may not be available on favorable terms, or at all. Further, if we do not pay dividends on our Series A Preferred Stock or Series B Preferred Stock, 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, as applicable, and, whenever dividends on the Series A Preferred Stock or Series B Preferred Stock are in arrears, whether or not authorized or declared, for six or more quarterly periods, holders of Series A Preferred Stock or Series B Preferred Stock will have the right to elect two additional directors to serve on our board.
We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic.
The COVID-19 pandemic has had, and another pandemic in the future could have, acquiredrepercussions across many sectors and expectareas of the global economy and financial markets, leading to significant adverse impacts on economic activity including volatility in financial markets. The impact of the COVID-19 pandemic has evolved rapidly. In many states and cities where our properties are located, measures including “shelter-in-place” or “stay-at-home” orders issued by local, state and federal authorities for much of 2020 and early part of 2021 and social distancing measures have resulted in closure and limitations on the operations of many businesses and organizations. While strict “shelter-in-place” and similar orders have generally been lifted, continued limitations on indoor occupancy or other restrictions applicable to in-person operations have been and may in future be re-instituted in some jurisdictions as rates of infection increase in those locations, including in light of the current spread of the Delta and Omicron variants and other potentially more contagious variants of the SARS-CoV-2 virus. As the COVID-19 pandemic continues, it is highly uncertain to what extent and when any such continuing restrictions will be lifted in various jurisdictions and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against these variants and the response by governmental bodies and regulators. Our tenants and SHOP properties operate businesses that require in-person interactions with their patients and residents. Even for businesses that have not closed or have closed and reopened, concern regarding the transmission of COVID-19 has impacted, and will likely continue to acquireimpact, the willingness of persons to, among other things, live in or use facilities at our properties, and impact the revenues generated by our tenants which may further impact the ability of our tenants to pay their rent obligations to us when due.
The COVID-19 pandemic has impacted global economic activity. Our ability to lease space and negotiate and maintain favorable rents and the results of operations at our SHOPs could also continue to be negatively impacted by a diversifiedprolonged recession in the U.S. economy as could the rates charged to residents at our SHOPs. Moreover, the demand for leasing space at our MOB properties could decline further negatively impacting occupancy percentage, revenue and net income. Additionally, downturns or stagnation the U.S. housing market as a result of an economic downturn could adversely affect the ability, or perceived ability, of seniors to afford the resident fees and services at our seniors housing properties.
MOB Segment
Within our MOB portfolio, many physician practices temporarily discontinued nonessential surgeries and procedures due to “shelter-in-place” and other health and safety measures, which negatively impacted their cash flows. Even now that prohibitions against performing elective procedures are generally no longer in place concern regarding the transmission of healthcare-related assetsCOVID-19 has impacted, and will likely continue to impact, the willingness of persons to seek medical care at healthcare facilities for non-urgent issues. Further, the COVID-19 pandemic might adversely impact the business of our MOB tenants by causing a decline in the number of patients seeking treatment, by disrupting or delaying production and delivery of medical supplies such as necessary pharmaceuticals (including due to a diversion of resources and priorities toward the treatment of COVID-19) or by causing staffing shortages, which would disrupt property operations. The complete or partial closures of, or other operational issues at, one or more of our properties resulting from government action or directives may intensify the risk of rent deferrals or non-payment of contractual obligations by our tenants or operators.
As a result of these and other factors, tenants or operators that experience deteriorating financial conditions as a result of the outbreak of COVID-19 have been, or may, in the future be, unwilling or unable to pay us in full or on a timely basis due to bankruptcy, lack of liquidity, lack of funding, operational failures, or for other reasons. We reported cash collections of nearly 100% for the MOB facilities segment for the year ended December 31, 2021 as of February 28, 2022. However, the impact of the COVID-19 pandemic on our tenants and operators and thus our ability to collect rents in future periods cannot be determined as present and the amount of cash rent collected during the past two years may not be indicative of any future period. In addition, there is no assurance that we will be able to collect the cash rent that is due in the future months including MOBs,amounts deferred during 2020 and 2021 under the deferral agreements we have entered into with our tenants.
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SHOP Segment
Starting in March 2020, the COVID-19 pandemic and measures to prevent its spread began to affect us in a number of ways. In our SHOP portfolio, occupancy has decreased compared to that in March 2020. Governmental policies and implementation of infection control best practices has, and may continue to, materially limit or close communities to new resident move-ins which has affected and could continue to affect our ability to fill vacancies. We have also experienced lower inquiry volumes and reduced in-person tours during the pandemic. In addition, starting in mid-March 2020, operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies, as our operators took appropriate actions to protect residents and caregivers. At the SHOP facilities, we generally bear these cost increases. See below for additional information on the CARES Act. These trends accelerated beginning in the second quarter of 2020, continued into early 2021, until stabilizing in the third quarter, and are expected to improve in 2022. Future developments in the course of the pandemic may have adverse impacts on our occupancy and cost levels, and these trends may continue to impact us in the future and have a material adverse effect on our revenues and results of operations.
COVID-19 has proven to be particularly harmful to seniors and persons with other pre-existing health conditions. There have been some incidences of COVID-19 among the residents and staff at certain of our SHOPs. Further incidences, or the perception that outbreaks may occur, could materially and adversely affect our revenues and net income, as well as cause significant reputational harm to us and our tenants, managers and operators. Due to the contagious nature of COVID-19, residents at our SHOPSs may decide to leave the community and the workforce at these facilities may similarly shrink. The operators may be required, or may otherwise determine that it would be prudent, to impose a quarantine of an indeterminate duration. We have and may also be required to incur additional costs to identify, contain and remedy the direct or indirect impacts of the COVID-19 pandemic, including costs related to implementing quarantines and vaccinations. Moreover, if seniors housing properties across the U.S. continue to experience high levels of residents infected with COVID-19, including the Delta and Omicron variants and other potentially more contagious variants of the SARS-CoV-2 virus, and related deaths, and news accounts emphasize these experiences, seniors may increasingly delay or forego moving into seniors housing properties. These trends could be realized across the senior living industry and not discriminate among owners and operators that have higher or lower levels of residents experiencing COVID-19 infections and related deaths. As a result, our operating results from our SHOPs, and the value of these properties, may be materially adversely affected.
Further, certain of our tenants or our third-party operators may not be eligible for or may not be successful in securing stimulus funds under government stimulus programs which may impact their ability to pay their obligations including any obligations to us. We received $3.6 million under a government program during the year ended December 31, 2020 and an additional $5.1 million in funding through the CARES Act during the year ended December 31, 2021. There can be no assurance that we will be able to qualify for, or receive, funds under this or any other healthcare-related facilities. However, the Board may changegovernmental program established in response to COVID-19.
The impact on our investment policies over time.tenants and operators in our SHOP segment cannot be determined at present. We may experience defaults and additional requests for rent deferrals or abatements or other allowances particularly if our tenants continue to experience financial distress and increased operating costs or if healthcare facilities and SHOPs continue to experience downward pressures on occupancy and increased costs. Furthermore, if we declare any tenants in default for non-payment of rent or other potential breaches of their leases with us, we might not be able to recover and may experience delays and additional costs in enforcing our rights as landlord to recover amounts due to us. Our ability to recover amounts under the terms of our leases may also be restricted or delayed as a result of any federal, state or local restrictions on tenant evictions for failure to make adjustmentscontractual rent payments, which may result in higher reserves for bad debt. If any of our tenants, any guarantor of a tenant’s lease obligations or an operator, files for bankruptcy, we could be further adversely affected due to loss of revenue and a decline in income produced by the property or properties operated by the third-party operator.
Other Impacts
In addition to the impacts on us, our tenants and operators described above, the COVID-19 pandemic has also impacted us in other ways and enhanced certain risks that could have a significant adverse effect on our business, financial condition and results of operations and our ability to pay distributions (including dividends on our Series A Preferred Stock and Series B Preferred Stock) and other distributions to our target portfolio basedstockholders including:
difficulty accessing debt and equity capital on favorable terms, or at all, if global financial markets become disrupted or unstable or credit conditions deteriorate;
disruption and instability in financial markets or deteriorations in credit and financing conditions could have an impact on the overall amount of capital being invested in real estate marketand could result in price or value decreases for real estate assets, which could negatively impact the value of our assets and may result in future acquisitions generating lower overall economic returns;
the volatility in stock markets caused by, among other things, the COVID-19 pandemic or the ongoing war in Ukraine could negatively impact the trading price of our Series A Preferred Stock, our Series B Preferred Stock and the value
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of our common stock and dilute our stockholders’ interest in us if we sell additional equity securities at prices less than the prices our stockholders paid for their shares;
limiting the number of properties we may seek to acquire due to capital availability;
that planned dispositions may not occur within the expected timeframe or at all because of buyer terminations or withdrawals related to the pandemic, capital constraints or other factors relating to the pandemic, including closing conditions and investment opportunities,that are dependent on the occurrence of events linked to the pandemic;
until we satisfy certain conditions, our Credit Facility restricts us from paying cash distributions on, or repurchasing, shares of our common stock, and we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the revolving portion of the Credit Facility;
our ability to maintain sufficient availability under our Credit Facility to fund the purchase of properties and meet other capital requirements which may changebe adversely affected to the extent the decreases in cash rent collected from our targeted investmentstenants and investment guidelines at any time without the consentincome from our operators cause a decrease in availability of future borrowings under our Credit Facility;
if we are unable to comply with financial covenants and other obligations under our Credit Facility and other debt agreements we could default under those agreements which could potentially result in an acceleration of our stockholders,indebtedness and foreclosure on our properties and could otherwise negatively impact our liquidity;
we have recognized, and may need to recognize further, impairment charges on our assets;
one or more counterparties to our derivative financial instruments could default on their obligations to us increasing the risk that we may not realize the benefits of utilizing these instruments;
we may be required to record reserves on previously accrued amounts in cases where it is subsequently concluded that collection is not probable;
tenants and operators may be subject to lawsuits related to COVID-19 outbreaks that may occur at our properties and insurance coverage may not be sufficient to cover any potential losses further straining their financial condition;
difficulty in repositioning properties where we or our tenants or operators have terminated or do not renew the leases or management agreements with another tenant or operator may be exacerbated by the COVID-19 pandemic, as new operators or tenants may not be willing to take on the increased exposure, especially while active cases are occurring;
difficulties completing capital improvements at our properties on a timely basis, on budget or at all, could affect the value of our properties;
our ability to ensure business continuity in the event our Advisor’s continuity of operations plan is not effective or is improperly implemented or deployed during a disruption;
increased operating risks resulting from changes to our Advisor’s operations and remote work arrangements, including the potential effects on our financial reporting systems and internal controls and procedures, cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events;
increased operating risks resulting from changes to operations of our third-party operators, including their personnel, which may adversely impact the service provided by our third-party operators with respect to our SHOPs; and
complying with REIT requirements during a period of reduced cash flow could cause us to liquidate otherwise attractive investments or borrow funds on unfavorable conditions.
The extent to which the COVID-19 pandemic, or a future pandemic, impacts our operations and those of our third-party operators will depend on future developments, including the scope, severity and duration of the pandemic, one or more resurgences of the virus, such as the Delta and Omicron variants, which could result in our making investmentsfurther government restrictions, the efficacy of available vaccines and boosters or other remedies developed, the efficacy of on-going efforts to distribute and administer available vaccines and boosters, the actions taken to contain the pandemic or mitigate its impact, including vaccine mandates and the direct and indirect economic effects of the pandemic and containment measures, among others, which are highly uncertain and cannot be predicted with confidence but could be material. The situation is rapidly changing and additional impacts to the business may arise that we are differentnot aware of currently. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic, but a prolonged or resurgent outbreak as well as related mitigation efforts could continue to have a material adverse effect. Moreover, many risk factors set forth in this Annual Report on Form 10-K should be interpreted as heightened risks as a result of the COVID-19 pandemic.
There is uncertainty surrounding the administration and affect of the CARES Act and the auditing and reporting requirements instituted by the CARES Act.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, which provided funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic. Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19. During the year ended
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December 31, 2021, we received $5.1 million from CARES Act grants. Previously, we received $3.6 million in grants during the year ended December 31, 2020. We have applied for additional funds under the CARES Act, however, there can be no assurance that any funds requested will actually be received. We consider the funds to be a grant contribution from the government and possibly riskier than, initially anticipated. A changethe full amount was recognized as a reduction of property operating expenses in our targeted investmentsconsolidated statements of operations for the years ended December 31, 2021 and 2020. There can be no assurance that the program will be extended or investment guidelinesany further amounts received under currently effective or potential future government programs.
As a condition of the funds received under the CARES Act, we had to attest to certain terms and conditions, and must comply with detailed reporting and auditing requirements. While we do not anticipate any finding of non-compliance, such a finding could result in consequences including repayment of funds received.
If a tenant or lease guarantor declares bankruptcy or becomes insolvent, we may increasebe unable to collect balances due under relevant leases.
We have previously had tenants file for bankruptcy and seek the protections afforded under Title 11 of the United States Code. There is no assurance we will not experience this in the future. A bankruptcy filing by one of our exposuretenants or any guarantor of a tenant’s lease obligations would result in a stay of all efforts by us to collect pre-bankruptcy debts from these entities or their assets, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be required to be paid currently. If a lease is assumed by the tenant, all pre-bankruptcy balances owing under it must be paid in full. If a lease is rejected by a tenant in bankruptcy, we would only have a general unsecured claim for damages. If a lease is rejected, it is unlikely we would receive any payments from the tenant because our claim is capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid as of the date of the bankruptcy filing (post-bankruptcy rent would be payable in full).This claim could be paid only if funds were available, and then only in the same percentage as that realized on other unsecured claims.
A tenant or lease guarantor bankruptcy could delay efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums.A tenant or lease guarantor bankruptcy could cause a decrease or cessation of rental payments that would mean a reduction in our cash flow and the amount available for dividends and other distributions to our stockholders.In the event of a bankruptcy, there is no assurance that the debtor in possession or the bankruptcy trustee will assume the lease.
A sale-leaseback transaction may be recharacterized in a tenant’s bankruptcy proceeding.
We may enter into sale-leaseback transactions, where we purchase a property and then lease the same property back to the seller, who becomes our tenant as part of the transaction. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback may be recharacterized as either a financing or a joint venture, and either type of recharacterization could adversely affect our business. If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor. In that event, we would no longer have the right to sell or encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under the lease. The tenant/debtor might have the ability to propose a plan restructuring the term, interest rate risk, default risk and real estate market fluctuations.amortization schedule of its outstanding balance. If this plan were confirmed by the bankruptcy court, we would be bound by the new terms. If the sale-leaseback were recharacterized as a joint venture, our lessee and we could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property. Either of these outcomes could adversely affect our cash flow.
Our results of operations have been, and may continue to be, adversely impacted by our inability to collect rent from certain tenants.

TenantsOn occasion, tenants at certain properties in our triple-net leased healthcare facilitiesMOB segment and residents at certain properties in our SHOP segment have been in default under their leases to us, andus. These defaults negatively impact our results of operations have been adversely impacted by our inability to collect rent from these tenants. There can be no assurance that we will be able to collect rent from these tenants in the future.operations. We incurred $13.4$1.1 million and $2.7 million of bad debt expense, including straight-line rent write-offs, related to these tenants during the year ended December 31, 2018. These amounts primarily relate to tenants and former tenants at two of our properties in Florida (collectively the "NuVista Tenant") that have been in default under their leases since July 2017 and tenants at four properties in Texas (collectively,to us during the "LaSalle Tenant") that are currently in default of a forbearance agreement. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Palm and the NuVista Tenants" for further details.
During the yearyears ended December 31, 2018,2021 and 2020, respectively.
Further, even if we transferred six properties from our triple-net leased healthcare facilities segmentreplace tenants in default to our SHOP segment under a structure permitted by RIDEA, under which a REIT may lease qualified healthcare properties on an arm’s length basis to a TRS if the property is operated on behalf of the subsidiary by an entity who qualifies as an eligible independent contractor. We have and expect to continue pursuing the replacement of these tenantsus in a manner that will allow us to transition the properties leased to thesethose tenants to our SHOP segment, such as by entering into settlement agreements and appointing court order receivers. By doing so, we will gain more control over the operations of the applicable properties, and we believe this will allow us to improve performance and the cash flows generated by the properties, but there can be no assurance this strategy will be successful.successful and we may be more exposed to changes in property operating expenses. There also can be no assurance that we will be able to replace these tenants on a timely basis, or at all, and our results of operations may therefore continue to be adversely impacted by bad debt expenses related to our inability to collect rent from defaulting tenants. These transitionsTransitions will also increase our exposure to risks associated with operating in this structure. See "— General Risks Related
Our tenants or operators that experience deteriorating financial conditions as a result of the outbreak of COVID-19 have been, or may, in the future be, unwilling or unable to Investmentspay us in full or on a timely basis due to bankruptcy, lack of liquidity, lack of funding, operational failures, or for other reasons. There is no assurance we will continue to collect at the current rates. The impact of the COVID-19 pandemic on our tenants and operators and thus our ability to collect rents in future periods cannot be determined as present and the amount of cash rent collected during 2021 may not be indicative of any future period. In addition, there is no assurance that we will be able to collect the cash rent that is due in the future months including the deferred 2020 rent amounts due in 2021 under the deferral agreements we have entered into with our tenants.
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Our operating results are affected by economic and regulatory changes that have an adverse impact on the real estate market.
Our operating results and the value of our properties are subject to risks, including:
changes in national and market-specific economic conditions;
changes in supply of or demand for competing properties in our market area;
changes in interest rates and availability of financing on favorable terms;
changes in tax, real estate, environmental and zoning laws;
periods of high interest rates and tight money supply; and
the possibility that one or more of our tenants will not pay their rental obligations.
Properties may have vacancies for a significant period of time.
A property may have vacancies either due to tenant defaults or the expiration of leases. If vacancies continue for a long period of time, our revenues and net income will be adversely impacted. In addition, the value of a property depends principally on the cash flow generated by the properties. Prolonged vacancies reduce our cash flow.
We obtain only limited warranties when we purchase a property and therefore have only limited recourse if our due diligence did not identify any issues that lower the value of our property.
We have acquired and may continue to acquire properties in “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements we entered into may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all our invested capital in the property as well as the loss of rental income from that property if a situation or loss occurs after the fact for which we have limited or no remedy.
Our properties and tenants may be unable to compete successfully.
The properties we have acquired and will acquire may face competition from nearby hospitals, senior housing properties and other medical office buildings and medical facilities that provide comparable services. Some of those competing facilities are owned by governmental agencies and supported by tax revenues, and others are owned by nonprofit corporations and may be supported to a large extent by endowments and charitable contributions. These types of support are not available to our properties. Similarly, our tenants face competition from other medical practices in nearby hospitals and other medical facilities. Additionally, the introduction and explosion of new stakeholders competing with traditional providers in the healthcare market, including companies such as telemedicine, telehealth and mhealth, are disrupting the healthcare industry. Our tenants’ failure to compete successfully with these other practices and providers could adversely affect their ability to make rental payments, which could adversely affect our rental revenues.
Further, from time to time and for reasons beyond our control, referral sources, including physicians and managed care organizations, may change their lists of hospitals or physicians to which they refer patients. This could adversely affect the ability of our tenants to make rental payments.
We may be unable to secure funds for future tenant improvements or capital needs.
If a tenant does not renew its lease or otherwise vacates its space, we will likely be required to expend substantial funds to improve and refurbish the vacated space. In addition, we are typically responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops, even if our leases with tenants may require tenants to pay routine property maintenance costs. If we need additional capital in the future to improve or maintain our properties or for any other reason, we may have to obtain financing from sources beyond our cash flow from operations, such as borrowings, property sales or future equity offerings to fund these capital requirements. These sources of funding may not be available on attractive terms or at all. Failure to procure additional funding for additional funding improvements would impact the value of the applicable property or our ability to lease the applicable property on favorable terms, if at all.
We have acquired or financed, and may continue to acquire or finance, properties with lock-out provisions which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
Lock-out provisions, such as the provisions contained in certain mortgage loans we have entered into, could materially restrict our ability to sell or otherwise dispose of properties or refinance properties, including by requiring a yield maintenance premium to be paid in connection with the required prepayment of principal upon a sale or disposition. Lock-out provisions may also prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties. Lock-out provisions could also impair our ability to take other actions during the lock-out period that may otherwise be in the best interests of our stockholders. In particular, lock-out provisions could preclude us from participating in major transactions that
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could result in a disposition of our assets or a change in control. Payment of yield maintenance premiums in connection with dispositions or refinancings could adversely affect our cash flow.
Rising expenses could reduce cash flow.
The properties that we own or may acquire are subject to operating risks, any or all of which may negatively affect us. If any property is not fully occupied or if rents are being paid in an amount that is insufficient to cover operating expenses, we could be required to expend funds with respect to that property for operating expenses. Properties may be subject to increases in tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance and administrative expenses. We may not be able to negotiate leases on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs.
Inflation and continuing increases in the inflation rate may have an adverse effect on our investments and results of operations.
Recent increases and continuing increases in the rate of inflation, both real and anticipated, may impact our investments and results of operations. Inflation could erode the value of long-term leases that do not contain indexed escalation provisions, or contain fixed annual rent escalation provisions that are at rates lower than the rate of inflation, and increase expenses including those that cannot be passed through under our leases. Increased inflation could also increase our general and administrative expenses and, as a result of an increase in market interest rate in response to higher than anticipated inflation rate, increase our mortgage and debt interest costs, and these costs could increase at a rate higher than our rent increases. An increase in our expenses, or expenses paid or incurred by our Advisor or its affiliates that are reimbursed by us pursuant to the advisory agreement, or a failure of revenues to increase at least with inflation could adversely impact our results of operations..
For the year ended December 31, 2021, the increase to the 12-month Consumer Price Index for all items, as published by the Bureau of Labor Statistics, was 7.0%. To help mitigate the adverse impact of inflation, approximately 87% of our leases with tenants in our MOB segment contain rent escalation provisions in their base rent which average 1.8% per year. 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). Leases with fixed or no escalation provisions may not keep pace with current rates of inflation, whereas leases with indexed escalations may provide more protection against inflation. Approximately 84% are fixed-rate, 3% are based on the Consumer Price Index and 13% do not contain any escalation provisions.
In addition to base rent, our net leases require the single-tenant MOB leases to pay all the properties operating expenses and our multi-tenant MOB leases to pay their allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. Increased operating costs paid by our tenants under these net leases could have an adverse impact on our tenants if increases in their operating expenses exceed increases in their revenue, which may adversely affect our tenants’ ability to pay rent owed to us or property expenses to be paid, or reimbursed to us, by our tenants. Renewals of leases or future leases for our net lease properties may not be negotiated on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs.
Leases with residents at our SHOPs typically do not have rent escalations, however, we are able to renew leases at market rates as they mature due to their short-term nature. As inflation rates increase or persist at high levels, the cost of providing medical care at our SHOPs, particularly labor costs, will increase. If we are unable to admit new residents or renew resident leases at market rates, while bearing these increased costs from providing services to our residents, our results of operations may be affected.
Damage from catastrophic weather and other natural events and climate change could result in losses to us.
Certain of our properties are located in areas that may experience catastrophic weather and other natural events from time to time, including hurricanes or other severe weather, flooding, fires, snow or ice storms, windstorms or, earthquakes. These adverse weather and natural events could cause substantial damages or losses to our properties which could exceed our insurance coverage. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected property, as well as anticipated future revenue from that property. We could also continue to be obligated to repay any mortgage indebtedness or other obligations related to the property.
To the extent that significant changes in the climate occur, we may experience extreme weather and changes in precipitation and temperature and rising sea levels, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. The impact of climate change may be material in nature, including destruction of our properties, or occur for lengthy periods of time.
Growing public concern about climate change has resulted in the increased focus of local, state, regional, national and international regulatory bodies on greenhouse gas (“GHG”) emissions and climate change issues. Legislation to regulate GHG emissions has periodically been introduced in the U.S. Congress, and there has been a wide-ranging policy debate, both in the
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U.S. and internationally, regarding the impact of these gases and possible means for their regulation. Federal, state or foreign legislation or regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties or to protect them from the consequence of climate change and could also result in increased compliance costs or additional operating restrictions that could adversely impact the businesses of our tenants and their ability to pay rent.
We may suffer uninsured losses relating to real property or have to pay expensive premiums for insurance coverage.
Our general liability, property and umbrella liability insurance coverage on all our properties may not be adequate to insure against liability claims and provide for the costs of defense. Similarly, we may not have adequate coverage against the risk of direct physical damage or to reimburse us on a replacement cost basis for costs incurred to repair or rebuild each property. Moreover, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with such catastrophic events could sharply increase the premiums we pay for coverage against property and casualty claims.
This risk is particularly relevant with respect to potential acts of terrorism. The Terrorism Risk Insurance Act of 2002 (the “TRIA”), under which the U.S. federal government bears a significant portion of insured losses caused by terrorism, will expire on December 31, 2027, and there can be no assurance that Congress will act to renew or replace the TRIA following its expiration. In the event that the TRIA is not renewed or replaced, terrorism insurance may become difficult or impossible to obtain at reasonable costs or at all, which may result in adverse impacts and additional costs to us.
Changes in the cost or availability of insurance due to the non-renewal of the TRIA or for other reasons could expose us to uninsured casualty losses. If any of our properties incurs a casualty loss that is not fully insured, the value of our assets will be reduced by any uninsured loss. In addition, other than any working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in less cash flow.
Additionally, mortgage lenders insist in some cases that commercial property owners purchase coverage against terrorism as a condition for providing mortgage loans. Accordingly, to the extent terrorism risk insurance policies are not available at reasonable costs, if at all, our ability to finance or refinance indebtedness secured by our properties could be impaired. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate, or any, coverage for the losses.
Actual or threatened terrorist attacks and other acts of violence, civilian unrest or war may affect the markets in which we operate our business and our profitability.
We own properties in densely populated areas that are susceptible to terrorist attack or damage. Because our properties are generally open to the public, they are exposed to a number of incidents that may take place within or around their premises and that are beyond our control or ability to prevent. Any actual or threatened act of terror, mass shooting or other violence could have a negative effect on our business, including us losing our tenants or being forced to close one or more of our properties for some time. If any of these incidents were to occur, the relevant property could face material damage to its image and the revenue generated therefrom. In addition, we may be exposed to civil liability and be required to indemnify the victims, and our insurance premiums could rise, any of which could adversely affect us.
In addition, actual or threatened terrorist activity or violent criminal acts, including terrorist acts against public institutions or buildings or modes of public transportation (including airlines, trains or buses) could have a negative effect on our business, the value of our properties and our results of operations. More generally, any terrorist attack, other act of violence or war, including armed conflicts, could result in increased volatility in, or damage to, the worldwide financial markets and economy, including demand for properties and availability of financing. Increased economic volatility could adversely affect our tenants’ abilities to conduct their operations profitably or our ability to borrow money or issue capital stock at acceptable prices.
Real Estate estate-related taxes may increase and these increases may not be passed on to tenants.
From time to time our property taxes increase as property values or assessment rates change or for other reasons. An increase in the assessed valuation of a property for real estate tax purposes will result in an increase in the related real estate taxes on that property. There is no assurance that renewal leases or future leases will be negotiated on a basis that passes such taxes on to the tenant.
Covenants, conditions and restrictions may impact our ability to operate a property.
Some of our properties are contiguous to other parcels of real property, comprising part of the same commercial center. In connection with such properties, there are significant covenants, conditions and restrictions restricting the operation of such properties and any improvements on such properties, and related to granting easements on such properties. Moreover, the operation and management of the contiguous properties may impact such properties. Compliance with covenants, conditions and restrictions may adversely affect our operating costs and reduce the amount of cash flow that we generate.
Our operating results may be negatively affected by potential development and construction delays and resultant increased costs and risks.
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We have acquired and developed, and may in the future acquire and develop, properties upon which we will construct improvements. In connection with our development activities, we are subject to uncertainties associated with re-zoning for development, environmental concerns of governmental entities or community groups and our builder or partner’s ability to build in conformity with plans, specifications, budgeted costs, and timetables. Performance also may be affected or delayed by conditions beyond our control. For example, we experienced substantial delays and incurred significant additional costs associated with development of a property located in Jupiter, Florida, a property we subsequently sold at a price below the amount we had invested. We would be exposed to the risks in connection with any other properties we develop. We may incur additional risks when we make periodic progress payments or other advances to builders before they complete construction. If a builder or development partner fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance, but there can be no assurance any legal action would be successful. These and other factors can result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and our return on our investment could suffer.
We compete with third parties in acquiring properties and other investments and attracting credit worthy tenants.
We compete with many other entities engaged in real estate investment activities, including individuals, corporations, private investment funds, bank and insurance company investment accounts, other REITs, real estate limited partnerships, and other entities engaged in real estate investment activities, many of which have greater resources than we do. These entities may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. In addition, the number of entities and the amount of funds competing for suitable investments may increase. Increased demand for assets will likely increase acquisition prices.
We also compete with other comparable properties for tenants, which impacts our ability to rent space and the amount of rent charged. We could be adversely affected if additional competitive properties are built in locations near our properties, causing increased competition for creditworthy tenants. This could result in decreased cash flow from our properties and may require us to make capital improvements to properties that we would not have otherwise made, further impacting property cash flows.
Discovery of previously undetected environmentally hazardous conditions may adversely affect our operating results.
We are subject to various federal, state and local laws and regulations that (a) regulate certain activities and operations that may have environmental or health and safety effects, such as the management, generation, release or disposal of regulated materials, substances or wastes, (b) impose liability for the costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances, and (c) regulate workplace safety. Compliance with these laws and regulations could increase our operational costs. Violation of these laws may subject us to significant fines, penalties or disposal costs, which could negatively impact our results of operations, financial position and cash flows. Under various federal, state and local environmental laws (including those of foreign jurisdictions), a current or previous owner or operator of currently or formerly owned, leased or operated real property may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. The costs of removing or remediating could be substantial. These laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Certain environmental laws and common law principles could be used to impose liability for release of, and exposure to, hazardous substances, including asbestos-containing materials into the air, and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with exposure to released hazardous substances. In addition, when excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property or development project. Accordingly, we may incur significant costs to defend against claims of liability, to comply with environmental regulatory requirements, to remediate any contaminated property, or to pay personal injury claims.
Moreover, environmental laws also may impose liens on property or other restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us or our Property Manager and its assignees from operating such properties. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations or the discovery of currently unknown conditions or non-compliances may impose material liability under environmental laws.
If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect our cash flows.
In some instances, we may sell our properties by providing financing to purchasers. If we do so, we will bear the risk that the purchaser may default on its debt, requiring us to seek remedies, a process which may be time-consuming and costly. Further, the borrower may have defenses that could limit or eliminate our remedies. In addition, even in the absence of a
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purchaser default, the proceeds from the sale will be delayed until the promissory notes or other property we may accept upon the sale are actually paid, sold, refinanced or otherwise disposed of. In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of years.
We assume additional operational risks and are subject to additional regulation and liability because we depend on eligible independent contractors to manage some of our facilities.
We invest in SHOPs using the RIDEA structure which permits REITs such as us to lease certain types of healthcare facilities and assume additional operational risks and are subject to additional regulation and liability."
Duethat we own or partially own to a disputeTRS, provided that our TRS hires an independent qualifying management company to operate the facility. Under this structure, the independent qualifying management company, which we also refer to as an operator, receives a management fee from our TRS for operating the facility as an independent contractor. As the owner of the facility, we assume most of the operational risk because we lease our facility to our own partially- or wholly-owned subsidiary rather than a third-party operator. We are therefore responsible for any operating deficits incurred by the facility. As of December 31, 2021, we had six eligible independent contractors operating 54 SHOPs (not including two land parcels). Subsequent to December 31, 2021, we terminated one of our independent contractors who managed 20 SHOPs and those management duties were assumed by other existing eligible independent contractors effective March 1, 2022 which reduced our active independent contractors to five. We may in the future, transition other triple-net leased facilities, which may or may not be experiencing declining performance, to third-party managed facilities using the RIDEA structure, in connection with the developer, we have funded excess development costs atwhich they would also transition from our development property in Jupiter, Florida and have not yet received any rental income from the property.triple-net leased healthcare facilities segment to our SHOP segment. There can be no assurance as to when wethese transitions will begin to generate cash from this investment, if at all.
In August 2015, we entered into an asset purchase agreement and development agreement to acquire land and construction in progress, and subsequently fund the remaining construction, of a development property in Jupiter, Florida for $82.0 million. Palm Health Partners, LLC ("Palm") is responsible for completing the development and obtaining a final certificate of occupancy for the facility (the "CO"). However, Palm is in defaultimprove performance of the development agreementproperties, and has ceased providingthey will also increase our exposure to risks associated with operating in this structure.
The income we generate from SHOPs is subject to a number of operational risks including fluctuations in occupancy levels and resident fee levels, increases in the cost of food, materials, energy, labor (as a result of unionization or otherwise) or other services, underrent control regulations, national and regional economic conditions, the development agreement. There is no assurance as to whenimposition of new or increased taxes, capital expenditure requirements, professional and if Palm will comply with its obligations, and this has resulted in delays in obtaining the CO. There is no assurance as to when and if Palm will comply with its obligations, and this has resulted in delays in obtaining the CO. We are currently working to obtain the CO, but there can be no assurance as to how long this process will take, or if we will be able to complete it at all. Until the CO is obtained, we will not receive income from the property,general liability claims, and the amountavailability and cost of cash we are able to generate to fund distributions to our stockholders will continue to be adversely affected. We have paid,professional and expect to continue to pay, ongoing maintenance expenses related to the property and other costs related to our work to obtain the CO while this process continues.
Under the development agreement, the targeted completion date was December 31, 2016. Additionally, the estimated rent commencement date was expected to be no later than April 1, 2017 with entities related to Palm operating the property as the tenants (the “Jupiter Tenant”). We do not expect entities related to Palm to become the tenant and we are working to find a replacement tenant once we obtain the CO, although there can be no assurance we will be able to do so on a timely basis, or at all. Pursuant to an agreement between the Jupiter Tenant and us, the Jupiter Tenant agreed to transfer all contracts, licenses and permits (including all operational permissions and certificates of need) to a replacement tenant designated by us. Until a replacement tenant is identified, there can be no assurance that the Jupiter Tenant will comply with the obligations set forth in the agreement.
general liability insurance. As of December 31, 2018, we had funded $90.6 million, including $10.0 million for the land and $80.6 million for construction in progress. As a result, we believe thatnoted herein, we have satisfied our funding commitments for the construction. We have and may continue,experienced declines in occupancy at our election, to provide additional funding to ensure completionSHOPs since the onset of the construction. To the extent we fund additional monies for the completion of the development, Palm, the developer of the facility, is responsible for reimbursing us for any amounts funded.pandemic. There can be no assurance that Palm will reimburse us for construction overruns so funded.
In addition, the NuVista Tenants, which are related parties to Palm, have failed to pay rental obligations due to us at other properties we own where they are tenants and owe $9.4 million of rent, property taxes, late fees, and interest receivable under their leases as of December 31, 2018. See "Item 7. — Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Palm and the NuVista Tenants" for further details.
We are working to resolve our various disputes with Palm, but there is no assurance we will be able to do somitigate these declines. Further, we rely on favorablethe personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment of our operators to set appropriate resident fees, provide accurate property-level financial results for our properties in a timely manner and to otherwise operate our SHOPs in compliance with the terms of our management agreements and all applicable laws and regulations. We also depend on our operators to attract and retain skilled management personnel who are responsible for the day-to-day operations of our SHOPs. A shortage of nurses or other trained personnel or general inflationary pressures may force the operator to enhance pay and benefit packages to compete effectively for personnel, but it may not be able to offset these added costs by increasing the rates charged to residents. Any increase in labor costs and other property operating expenses, any failure to attract and retain qualified personnel, or significant changes in the operator’s senior management or equity ownership could adversely affect the income we receive from our SHOPs.
The operators of our SHOPS are generally required to be holders of the applicable healthcare licenses for the healthcare services they administer. Any delay in obtaining the license, or failure to obtain one at all. Failureall, could result in a delay or an inability to resolve these has had,collect a significant portion of our revenue from the impacted property. Furthermore, this licensing requirement subjects us (through our ownership interest in our TRS) to various regulatory laws, including those described herein. Most states regulate and inspect healthcare facility operations, patient care, construction and the safety of the physical environment. If one or more of our healthcare real estate facilities fails to comply with applicable laws, our TRS, if it holds the healthcare license and is the entity enrolled in government health care programs, would be subject to penalties including loss or suspension of license, certification or accreditation, exclusion from government healthcare programs such as Medicare or Medicaid, administrative sanctions, civil monetary penalties, and in certain instances, criminal penalties. Additionally, when we receive individually identifiable health information relating to residents of our TRS-operated healthcare facilities, we are subject to federal and state data privacy and confidentiality laws and rules, and could be subject to liability in the event of an audit, complaint, or data breach. Furthermore, to the extent our TRS holds the healthcare license, it could have exposure to professional liability claims arising out of an alleged breach of the applicable standard of care rules.
Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.
We have made investments in certain assets through joint ventures and may continue to enter into joint ventures, partnerships and other co-ownership arrangements (including preferred equity investments) in the future. In such event, we may not be in a position to exercise sole decision-making authority regarding the joint venture. Investments in joint ventures may, under certain circumstances, involve risks not present were a third-party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their required capital contributions. Co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. These investments may also have the potential risk of impasses
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on decisions, such as a sale, because neither we nor the co-venturer would have full control over the joint venture. Disputes between us and co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers or directors from focusing their time and effort on our business. Consequently, actions by or disputes with co-venturers might result in subjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our co-venturers.
We may incur costs associated with complying with the Americans with Disabilities Act.
Our properties must also comply with the Americans with Disabilities Act of 1990 (the “Disabilities Act”). Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services, including restaurants and retail stores, be made accessible and available to people with disabilities. The Disabilities Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties, or, in some cases, an award of damages. A determination that a property does not comply with the Disabilities Act could result in liability for both governmental fines and damages. If we are required to make unanticipated major modifications to any of our properties to comply with the Disabilities Act which are determined not to be the responsibility of our tenants, we could incur unanticipated expenses that could have an adverse effectimpact upon our cash flow.
Net leases may not result in fair market lease rates over time.
Some of our rental income is generated by properties leased to tenants under net leases, which generally provide the tenant greater discretion in using the leased property than ordinary property leases, such as the right to freely sublease the property, to make alterations in the leased premises and to terminate the lease prior to its expiration under specified circumstances. Furthermore, net leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases in future years will fail to result in fair market rental rates during those years. Moreover, inflation could erode the value of long-term leases that do not contain indexed escalation provisions.
We may be unable to renew leases or re-lease space as leases expire.
We may be unable to renew expiring leases on terms and conditions that are as, or more, favorable as the terms and conditions of the expiring leases. In addition, vacancies may occur at one or more of our properties due to a default by a tenant on its lease or expiration of a lease. Healthcare facilities in general and MOBs in particular tend to be specifically suited for the particular needs of their tenants and major renovations and expenditures may be required in order for us to re-lease vacant space. Vacancies may reduce the value of a property as a result of reduced cash flow generated by the property.
Our properties have been and may continue to be subject to impairment charges.
We periodically evaluate our real estate investments for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, tenant performance and legal structure. For example, the early termination of, or default under, a lease by a major tenant may lead to an impairment charge. If we determine that an impairment has occurred, we are required to make a downward adjustment to the net carrying value of the property. Impairment charges also indicate a potential permanent adverse change in the fundamental operating characteristics of the impaired property. There is no assurance that these adverse changes will be reversed in the future and the decline in the impaired property’s value could be permanent. We have incurred impairment charges, which have an immediate direct impact on our business.
Provisions in our New Credit Facility currently restrict us from increasingnet income for GAAP purposes, including $41.0 million, during the rate we pay distributions to our stockholders, and thereyear ended December 31, 2021. There can be no assurance that we will be able to continue paying distributions atnot take additional charges in the current rate, or at all.

We currently pay distributionsfuture. Any future impairment could have a material adverse effect on our results in the fifth day of each month to stockholders of record each day during the prior month at a rate equivalent to $0.85 per share per annum. Pursuant to our New Credit Facility, until the earlier of the first day of the first fiscal quarter in 2019period in which we elect to be subject to other restrictions on distributions under our New Credit Facility or January 1, 2020, wethe charge is taken.
Our real estate investments are not permitted to amend or modify our current distribution policy in any manner (including, without limitation, to change the timing, amount or frequency of payments), except to reduce the amount of the distribution. Once we are permitted to increase our distribution rate, provisions in our New Credit Facility will restrict us from paying distributions in any fiscal quarter that, when added to the aggregate amount of all other distributions paid in the same fiscal quarterrelatively illiquid, and the preceding three fiscal quarters (calculated on an annualized basis during the first three fiscal quarters for which the provisions are in effect), exceed 95% of our Modified FFO (as defined in our New Credit Facility and which is similar but not identical to MFFO as discussed in this Annual Report on Form 10-K) during the applicable period. Until we become subject to these distribution restrictions, we will be subject to a covenant requiring us to maintain a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $50.0 million, and the amount available for borrowings under our New Credit Facility based on the same borrowing base properties will be slightly lower.
The Prior Credit Facility also contained a covenant that restricted our ability to pay distributions exceeding certain percentages of Modified FFO. This covenant was amended twice during 2017 to permit us to pay a certain level of distributions. There can be no assurance that the lenders under our New Credit Facility will agree to any amendments to covenants impacting our ability to pay distributions. There also can be no assurance that we will be able to continue paying distributions at the current rate, or at all.
We have not generated, and in the future may not generate, operating cash flows sufficient to fund all of the distributions we pay to our stockholders, and, as such, we may be forced to fund distributions from other sources, including borrowings, which may not be available on favorable terms, or at all.
We have historically not generated sufficient cash flow from operations to fund distributions. If we do not generate sufficient cash flows from our operations to fund distributions, we may have to further reduce or suspend distributions. The amount of cash we have available for distributions is dependent on many factor, including factors that are beyond our control, such as that cash flows from our existing properties may not increase (or may decline),therefore we may not be able to obtain a CO and begin receiving rental income from our development propertydispose of properties when we desire to do so or on favorable terms.
Investments in Jupiter, Florida and future asset acquisitionsreal properties are relatively illiquid. We may not increasebe able to quickly alter our cashportfolio or generate capital by selling properties. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. If we need or desire to sell a property or properties, we cannot predict whether we will be able to do so at a price or on the terms and conditions acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Further, we may be required to invest monies to correct defects or to make improvements before a property can be sold. We can make no assurance that we will have funds available to correct these defects or to make these improvements. Moreover, in acquiring a property or incurring debt securing a property, we may agree to restrictions that prohibit the sale of that property for making distributionsa period of time or impose other restrictions, such as much as we anticipate,a limitation on the amount of debt that can be placed or at all. Moreover, decisionsrepaid on whether, when and in which amountsthat property. These types of provisions restrict our ability to pay any future distributions will remain at all times entirely atsell a property.
In addition, applicable provisions of the discretionCode impose restrictions on the ability of our boarda REIT to dispose of directors, which reserves the rightproperties that are not applicable to change our distribution policy at any time and for any reason.
Our cash flows provided by operations were $54.2 million for the year ended December 31, 2018. During the year ended December 31, 2018, we paid distributions of $91.5 million, of which 59.2% was funded from cash flows from operations, 35.2% was funded from proceeds from issuances of common stock under our DRIP with the remainder funded from available cash on hand, which consists of proceeds from saleother types of real estate companies. Thus, we may be unable to realize our investment objectives by selling or otherwise disposing of a property, or refinancing debt secured by the property, at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy.
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Risks Related to the Healthcare Industry

Our real estate investments are concentrated in healthcare-related facilities, and proceeds from borrowings. A decreasewe may be negatively impacted by adverse trends in the levelhealthcare industry.
We own and seek to acquire a diversified portfolio of stockholderhealthcare-related assets including MOBs, SHOPs and other healthcare-related facilities. We are subject to risks inherent in concentrating investments in real estate and, in particular, healthcare-related assets. A downturn in the commercial real estate industry generally could significantly adversely affect the value of our properties. A downturn in the healthcare industry could particularly negatively affect our lessees’ ability to make lease payments to us and our ability to pay dividends and other distributions to our stockholders. These adverse effects could be more pronounced than if we diversified our investments outside of real estate or if our portfolio did not include a concentration in healthcare-related assets.
Furthermore, the healthcare industry currently is experiencing rapid regulatory changes and uncertainty; changes in the demand for and methods of delivering healthcare services; changes in third-party reimbursement policies; significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas; expansion of insurance providers into patient care; continuing pressure by private and governmental payors to reduce payments to providers of services; and increased scrutiny of billing, referral and other practices by federal and state authorities. These factors may adversely affect the economic performance of some or all of our tenants and, in turn, our revenues and cash flows.
Certain of our properties in our MOB Segment may not have efficient alternative uses, so the loss of a tenant may cause us to not be able to find a replacement or cause us to spend considerable capital to adapt the property to an alternative use.
Some of our properties and the properties we will seek to acquire are healthcare-related assets that may only be suitable for similar healthcare-related tenants. If we or our tenants terminate the leases for these properties or our tenants lose their regulatory authority to operate such properties, we may not be able to locate suitable replacement tenants to lease the properties for their specialized uses. Alternatively, we may be required to spend substantial amounts to adapt the properties to other uses.
The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could result in the inability of our tenants to make rent payments to us.
The healthcare industry is heavily regulated by federal, state and local governmental bodies. Our tenants generally are subject to laws and regulations covering, among other things, licensure, certification for participation in government programs, relationships with physicians and other referral sources, and the privacy and security of patient health information. Changes in these laws and regulations could negatively affect the ability of our DRIPtenants to make lease payments to us. In some states, healthcare facilities are subject to various state CON laws requiring governmental approval prior to the development or expansion of healthcare facilities and services. The approval process in these states generally requires a facility to demonstrate the need for additional or expanded healthcare facilities or services. CONs, where applicable, can also be conditions to regulatory approval of changes in ownership or control of licensed facilities, addition of beds, investment in major capital equipment, introduction of new services, termination of services previously approved through the CON process and other control or operational changes. Many of our medical facilities and their tenants may require a license or CON to operate. Failure to obtain a license or CON, or loss of a required license or CON, would prevent a facility from operating in the manner intended by the tenant and may restrict an operator’s ability to expand properties and grow the operator’s business in certain circumstances, which could have an adverse effect on the operator’s or tenant’s revenues, and in turn, negatively impact their ability to make rental payments under, and otherwise comply with the terms of their leases with us. State CON laws are not uniform throughout the United States and are subject to change. We cannot predict the impact of state CON laws on our improvement of medical facilities or the operations of our tenants. In addition, state CON laws often materially impact the ability of competitors to enter into the marketplace of our facilities. The repeal of CON laws could allow competitors to freely operate in previously closed markets. This could negatively affect the ability of our tenants’ to make rental payments to us. In limited circumstances, loss of state licensure or certification or closure of a facility could ultimately result in loss of authority to operate the facility and require new CON authorization to re-institute operations.
Furthermore, uncertainty surrounding the implementation of the Affordable Care Act may adversely affect our operators. As the primary vehicle for comprehensive healthcare reform in the United States, the Affordable Care Act was designed to reduce the number of individuals in the United States without health insurance and change the ways in which healthcare is organized, delivered and reimbursed. The Affordable Care Act has faced ongoing legal challenges, including litigation seeking to invalidate some or all of the law or the manner in which it has been interpreted. The legal challenges and legislative initiatives to roll back the Affordable Care Act continues and the outcomes are uncertain. In June of 2021, the Supreme Court of the United States for a third time declined to invalidate the Affordable Care Act. There is no assurance that future litigation or legislative initiatives will not attempt to do so. The regulatory uncertainty and the potential impact on our tenants and operators could have an adverse material effect on their ability to satisfy their contractual obligations. Further, we are unable to predict the scope of future federal, state and local regulations and legislation, including Medicare and Medicaid statutes and regulations or judicial decisions, or the intensity of enforcement efforts with respect to such regulations and legislation, and any
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changes in the regulatory or judicial framework may have a material adverse effect on our tenants, which, in turn, could have a material adverse effect on us.
The expansion in health insurance coverage under the Affordable Care Act is likely going to continue to erode in 2022 as cuts in advertising and outreach during the marketplace open-enrollment periods, shorter open enrollment periods, and other changes have left many Americans uncertain about their ability to access and be eligible for coverage. Additionally, the repeal of the individual mandate penalty included in the TCJA, recent actions to increase the availability of insurance policies that do not include Affordable Care Act minimum benefit standards, and support for Medicaid work requirements will likely impact the market. Accordingly, current and future payments under federal and state healthcare programs may not be sufficient to sustain a facility’s operations, which could adversely affect its ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of, the facility’s leases and other agreements with us.
The Affordable Care Act includes program integrity provisions that both create new authorities and expand existing authorities for federal and state governments to address fraud, waste and abuse in federal health programs. In addition, the Affordable Care Act expands reporting requirements and responsibilities related to facility ownership and management, patient safety and care quality. In the ordinary course of their businesses, our operators may be regularly subjected to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations. If they do not comply with the additional reporting requirements and responsibilities, the ability of our operators’ to participate in federal health programs may be adversely affected. Moreover, there may be other aspects of the comprehensive healthcare reform legislation for which regulations have not yet been adopted, which, depending on how they are implemented, could materially and adversely affect our operators.
The Affordable Care Act also requires the reporting and return of overpayments. Healthcare providers that fail to report and return an overpayment could face potential liability under the FCA and the CMPL and exclusion from federal healthcare programs. Accordingly, if our operators fail to comply with the Affordable Care Act’s requirements, they may be subject to significant monetary penalties and excluded from participation in Medicare and Medicaid, which could materially and adversely affect their ability to pay rent and satisfy other financial obligations to us.
Reductions or changes in reimbursement from third-party payors, including Medicare and Medicaid, or delays in receiving these reimbursements, could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us.
Our tenants may receive payments from the federal Medicare program, state Medicaid programs, private insurance carriers and health maintenance organizations, among others. Efforts by such payors to reduce healthcare costs have intensified in recent years and will likely continue, which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenants. The Medicare and Medicaid programs have adopted a variety of initiatives which have been incorporated and expanded by private insurance carriers, including health maintenance organizations and other health plans, to extract greater discounts and impose more stringent cost controls upon healthcare provider operations. Examples include, but are not limited to, changes in reimbursement rates and methodologies, such as bundled payments, capitation payments and discounted fee structures. As a result, our tenants and operators may face significant limits on the reimbursed and on reimbursement rates and fees. All of these changes could impact the ability of our operators and tenants’ ability to pay rent or other obligations to us. In addition, operators and tenants in certain states have experienced delays; some of which are, have been, and may be late in receiving reimbursements, which have adversely affected their ability to make rent payments to us.Further, failure of any of our operators or tenants to comply with various laws and regulations could jeopardize their ability to continue participating in Medicare, Medicaid and other government-sponsored payment programs.
The healthcare industry continues to use DRIP proceeds. Borrowingsface various challenges, including increased government and private payor pressure on healthcare providers to control or reduce costs. Coverage expansions under the Affordable Care Act through the Medicaid expansion and health insurance exchanges may be scaled back or eliminated in the future due to ongoing legal challenges and the future status of the Affordable Care Act is unknown. We cannot ensure that of our operators or tenants who currently depend on governmental or private payer reimbursement will be adequately reimbursed for the services they provide.
Any slowdown in the United States economy can negatively affect state budgets, thereby putting pressure on states to decrease spending on state programs including Medicaid. The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in state Medicaid programs due to unemployment and declines in family incomes. Historically, some states have attempted to reduce Medicaid spending by limiting benefits and tightening Medicaid eligibility requirements. Potential reductions to Medicaid program spending in response to state budgetary pressures could negatively impact the ability of our tenants and operators to successfully operate their businesses.
Our tenants and operators may continue to experience a shift in payor mix away from fee-for-service payors, resulting in an increase in the percentage of revenues attributable to managed care payors, and general industry trends that include pressures to control healthcare costs. In addition, some of our tenants may be subject to value-based purchasing programs, which base reimbursement on the quality and efficiency of care provided by facilities and require the public reporting of quality data and preventable adverse events to receive full reimbursement. Pressures to control healthcare costs and a shift away from traditional health insurance reimbursement to managed care plans have resulted in an increase in the number of patients whose healthcare
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coverage is provided under managed care plans, such as health maintenance organizations and preferred provider organizations. Medicare Access and CHIP Reauthorization Act (“MACRA”) has also established a new payment framework, which modified certain Medicare payments to eligible clinicians, representing a fundamental change to physician reimbursement. These changes could have a material adverse effect on the financial condition of some or all of our tenants in our properties. The financial impact on our tenants and operators could restrict their ability to make rent payments to us.
Required regulatory approvals can delay or prohibit transfers of our healthcare facilities.
Transfers of healthcare facilities to successor tenants or operators are typically subject to regulatory approvals or ratifications, including, but not limited to, change of ownership approvals, zoning approvals, and Medicare and Medicaid provider arrangements that are either not required, or enjoy reduced requirements, in connection with transfers of other types of commercial operations and other types of real estate. The replacement of any tenant or operator could be delayed by the regulatory approval process of any federal, state or local government agency necessary for the transfer of the facility or the replacement of the operator licensed to fund distributionsmanage the facility. If we are unable to find a suitable replacement tenant or operator upon favorable terms, or at all, we may take possession of a facility, which could expose us to successor liability, require us to indemnify subsequent operators to whom we transfer the operating rights and licenses, or require us to spend substantial time and funds to preserve the value of the property and adapt the facility to other use. Furthermore, transitioning to a new tenant or operator could cause disruptions at the operations of the properties and, if there is a delay in the new tenant or operator obtaining its Medicare license, delays in our ability to receive reimbursements from Medicare.
A reduction in Medicare payment rates for skilled nursing facilities may have an adverse effect on the Medicare reimbursements received by certain of our tenants.
Several government initiatives have resulted in reductions in funding of the Medicare and Medicaid programs and additional changes in reimbursement regulations by the Centers for Medicare & Medicaid Services (“CMS”), contributing to pressure to contain healthcare costs and additional operational requirements, which has impacted the ability of our tenants and operators to make rent payments to us. The Medicare and Medicaid programs have adopted a variety of initiatives which have been incorporated and expanded by private insurance carriers, including health maintenance organizations and other health plans, to extract greater discounts and impose more stringent cost controls upon healthcare provider operations. As a result, our tenants and operators may face reductions in reimbursement rates and fees. Operators in certain states have experienced delays in receiving reimbursements, which has adversely affected their ability to make rent payments to us. Similar delays, or reductions in reimbursements, may continue to impose financial and operational challenges for our tenants and operators, which may affect their ability to make contractual payments to us.
There have been numerous initiatives on the federal and state levels for comprehensive reforms affecting the payment for, and availability of, healthcare services. We may own and acquire skilled nursing facility assets that rely on revenue from Medicaid or Medicare. Our tenants have, and may continue to experience, limited increases or reductions in Medicare payments and aspects of certain of these government initiatives, such as further reductions in funding of the Medicare and Medicaid programs, additional changes in reimbursement regulations by CMS, enhanced pressure to contain healthcare costs by Medicare, Medicaid and other payors, and additional operational requirements may adversely affect their ability to make rental payments. For example, CMS is focused on reducing what it considers to be payment errors by identifying, reporting, and implementing actions to reduce payment error vulnerabilities.
In addition, CMS is currently in the midst of transitioning Medicare from traditional fee for service reimbursement models to a capitated system, which means medical providers are given a set fee per patient regardless of treatment required, and value-based and bundled payment approaches, where the government pays a set amount for each beneficiary for a defined period of time, based on that person’s underlying medical needs, rather than based on the actual services provided. Providers and facilities are increasing responsible to care for and be financially responsible for certain populations of patients under the population health models and this shift in patient management paradigm is creating and will continue to create unprecedented challenges for providers and impact their ability to pay rent to us.
Certain of our facilities may be subject to pre- and post-payment reviews and audits by governmental authorities, which could result in recoupments, denials or delay of payments and could adversely affect the profitability of our tenants.
Certain of our facilities may be subject to periodic pre- and post-payment reviews and audits by governmental authorities. If the review or audit shows a facility is not in compliance with federal and state requirements, previous payments to the facility may be recouped and future payments may be denied or delayed. Recoupments, denials or delay of payments could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us.
Events that adversely affect the ability of seniors and their families to afford daily resident fees at our SHOPs could cause our occupancy rates and resident fee revenues to decline.
Assisted and independent living services generally are not reimbursable under government reimbursement programs, such as Medicare and Medicaid. Most of the resident fee revenues generated by our SHOPs, therefore, are derived from private pay sources consisting of the income or assets of residents or their family members. The rates for these residents are set by the facilities based on local market conditions and operating costs. In light of the significant expense associated with building new
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properties and staffing and other costs of providing services, typically only seniors with income or assets that meet or exceed the comparable region median can afford the daily resident and care fees at our SHOPs. A weak economy, depressed housing market or changes in demographics could adversely affect their continued ability to do so. If the operators of our SHOPs are unable to attract and retain seniors that have sufficient income, assets or other resources to pay the fees associated with assisted and independent living services, the occupancy rates, resident fee revenues and results of operations of our SHOPs could decline.
Residents in our SHOPs may terminate leases.
State regulations generally require assisted living communities to have a written lease agreement with each resident that permits the resident to terminate his or her lease for any reason on reasonable notice, unlike typical apartment lease agreements that have initial terms of one year or longer. Due to these lease termination rights and the advanced age of the residents, the resident turnover rate in our SHOPs may be difficult to predict. A large number of resident lease agreements may terminate at or around the same time, and the affected units may remain unoccupied.
Some tenants of our healthcare-related assets must comply with fraud and abuse laws, the violation of which by a tenant may jeopardize the tenant’s ability to make rent payments to us.
There are various federal and state laws prohibiting fraudulent and abusive business practices by healthcare providers who participate in, receive payments from or are in a position to make referrals in connection with government-sponsored healthcare programs, including the Medicare and Medicaid programs.
Our lease arrangements with certain tenants may also be subject to these fraud and abuse laws. These laws include the Federal Anti-Kickback Statute, which prohibits, among other things, the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, the referral of any item or service reimbursed by Medicare or Medicaid; the Federal Physician Self-Referral Prohibition (commonly referred to as the “Stark Law”), which, subject to specific exceptions, restricts physicians from making referrals for specifically designated health services for which payment may be made under Medicare or Medicaid programs to an entity with which the physician, or an immediate family member, has a financial relationship; the FCA, which prohibits any person from knowingly presenting false or fraudulent claims for payment to the federal government, including claims paid by the Medicare and Medicaid programs; and the CMPL, which authorizes the U.S. Department of Health and Human Services to impose monetary penalties for certain fraudulent acts. Additionally, some states may have laws similar to the Federal Anti-Kickback Statute and the Stark Law expanding their respective prohibitions to private insurance.
Each of these laws includes substantial criminal or civil penalties for violations that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments or exclusion from the Medicare and Medicaid programs. Certain laws, such as the FCA, allow for individuals to bring whistleblower actions on behalf of the government for violations thereof. Individuals have tremendous potential financial gain in bringing whistleblower claims as the FCA statute provides that the individual will receive between 15% and 30% of the money recouped. Additionally, violations of the FCA can result in treble damages. Significant enforcement activity has been the result of actions brought by these individuals. Additionally, certain states in which the facilities are located also have similar fraud and abuse laws. Federal and state adoption and enforcement of such laws increase the regulatory burden and costs, and potential liability, of healthcare providers. Investigation by a federal or state governmental body for violation of fraud and abuse laws, and these state laws have their own penalties which may be in additional to federal penalties.
Investigation by a federal or state governmental body for violation of fraud and abuse laws or imposition of any of these penalties upon one of our tenants could jeopardize that tenant’s business, its reputation, and its ability to operate or to make rent payments. Increased funding for investigation and enforcement efforts, accompanied by an increased pressure to eliminate government waste, has led to a significant increase in the number of investigations and enforcement actions over the past several years, a trend which is not anticipated to decrease considerably.
Tenants of our healthcare-related assets may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their rent payments to us.
As is typical in the healthcare industry, certain types of tenants of our healthcare-related assets may often become subject to claims that their services have resulted in patient injury or other adverse effects. The insurance coverage maintained by these tenants may not cover all claims made against them or continue to be available at favorable rates,a reasonable cost, if at all. In some states, insurance coverage for the risk of punitive damages arising from professional liability and general liability claims or at all,litigation may not, in certain cases, be available to these tenants due to state law prohibitions or limitations of availability. As a result, these types of tenants operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits. Recently, there has been an increase in governmental investigations of certain healthcare providers, particularly in the area of Medicare and could restrict the amount we can borrow for investments and other purposes. The proceedsMedicaid false claims, as well as an increase in enforcement actions resulting from any property sale are subject to reduction to repay the debt, if any, associated with the property sold andthese investigations. Insurance may not be available to fund distributions. Distributions paidcover such losses. Any adverse determination in a legal proceeding or governmental investigation, whether currently asserted or arising in the future, could have a material adverse effect on a tenant’s financial condition. If a tenant is unable to obtain or maintain insurance coverage, if judgments are obtained in excess
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of the insurance coverage, if a tenant is required to pay uninsured punitive damages, or if a tenant is subject to an uninsurable government enforcement action, the tenant could be exposed to substantial additional liabilities, which may affect the tenant’s business, operations and ability to pay rent to us.
We may experience adverse effects as a result of potential financial and operational challenges faced by the operators of any seniors housing facilities and skilled nursing facilities we own or acquire.
Operators of any seniors housing facilities and skilled nursing facilities may face operational challenges from sources other thanpotentially reduced revenue streams and increased demands on their existing financial resources. The resources of our cash flowsskilled nursing units are primarily derived from operations also reduce the funds available for other needsgovernmentally funded reimbursement programs, such as property acquisitions,Medicare and Medicaid. Accordingly, our facility operators are subject to the potential negative effects of decreased reimbursement rates or other changes in reimbursement policy or programs offered through such reimbursement programs. Their revenue may also be adversely affected as a result of falling occupancy rates or slow lease-ups for assisted and independent living facilities due to various factors, including the ongoing COVID-19 pandemic and its effects and turmoil in the capital expendituresdebt and real estate markets. In addition, our facility operators may incur additional demands on their existing financial resources as a result of increases in seniors housing facility operator liability, insurance premiums and other operational expenses. The economic deterioration of an operator could cause such operator to file for bankruptcy protection. The bankruptcy or insolvency of an operator may adversely affect the income produced by the property or properties it operates.
The performance and economic condition of our operators may be negatively affected if they fail to comply with various complex federal and state laws that govern a wide array of referrals, relationships and licensure requirements in the senior healthcare industry. The violation of any of these laws or regulations by a seniors housing facility operator may result in the imposition of fines or other penalties that could jeopardize that operator’s ability to make payments to us or to continue operating its facility. In addition, legislative proposals are commonly being introduced or proposed in federal and state legislatures that could affect major changes in the seniors housing sector, either nationally or at the state level. Any such legislation could materially impact our operators in an adverse fashion.
We may change our targeted investments without stockholder consent.
We have acquired and expect to continue to acquire a diversified portfolio of healthcare-related assets including MOBs, SHOPs and other healthcare-related facilities. However, the board may change our investment policies in its sole discretion. We may change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, initially anticipated by increasing our exposure to, among other things, interest rate risk, default risk and real estate-related investments.estate market fluctuations.
If we internalize our management functions, we would be required to pay a transition fee and would not have the right to retain our management or personnel.
We may engage in an internalization transaction and become self-managed in the future. If we internalize our management functions, under the terms of our advisory agreement we would be required to pay a transition fee to our Advisor upon termination of the advisory agreement in connection with an internalization that could be up to 4.5 times the compensation paid to our Advisor in the previous year, plus expenses. We also would not have any right to retain our executive officers or other personnel of our Advisor who currently manage our day-to-day operations. An inability to manage an internalization transaction effectively could thus result in our incurring excess costs and suffering deficiencies in our disclosure controls and procedures or our internal control over financial reporting. SuchThese deficiencies could cause us to incur additional costs, and our management'smanagement’s attention could be diverted from most effectively managing our investments, which could result in litigation and resulting associated costs in connection with the internalization transaction.

We may terminate our advisory agreement in only limited circumstances, which may require payment of a termination fee.
We have limited rights to terminate theour Advisor. The initial term of our advisory agreement expires on February 16, 2027, but is automatically renewed upon expiration for consecutive ten-year terms unless notice of termination is provided by either party 365 days in advance of the expiration of the term. Further, we may terminate the agreement only under limited circumstances. In the event of a termination in connection with a change in control of us, we would be required to pay a termination fee that could be up to four times the compensation paid to our Advisor in the previous year, plus expenses. In the event of a termination in connection with an internalization, the fee payable could be up to 4.5 times the compensation paid to our Advisor in the previous year, plus expenses. The limited termination rights of the advisory agreement will make it difficult for us to renegotiate the terms of the advisory agreement or replace our Advisor even if the terms of the advisory agreement are no longer consistent with the terms generally available to externally-managed REITs for similar services.
We indemnify our officers, directors, the Advisor and its affiliates against claims or liability they may become subject to due to their service to us, and our rights and the rights of our stockholders to recover claims against our officers, directors, our Advisor and its affiliates are limited.
Maryland law provides that a director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the corporation’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, subject to certain limitations set forth therein or under Maryland law, our charter provides that no director or officer will be liable to us or our stockholders for monetary damages and permits us to indemnify our directors and officersfrom liability and advance certain expenses to them in connection with claims or liability they may become subject to due to their service to us, and we are not restricted from indemnifying our Advisor or its affiliates on a similar basis. We have entered into indemnification agreements to this effect with our directors and officers, certain former directors and officers, our Advisor and AR Global. We and our stockholders may have more limited rights against our directors, officers, employees and agents, and our Advisor and its affiliates, than might otherwise exist under common law, which could reduce the recovery of our stockholders and our recovery against them. In addition, we may be obligated to fund the defense costs incurred by ourdirectors, officers, employees and agents or our Advisor and its affiliates in some cases. Subject to conditions and exceptions, we also indemnify our Advisor and its affiliates from losses arising in the performance of their duties under the advisory agreement and have agreed to advance certain expenses to them in connection with claims or liability they may become subject to due to their service to us.
Our business and operations could suffer if our Advisor or any other party that provides us with services essential to our operations experiences system failures or cyber incidents or a deficiency in cybersecurity.
The internal information technology networks and related systems of our Advisor and other parties that provide us with services essential to our operations (including our tenant operators and other third partythird-party operators of our healthcare facilities) are vulnerable to damage from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our
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operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by these disruptions.
As reliance on technology has increased, so have the risks posed to those systems. Our Advisor and other parties that provide us with services essential to our operations must continuously monitor and develop their networks and information technology to prevent, detect, address and mitigate the risk of unauthorized access, misuse, computer viruses, and social engineering, such as phishing. We areOur Advisor is continuously working, including with the aid of third partythird-party service providers, to install new, and to upgrade our existing, network and information technology systems, to create processes for risk assessment, testing, prioritization, remediation, risk acceptance, and reporting, and to provide awareness training around phishing, malware and other cyber risks to ensure that our Advisor and other parties that provide us with services essential to our operations and we are protected against cyber risks and security breaches.breaches and that we are also therefore so protected. However, these upgrades, processes, new technology and training may not be sufficient to protect us from all risks. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques and technologies used in attempted attacks and intrusions evolve and generally are not recognized until launched against a target. In some cases, attempted attacks and intrusions are designed not to be detected and, in fact, may not be detected.
The remediation costs and lost revenues experienced by a subject of an intentional cyberattack or other event which results in unauthorized third partythird-party access to systems to disrupt operations, corrupt data or steal confidential information may be significant and significant resources may be required to repair system damage, protect against the threat of future security breaches or to alleviate problems, including reputational harm, loss of revenues and litigation, caused by any breaches. Additionally, any failure to adequately protect against unauthorized or unlawful processing of personal data, or to take appropriate action in cases of infringement may result in significant penalties under privacy law.
Furthermore, a security breach or other significant disruption involving the information technology networks and related systems of our Advisor or any other party that provides us with services essential to our operations could:
result in misstated financial reports, violations of loan covenants, missed reporting deadlines or missed permitting deadlines;

affect our ability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;
result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information (including information about our tenant operators and other third partythird-party operators of our healthcare facilities, as well as the patients or residents at those facilities), which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space;
require significant management attention and resources to remedy any damages that result;
subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or
adversely impact our reputation among our tenants, operators and investors generally.
Although our Advisor and other parties that provide us with services essential to our operations intend to continue to implement industry-standard security measures, there can be no assurance that those measures will be sufficient, and any material adverse effect experienced by our Advisor and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us.
The purchase price per shareWe depend on our Advisor and Property Manager to provide us with executive officers, key personnel and all services required for shares issued underus to conduct our operations and our operating performance may be impacted by any adverse changes in the DRIP and the repurchase pricefinancial health or reputation of our sharesAdvisor.
We have no employees. Personnel and services that we require are provided to us under contracts with our share repurchase program is basedAdvisor and its affiliates including our Property Manager. We depend on our Estimated Per-Share NAV, which is based upon subjective judgments, assumptionsAdvisor and opinions about future events,our Property Manager to manage our operations and may not reflect the amount that our stockholders might receive for their shares in a market transaction.
We intend to publish an updated Estimated Per-Share NAV as of December 31, 2018 shortly following the filing of this Annual Report on Form 10-K.Our Advisor has engaged an independent valuer to perform appraisalsacquire and manage certain of our real estate assets in accordanceassets. Our Advisor makes all decisions with valuationrespect to the management of our company, subject to the supervision of, and any guidelines established by, the Board. As with any methodology usedboard.
Our success depends to estimate value,a significant degree upon the valuation methodologies that will be used by any independent valuer to value our properties involve subjective judgments concerning factors such as comparable sales, rental and operating expense data, capitalization or discount rate, and projections of future rent and expenses.
Under our valuation guidelines, our independent valuer estimates the market valuecontributions of our principal real estateexecutive officers and real estate-related assets, andother key personnel of our Advisor determines the net valueand its affiliates, including Edward M. Weil, Jr., our chief executive officer, and Scott Lappetito, our chief financial officer, treasurer and secretary. Neither our Advisor nor any of our real estateits affiliates has an employment agreement with these key personnel and real estate-related assets and liabilities taking into consideration such estimate provided by the independent valuer. Our Advisor reviews the valuation provided by the independent valuer for consistency with its determinationswe cannot guarantee that all, or any particular one, of value and our valuation guidelines and the reasonableness of the independent valuer's conclusions. The independent directors of the Board review the appraisals and valuations and makes a final determination of the Estimated Per-Share NAV. The independent directors of the Board rely on our Advisor’s input, including its view of the estimate and the appraisals performed by the independent valuation firm, but the independent directors of the Board may, in their discretion, consider other factors. Although the valuations of our real estate assets by the independent valuer are reviewedthese individuals will remain employed by our Advisor or one of its affiliates and approved byotherwise available to continue to perform services for us. Further, we do not maintain key person life insurance on any person. We believe that our success depends, in large part, upon the independent directorsability of the Board, neither our Advisor norto hire, retain or contract for services of highly skilled managerial, operational and marketing personnel. Competition for skilled personnel is intense, and there can be no assurance that our Advisor will be successful in attracting and retaining skilled personnel. If our Advisor loses or is unable to obtain the independent directorsservices of the Board will independently verify the appraised valueskilled personnel due to, among other things, an overall labor shortage, lack
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of skilled labor, increased turnover or labor inflation, caused by COVID-19 or as a result the appraised value of a particular property mayother general macroeconomic factors, our Advisor’s ability to manage our business and implement our investment strategies could be greaterdelayed or less than its potential realizable value, which would cause our Estimated Per-Share NAV to be greater or less than the potential realizable value of shares of our common stock.hindered.
Because they are based on Estimated Per-Share NAV, the price at which our shares may be sold under the DRIP and the price at which our shares may be repurchased by us pursuant to the SRP may not reflect the price that our stockholders would receive for their shares in a market transaction, the proceeds that would be received upon our liquidation or the price that a third party would pay to acquire us.
Because Estimated Per-Share NAV is only determined annually, it may differ significantly from our actual per-share net asset value at any given time.
Valuations of Estimated Per-Share NAV are made at least once annually. In connection with any valuation, the Board estimate of the value of our real estate and real estate-related assets will be partly based on appraisals of our properties, which we expect will only be appraised in connection with the annual valuation.
Because valuations only occur annually, Estimated Per-Share NAV cannot take into account any material events that occur after the Estimated Per-Share NAV has been calculated for that year. Material events could include the appraised value of our properties substantially changing actual property operating results differing from what we originally budgeted or distributions to shareholders exceeding cash flow generated by us. Any such material event could cause a changeadverse changes in the Estimated Per-Share NAV that would not be reflected until the next valuation. Also,financial condition or financial health of, or our relationship with, our Advisor or Property Manager, including any change resulting from an adverse outcome in any litigation could hinder their ability to the extent we pay distributions in excess ofsuccessfully manage our cash flows provided by operations this could result in a decrease to our Estimated Per-Share NAV. As a result, the Estimated Per-Share NAV is not guaranteed to accurately reflect the value of the shares at any given time, and our Estimated Per-Share NAV may differ significantly frominvestments. Additionally, changes in ownership or management practices, the occurrence of adverse events affecting our actual per-share net asset value at any given time.

Advisor or its affiliates or other companies advised by our Advisor or its affiliates could create adverse publicity and adversely affect us and our relationship with lenders, tenants, operators or counterparties.
We may in the future acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which would expose us to additional risks.
As ofWe may in the date of this Annual Report on Form 10-K, we have not invested in anyfuture acquire or originate first mortgage debt loans, mezzanine loans, preferred equity or securitized loans, commercial mortgage-backed securities ("CMBS"),CMBS, preferred equity and other higher-yielding structured debt and equity investments. In the future, however, we may choose to acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, whichDoing so would expose us not only to the risks and uncertainties we are currently exposed to through our direct investments in real estate but also to additional risks and uncertainties attendant to investing in and holding these types of investments, such as:
risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments;
increased competition from entities engaged in mortgage lending and, or investing in our target assets;
deterioration in the performance of properties securing our investments may cause deterioration in the performance of our investments and, potentially, principal losses to us;
fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments;
difficulty in redeploying the proceeds from repayments of our existing loans and investments;
the illiquidity of certain of these investments;
lack of control over certain of our loans and investments;
the potential need to foreclose on certain of the loans we originate or acquire, which could result in losses losses;
additional risks, including the risks of the securitization process, posed by investments in CMBS and other similar structured finance investments, as well as those we structure, sponsor or arrange; use of leverage may create a mismatch with the duration and interest rate of the investments that we financing;finance;
risks related to the operating performance or trading price volatility of any publicly-traded and private companies primarily engaged in real estate businesses we invest in; and
the need to structure, select and more closely monitor our investments such that we continue to maintain our qualification as a REIT and our exemption from registration under the Investment Company Act of 1940, as amendedamended.


Risks Related to our Indebtedness

Our level of indebtedness may increase our business risks.
As of December 31, 2021, we had total outstanding indebtedness of $1.1 billion. We may incur additional indebtedness in the future for various purposes. The amount of our indebtedness could have material adverse consequences for us, including:
hindering our ability to adjust to changing market, industry or economic conditions;
limiting our ability to access the capital markets to raise additional equity or debt on favorable terms or at all, whether to refinance maturing debt, to fund acquisitions, to fund dividends and other distributions or for other corporate purposes;
limiting the amount of free cash flow available for future operations, acquisitions, dividends and other distributions, stock repurchases or other uses; and
making us more vulnerable to economic or industry downturns, including interest rate increases.
In most instances, we acquire real properties by using either existing financing or borrowing new funds. In addition, we may incur mortgage debt and pledge the underlying property as security for that debt to obtain funds to acquire additional real properties or for other corporate purposes. We may also borrow if we need funds to satisfy the REIT tax qualification requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. We also may borrow if we otherwise deem it necessary or advisable to assure that we maintain our qualification as a REIT.
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If there is a shortfall between the cash flow from a property and the cash flow needed to service mortgage debt on that property, especially if we acquire the property when it is being developed or under construction, we may use additional borrowings to fund the shortfall. Using debt increases the risk of loss because defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default. For U.S. federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. In this event, we may be unable to pay the amount of distributions required in order to maintain our REIT status. We may give full or partial guarantees to lenders of mortgage debt to the entities that own our properties. In those cases, we will be responsible to the lender for repaying the debt if it is not paid by the entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.
Our Credit Facility contains various covenants that may restrict our ability to take certain actions and may restrict our ability to use our cash and make investments.
Our Credit Facility contains various covenants that may restrict our ability to take certain actions for example, we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Company meets certain requirements. We may, however, pay dividends on the Series A Preferred Stock and Series B Preferred Stock, or any other preferred stock we may issue and any cash distributions necessary to maintain our status as a REIT. The restrictions on paying cash distributions will no longer apply starting in the quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter, we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, among other things. In the past, we have not chosen to make the election. There can be no assurance as to if, or when, we will be able to satisfy these conditions or make the required election; moreover, we will only be permitted to pay cash distributions if the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock or Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after we make the election and begin paying distributions.
The lenders waived any defaults or events of defaults under the covenant requiring a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges that may have occurred during the fiscal quarter ended September 31, 2021 as well as any additional default or events of default resulting therefrom prior to November 12, 2021. The lenders have also adjusted this covenant for a period starting November 12, 2021 and lasting until the earlier of December 31, 2022 and the date on which we irrevocably elect to terminate the covenant relief period.There can be no assurance our lenders will consent to any future amendments, or waivers or adjustments that may become necessary to comply with our Credit Facility, and a breach of our Credit Facility would, among other things, impact our ability to make draws on our Credit Facility, and could require us to repay amounts borrowed under our Credit Facility earlier than we otherwise would have been required to pay.
Covenants in our Credit Facility also require us to maintain a combination of cash, cash equivalents and availability for future borrowings under our Revolving Credit Facility totaling at least $50.0 million. As of December 31, 2021, we had $59.7 million of cash and cash equivalents, and $236.6 million was available for future borrowings under our Revolving Credit Facility. Further, our Credit Facility also restricts how we may use our sources of liquidity. Until the first day of the Commencement Quarter (as defined herein), we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met.
The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base. Availability has been, and may continue to be, adversely affected by the decreases in net operating income at the properties comprising the borrowing base from the effects of the COVID-19 pandemic and may persist for some time. Our ability to increase the amount of cash we generate from property operations depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties on favorable terms 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 favorable terms and conditions, if at all, particularly if we do not have a source of capital available that will allow us to do so. Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, particularly due to the COVID-19 pandemic, and there can be no assurance we will be successful in achieving this objective. Because shares of common stock are only offered and sold pursuant to our distribution reinvestment plan (“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 we pay distributions in stock instead of cash, so this source of capital is available unless and until we
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are able to resume paying cash distributions on our common stock. There is also no assurance that participation in the DRIP will be maintained at current or higher levels if the DRIP becomes a source of capital in the future.
Other financing arrangements have restrictive covenants.
The agreements governing our borrowings contain provisions that affect or restrict our policies regarding dividends and other distributions and our operations, require us to satisfy financial coverage ratios, and may restrict our ability to, among other things, incur additional indebtedness, make certain investments, replace our Advisor, discontinue insurance coverage, merge with another company, and create, incur or assume liens. These or other limitations may adversely affect our flexibility and our ability to achieve our investment and operating objectives.
Changes in the debt markets could have a material adverse impact on our earnings and financial condition.
The commercial real estate debt markets are subject to volatility, resulting in, from time to time, the tightening of underwriting standards by lenders and credit rating agencies and reductions in the availability of financing. For example, recent credit and capital market conditions have been characterized by volatility and a tightening of credit standards. This may impact our ability to access capital on favorable terms, in a timely manner, or at all, which could make obtaining funding for our capital needs more challenging or expensive. We may also face a heightened level of interest rate risk as the U.S. Federal Reserve Board begins to taper its quantitative easing program and begins to raise interest rates. All of these actions will likely lead to increases in borrowing costs.
If our overall cost of borrowings increases, either due to increases in the index rates or due to increases in lender spreads, we will need to factor such increases into pricing and projected returns for any future acquisitions. This may result in future acquisitions generating lower overall economic returns. Volatility in the debt markets, may negatively impact our ability to borrow monies to finance the purchase of, or other activities related to, our real estate assets may be negatively impacted. If we are unable to borrow monies on terms and conditions that we find acceptable, our ability to purchase properties and meet other capital requirements may be limited, and the return on the properties we do purchase may be lower. In addition, we may find it difficult, costly or impossible to refinance maturing indebtedness.
Furthermore, the state of the debt markets could have an impact on the overall amount of capital being invested in real estate, which may result in price or value decreases of real estate assets and could negatively impact the value of our assets.
Increases in interest rates may make it difficult for us to finance or refinance indebtedness secured by our properties.
We have borrowed, and may continue to borrow monies, secured and unsecured by our properties. Increases in interest rates may adversely impact our ability to refinance our indebtedness, including the indebtedness secured by our properties, as the loans come due or we otherwise desire to do so on favorable terms, or at all. If interest rates are higher when the indebtedness is refinanced, we may not be able to refinance indebtedness secured by the properties and we may be required to obtain equity to repay the loan or to increase the collateral for the loan.
Increasing interest rates could increase the amount of our debt payments and we may be adversely affected by uncertainty surrounding the LIBOR.
We have incurred, and may continue to incur, variable-rate debt. Increases in interest rates on our variable-rate debt would increase our interest cost.
We have mortgages, credit facilities and derivative agreements that have terms that are based on the London Interbank Offered Rate (“LIBOR”). As of December 31, 2021, we have nine designated interest rate swaps with a notional amount of $578.5 million, which effectively fixes a portion of our variable-rate debt. In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings effective December 31, 2021. The remaining USD LIBOR settings, including the USD LIBOR rates currently relevant to us, will continue to be published through June 30, 2023. We are monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. In some instances, transitioning to an alternative rate may require negotiation with lenders and other counterparties and could present challenges. Certain of our agreements that have terms that are based on LIBOR have alternative rates already contained in the agreements while others do not. We anticipate that we will either utilize the alternative rates contained in the agreements or negotiate a replacement reference rate for LIBOR with the lenders and derivative counterparties. The consequences of these developments cannot be entirely predicted and could include an increase in the cost of our variable rate debt. The consequences of these developments cannot be entirely predicted and could include an increase in the cost of our variable rate indebtedness.
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Any hedging strategies we utilize may not be successful in mitigating our risks.
We have and may continue to enter into hedging transactions to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or own real estate assets. To the extent that we use derivative financial instruments, we will be exposed to credit, basis and legal enforceability risks. Derivative financial instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract.

Risks Related to Conflicts of Interestthe Healthcare Industry

Our Advisor faces conflictsreal estate investments are concentrated in healthcare-related facilities, and we may be negatively impacted by adverse trends in the healthcare industry.
We own and seek to acquire a diversified portfolio of interest relatinghealthcare-related assets including MOBs, SHOPs and other healthcare-related facilities. We are subject to risks inherent in concentrating investments in real estate and, in particular, healthcare-related assets. A downturn in the purchasecommercial real estate industry generally could significantly adversely affect the value of our properties. A downturn in the healthcare industry could particularly negatively affect our lessees’ ability to make lease payments to us and leasingour ability to pay dividends and other distributions to our stockholders. These adverse effects could be more pronounced than if we diversified our investments outside of real estate or if our portfolio did not include a concentration in healthcare-related assets.
Furthermore, the healthcare industry currently is experiencing rapid regulatory changes and uncertainty; changes in the demand for and methods of delivering healthcare services; changes in third-party reimbursement policies; significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas; expansion of insurance providers into patient care; continuing pressure by private and governmental payors to reduce payments to providers of services; and increased scrutiny of billing, referral and other practices by federal and state authorities. These factors may adversely affect the economic performance of some or all of our tenants and, in turn, our revenues and cash flows.
Certain of our properties in our MOB Segment may not have efficient alternative uses, so the loss of a tenant may cause us to not be able to find a replacement or cause us to spend considerable capital to adapt the property to an alternative use.
Some of our properties and the properties we will seek to acquire are healthcare-related assets that may only be suitable for similar healthcare-related tenants. If we or our tenants terminate the leases for these conflictsproperties or our tenants lose their regulatory authority to operate such properties, we may not be resolvedable to locate suitable replacement tenants to lease the properties for their specialized uses. Alternatively, we may be required to spend substantial amounts to adapt the properties to other uses.
The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could result in the inability of our favor,tenants to make rent payments to us.
The healthcare industry is heavily regulated by federal, state and local governmental bodies. Our tenants generally are subject to laws and regulations covering, among other things, licensure, certification for participation in government programs, relationships with physicians and other referral sources, and the privacy and security of patient health information. Changes in these laws and regulations could negatively affect the ability of our tenants to make lease payments to us. In some states, healthcare facilities are subject to various state CON laws requiring governmental approval prior to the development or expansion of healthcare facilities and services. The approval process in these states generally requires a facility to demonstrate the need for additional or expanded healthcare facilities or services. CONs, where applicable, can also be conditions to regulatory approval of changes in ownership or control of licensed facilities, addition of beds, investment in major capital equipment, introduction of new services, termination of services previously approved through the CON process and other control or operational changes. Many of our medical facilities and their tenants may require a license or CON to operate. Failure to obtain a license or CON, or loss of a required license or CON, would prevent a facility from operating in the manner intended by the tenant and may restrict an operator’s ability to expand properties and grow the operator’s business in certain circumstances, which could have an adverse effect on the operator’s or tenant’s revenues, and in turn, negatively impact their ability to make rental payments under, and otherwise comply with the terms of their leases with us. State CON laws are not uniform throughout the United States and are subject to change. We cannot predict the impact of state CON laws on our improvement of medical facilities or the operations of our tenants. In addition, state CON laws often materially impact the ability of competitors to enter into the marketplace of our facilities. The repeal of CON laws could allow competitors to freely operate in previously closed markets. This could negatively affect the ability of our tenants’ to make rental payments to us. In limited circumstances, loss of state licensure or certification or closure of a facility could ultimately result in loss of authority to operate the facility and require new CON authorization to re-institute operations.
Furthermore, uncertainty surrounding the implementation of the Affordable Care Act may adversely affect our operators. As the primary vehicle for comprehensive healthcare reform in the United States, the Affordable Care Act was designed to reduce the number of individuals in the United States without health insurance and change the ways in which healthcare is organized, delivered and reimbursed. The Affordable Care Act has faced ongoing legal challenges, including litigation seeking to invalidate some or all of the law or the manner in which it has been interpreted. The legal challenges and legislative initiatives to roll back the Affordable Care Act continues and the outcomes are uncertain. In June of 2021, the Supreme Court of the United States for a third time declined to invalidate the Affordable Care Act. There is no assurance that future litigation or legislative initiatives will not attempt to do so. The regulatory uncertainty and the potential impact on our tenants and operators could have an adverse material effect on their ability to satisfy their contractual obligations. Further, we are unable to predict the scope of future federal, state and local regulations and legislation, including Medicare and Medicaid statutes and regulations or judicial decisions, or the intensity of enforcement efforts with respect to such regulations and legislation, and any
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changes in the regulatory or judicial framework may have a material adverse effect on our tenants, which, in turn, could have a material adverse effect on us.
The expansion in health insurance coverage under the Affordable Care Act is likely going to continue to erode in 2022 as cuts in advertising and outreach during the marketplace open-enrollment periods, shorter open enrollment periods, and other changes have left many Americans uncertain about their ability to access and be eligible for coverage. Additionally, the repeal of the individual mandate penalty included in the TCJA, recent actions to increase the availability of insurance policies that do not include Affordable Care Act minimum benefit standards, and support for Medicaid work requirements will likely impact the market. Accordingly, current and future payments under federal and state healthcare programs may not be sufficient to sustain a facility’s operations, which could adversely affect its ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of, the facility’s leases and other agreements with us.
The Affordable Care Act includes program integrity provisions that both create new authorities and expand existing authorities for federal and state governments to address fraud, waste and abuse in federal health programs. In addition, the Affordable Care Act expands reporting requirements and responsibilities related to facility ownership and management, patient safety and care quality. In the ordinary course of their businesses, our operators may be regularly subjected to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations. If they do not comply with the additional reporting requirements and responsibilities, the ability of our operators’ to participate in federal health programs may be adversely affected. Moreover, there may be other aspects of the comprehensive healthcare reform legislation for which regulations have not yet been adopted, which, depending on how they are implemented, could materially and adversely affect our operators.
The Affordable Care Act also requires the reporting and return of overpayments. Healthcare providers that fail to report and return an overpayment could face potential liability under the FCA and the CMPL and exclusion from federal healthcare programs. Accordingly, if our operators fail to comply with the Affordable Care Act’s requirements, they may be subject to significant monetary penalties and excluded from participation in Medicare and Medicaid, which could materially and adversely affect their ability to pay rent and satisfy other financial obligations to us.
Reductions or changes in reimbursement from third-party payors, including Medicare and Medicaid, or delays in receiving these reimbursements, could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us.
Our tenants may receive payments from the federal Medicare program, state Medicaid programs, private insurance carriers and health maintenance organizations, among others. Efforts by such payors to reduce healthcare costs have intensified in recent years and will likely continue, which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenants. The Medicare and Medicaid programs have adopted a variety of initiatives which have been incorporated and expanded by private insurance carriers, including health maintenance organizations and other health plans, to extract greater discounts and impose more stringent cost controls upon healthcare provider operations. Examples include, but are not limited to, changes in reimbursement rates and methodologies, such as bundled payments, capitation payments and discounted fee structures. As a result, our tenants and operators may face significant limits on the reimbursed and on reimbursement rates and fees. All of these changes could impact the ability of our operators and tenants’ ability to pay rent or other obligations to us. In addition, operators and tenants in certain states have experienced delays; some of which are, have been, and may be late in receiving reimbursements, which have adversely affected their ability to make rent payments to us.Further, failure of any of our operators or tenants to comply with various laws and regulations could jeopardize their ability to continue participating in Medicare, Medicaid and other government-sponsored payment programs.
The healthcare industry continues to face various challenges, including increased government and private payor pressure on healthcare providers to control or reduce costs. Coverage expansions under the Affordable Care Act through the Medicaid expansion and health insurance exchanges may be scaled back or eliminated in the future due to ongoing legal challenges and the future status of the Affordable Care Act is unknown. We cannot ensure that of our operators or tenants who currently depend on governmental or private payer reimbursement will be adequately reimbursed for the services they provide.
Any slowdown in the United States economy can negatively affect state budgets, thereby putting pressure on states to decrease spending on state programs including Medicaid. The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in state Medicaid programs due to unemployment and declines in family incomes. Historically, some states have attempted to reduce Medicaid spending by limiting benefits and tightening Medicaid eligibility requirements. Potential reductions to Medicaid program spending in response to state budgetary pressures could negatively impact the ability of our tenants and operators to successfully operate their businesses.
Our tenants and operators may continue to experience a shift in payor mix away from fee-for-service payors, resulting in an increase in the percentage of revenues attributable to managed care payors, and general industry trends that include pressures to control healthcare costs. In addition, some of our tenants may be subject to value-based purchasing programs, which base reimbursement on the quality and efficiency of care provided by facilities and require the public reporting of quality data and preventable adverse events to receive full reimbursement. Pressures to control healthcare costs and a shift away from traditional health insurance reimbursement to managed care plans have resulted in an increase in the number of patients whose healthcare
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coverage is provided under managed care plans, such as health maintenance organizations and preferred provider organizations. Medicare Access and CHIP Reauthorization Act (“MACRA”) has also established a new payment framework, which modified certain Medicare payments to eligible clinicians, representing a fundamental change to physician reimbursement. These changes could have a material adverse effect on the financial condition of some or all of our tenants in our properties. The financial impact on our tenants and operators could restrict their ability to make rent payments to us.
Required regulatory approvals can delay or prohibit transfers of our healthcare facilities.
Transfers of healthcare facilities to successor tenants or operators are typically subject to regulatory approvals or ratifications, including, but not limited to, change of ownership approvals, zoning approvals, and Medicare and Medicaid provider arrangements that are either not required, or enjoy reduced requirements, in connection with transfers of other types of commercial operations and other types of real estate. The replacement of any tenant or operator could be delayed by the regulatory approval process of any federal, state or local government agency necessary for the transfer of the facility or the replacement of the operator licensed to manage the facility. If we are unable to find a suitable replacement tenant or operator upon favorable terms, or at all, we may take possession of a facility, which could expose us to successor liability, require us to indemnify subsequent operators to whom we transfer the operating rights and licenses, or require us to spend substantial time and funds to preserve the value of the property and adapt the facility to other use. Furthermore, transitioning to a new tenant or operator could cause disruptions at the operations of the properties and, if there is a delay in the new tenant or operator obtaining its Medicare license, delays in our ability to receive reimbursements from Medicare.
A reduction in Medicare payment rates for skilled nursing facilities may have an adverse effect on the Medicare reimbursements received by certain of our tenants.
Several government initiatives have resulted in reductions in funding of the Medicare and Medicaid programs and additional changes in reimbursement regulations by the Centers for Medicare & Medicaid Services (“CMS”), contributing to pressure to contain healthcare costs and additional operational requirements, which has impacted the ability of our tenants and operators to make rent payments to us. The Medicare and Medicaid programs have adopted a variety of initiatives which have been incorporated and expanded by private insurance carriers, including health maintenance organizations and other health plans, to extract greater discounts and impose more stringent cost controls upon healthcare provider operations. As a result, our tenants and operators may face reductions in reimbursement rates and fees. Operators in certain states have experienced delays in receiving reimbursements, which has adversely affected their ability to make rent payments to us. Similar delays, or reductions in reimbursements, may continue to impose financial and operational challenges for our tenants and operators, which may affect their ability to make contractual payments to us.
There have been numerous initiatives on the federal and state levels for comprehensive reforms affecting the payment for, and availability of, healthcare services. We may own and acquire skilled nursing facility assets that rely on revenue from Medicaid or Medicare. Our tenants have, and may continue to experience, limited increases or reductions in Medicare payments and aspects of certain of these government initiatives, such as further reductions in funding of the Medicare and Medicaid programs, additional changes in reimbursement regulations by CMS, enhanced pressure to contain healthcare costs by Medicare, Medicaid and other payors, and additional operational requirements may adversely affect their ability to make rental payments. For example, CMS is focused on reducing what it considers to be payment errors by identifying, reporting, and implementing actions to reduce payment error vulnerabilities.
In addition, CMS is currently in the midst of transitioning Medicare from traditional fee for service reimbursement models to a capitated system, which means medical providers are given a set fee per patient regardless of treatment required, and value-based and bundled payment approaches, where the government pays a set amount for each beneficiary for a defined period of time, based on that person’s underlying medical needs, rather than based on the actual services provided. Providers and facilities are increasing responsible to care for and be financially responsible for certain populations of patients under the population health models and this shift in patient management paradigm is creating and will continue to create unprecedented challenges for providers and impact their ability to pay rent to us.
Certain of our facilities may be subject to pre- and post-payment reviews and audits by governmental authorities, which could result in recoupments, denials or delay of payments and could adversely affect the profitability of our tenants.
Certain of our facilities may be subject to periodic pre- and post-payment reviews and audits by governmental authorities. If the review or audit shows a facility is not in compliance with federal and state requirements, previous payments to the facility may be recouped and future payments may be denied or delayed. Recoupments, denials or delay of payments could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us.
Events that adversely affect the ability of seniors and their families to afford daily resident fees at our SHOPs could cause our occupancy rates and resident fee revenues to decline.
Assisted and independent living services generally are not reimbursable under government reimbursement programs, such as Medicare and Medicaid. Most of the resident fee revenues generated by our SHOPs, therefore, are derived from private pay sources consisting of the income or assets of residents or their family members. The rates for these residents are set by the facilities based on local market conditions and operating costs. In light of the significant expense associated with building new
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properties and staffing and other costs of providing services, typically only seniors with income or assets that meet or exceed the comparable region median can afford the daily resident and care fees at our SHOPs. A weak economy, depressed housing market or changes in demographics could adversely affect their continued ability to do so. If the operators of our SHOPs are unable to attract and retain seniors that have sufficient income, assets or other resources to pay the fees associated with assisted and independent living services, the occupancy rates, resident fee revenues and results of operations of our SHOPs could decline.
Residents in our SHOPs may terminate leases.
State regulations generally require assisted living communities to have a written lease agreement with each resident that permits the resident to terminate his or her lease for any reason on reasonable notice, unlike typical apartment lease agreements that have initial terms of one year or longer. Due to these lease termination rights and the advanced age of the residents, the resident turnover rate in our SHOPs may be difficult to predict. A large number of resident lease agreements may terminate at or around the same time, and the affected units may remain unoccupied.
Some tenants of our healthcare-related assets must comply with fraud and abuse laws, the violation of which by a tenant may jeopardize the tenant’s ability to make rent payments to us.
There are various federal and state laws prohibiting fraudulent and abusive business practices by healthcare providers who participate in, receive payments from or are in a position to make referrals in connection with government-sponsored healthcare programs, including the Medicare and Medicaid programs.
Our lease arrangements with certain tenants may also be subject to these fraud and abuse laws. These laws include the Federal Anti-Kickback Statute, which prohibits, among other things, the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, the referral of any item or service reimbursed by Medicare or Medicaid; the Federal Physician Self-Referral Prohibition (commonly referred to as the “Stark Law”), which, subject to specific exceptions, restricts physicians from making referrals for specifically designated health services for which payment may be made under Medicare or Medicaid programs to an entity with which the physician, or an immediate family member, has a financial relationship; the FCA, which prohibits any person from knowingly presenting false or fraudulent claims for payment to the federal government, including claims paid by the Medicare and Medicaid programs; and the CMPL, which authorizes the U.S. Department of Health and Human Services to impose monetary penalties for certain fraudulent acts. Additionally, some states may have laws similar to the Federal Anti-Kickback Statute and the Stark Law expanding their respective prohibitions to private insurance.
Each of these laws includes substantial criminal or civil penalties for violations that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments or exclusion from the Medicare and Medicaid programs. Certain laws, such as the FCA, allow for individuals to bring whistleblower actions on behalf of the government for violations thereof. Individuals have tremendous potential financial gain in bringing whistleblower claims as the FCA statute provides that the individual will receive between 15% and 30% of the money recouped. Additionally, violations of the FCA can result in treble damages. Significant enforcement activity has been the result of actions brought by these individuals. Additionally, certain states in which the facilities are located also have similar fraud and abuse laws. Federal and state adoption and enforcement of such laws increase the regulatory burden and costs, and potential liability, of healthcare providers. Investigation by a federal or state governmental body for violation of fraud and abuse laws, and these state laws have their own penalties which may be in additional to federal penalties.
Investigation by a federal or state governmental body for violation of fraud and abuse laws or imposition of any of these penalties upon one of our tenants could jeopardize that tenant’s business, its reputation, and its ability to operate or to make rent payments. Increased funding for investigation and enforcement efforts, accompanied by an increased pressure to eliminate government waste, has led to a significant increase in the number of investigations and enforcement actions over the past several years, a trend which is not anticipated to decrease considerably.
Tenants of our healthcare-related assets may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their rent payments to us.
As is typical in the healthcare industry, certain types of tenants of our healthcare-related assets may often become subject to claims that their services have resulted in patient injury or other adverse effects. The insurance coverage maintained by these tenants may not cover all claims made against them or continue to be available at a reasonable cost, if at all. In some states, insurance coverage for the risk of punitive damages arising from professional liability and general liability claims or litigation may not, in certain cases, be available to these tenants due to state law prohibitions or limitations of availability. As a result, these types of tenants operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits. Recently, there has been an increase in governmental investigations of certain healthcare providers, particularly in the area of Medicare and Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Insurance may not be available to cover such losses. Any adverse determination in a legal proceeding or governmental investigation, whether currently asserted or arising in the future, could have a material adverse effect on a tenant’s financial condition. If a tenant is unable to obtain or maintain insurance coverage, if judgments are obtained in excess
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of the insurance coverage, if a tenant is required to pay uninsured punitive damages, or if a tenant is subject to an uninsurable government enforcement action, the tenant could be exposed to substantial additional liabilities, which may affect the tenant’s business, operations and ability to pay rent to us.
We may experience adverse effects as a result of potential financial and operational challenges faced by the operators of any seniors housing facilities and skilled nursing facilities we own or acquire.
Operators of any seniors housing facilities and skilled nursing facilities may face operational challenges from potentially reduced revenue streams and increased demands on their existing financial resources. The resources of our skilled nursing units are primarily derived from governmentally funded reimbursement programs, such as Medicare and Medicaid. Accordingly, our facility operators are subject to the potential negative effects of decreased reimbursement rates or other changes in reimbursement policy or programs offered through such reimbursement programs. Their revenue may also be adversely affected as a result of falling occupancy rates or slow lease-ups for assisted and independent living facilities due to various factors, including the ongoing COVID-19 pandemic and its effects and turmoil in the capital debt and real estate markets. In addition, our facility operators may incur additional demands on their existing financial resources as a result of increases in seniors housing facility operator liability, insurance premiums and other operational expenses. The economic deterioration of an operator could cause such operator to file for bankruptcy protection. The bankruptcy or insolvency of an operator may adversely affect the income produced by the property or properties it operates.
The performance and economic condition of our operators may be negatively affected if they fail to comply with various complex federal and state laws that govern a wide array of referrals, relationships and licensure requirements in the senior healthcare industry. The violation of any of these laws or regulations by a seniors housing facility operator may result in the imposition of fines or other penalties that could jeopardize that operator’s ability to make payments to us or to continue operating its facility. In addition, legislative proposals are commonly being introduced or proposed in federal and state legislatures that could affect major changes in the seniors housing sector, either nationally or at the state level. Any such legislation could materially impact our operators in an adverse fashion.
We may change our targeted investments without stockholder consent.
We have acquired and expect to continue to acquire a diversified portfolio of healthcare-related assets including MOBs, SHOPs and other healthcare-related facilities. However, the board may change our investment opportunities.policies in its sole discretion. We may change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, initially anticipated by increasing our exposure to, among other things, interest rate risk, default risk and real estate market fluctuations.
If we internalize our management functions, we would be required to pay a transition fee and would not have the right to retain our management or personnel.
We relymay engage in an internalization transaction and become self-managed in the future. If we internalize our management functions, under the terms of our advisory agreement we would be required to pay a transition fee to our Advisor upon termination of the advisory agreement in connection with an internalization that could be up to 4.5 times the compensation paid to our Advisor in the previous year, plus expenses. We also would not have any right to retain our executive officers or other personnel of our Advisor who currently manage our day-to-day operations. An inability to manage an internalization transaction effectively could thus result in our incurring excess costs and suffering deficiencies in our disclosure controls and procedures or our internal control over financial reporting. These deficiencies could cause us to incur additional costs, and our management’s attention could be diverted from most effectively managing our investments, which could result in litigation and resulting associated costs in connection with the internalization transaction.
We may terminate our advisory agreement in only limited circumstances, which may require payment of a termination fee.
We have limited rights to terminate our Advisor. The initial term of our advisory agreement expires on February 16, 2027, but is automatically renewed upon expiration for consecutive ten-year terms unless notice of termination is provided by either party 365 days in advance of the expiration of the term. Further, we may terminate the agreement only under limited circumstances. In the event of a termination in connection with a change in control of us, we would be required to pay a termination fee that could be up to four times the compensation paid to our Advisor in the previous year, plus expenses. The limited termination rights will make it difficult for us to renegotiate the terms of the advisory agreement or replace our Advisor even if the terms of the advisory agreement are no longer consistent with the terms generally available to externally-managed REITs for similar services.
Our business and operations could suffer if our Advisor or any other party that provides us with services essential to our operations experiences system failures or cyber incidents or a deficiency in cybersecurity.
The internal information technology networks and related systems of our Advisor and other parties that provide us with services essential to our operations (including our tenant operators and other third-party operators of our healthcare facilities) are vulnerable to damage from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our
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operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by these disruptions.
As reliance on technology has increased, so have the risks posed to those systems. Our Advisor and other parties that provide us with services essential to our operations must continuously monitor and develop their networks and information technology to prevent, detect, address and mitigate the risk of unauthorized access, misuse, computer viruses, and social engineering, such as phishing. Our Advisor is continuously working, including with the aid of third-party service providers, to install new, and to upgrade existing, network and information technology systems, to create processes for risk assessment, testing, prioritization, remediation, risk acceptance, and reporting, and to provide awareness training around phishing, malware and other cyber risks to ensure that our Advisor and other parties that provide us with services essential to our operations are protected against cyber risks and security breaches and that we are also therefore so protected. However, these upgrades, processes, new technology and training may not be sufficient to protect us from all risks. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques and technologies used in attempted attacks and intrusions evolve and generally are not recognized until launched against a target. In some cases, attempted attacks and intrusions are designed not to be detected and, in fact, may not be detected.
The remediation costs and lost revenues experienced by a subject of an intentional cyberattack or other event which results in unauthorized third-party access to systems to disrupt operations, corrupt data or steal confidential information may be significant and significant resources may be required to repair system damage, protect against the threat of future security breaches or to alleviate problems, including reputational harm, loss of revenues and litigation, caused by any breaches. Additionally, any failure to adequately protect against unauthorized or unlawful processing of personal data, or to take appropriate action in cases of infringement may result in significant penalties under privacy law.
Furthermore, a security breach or other significant disruption involving the information technology networks and related systems of our Advisor or any other party that provides us with services essential to our operations could:
result in misstated financial reports, violations of loan covenants, missed reporting deadlines or missed permitting deadlines;
affect our ability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;
result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information (including information about our tenant operators and other third-party operators of our healthcare facilities, as well as the patients or residents at those facilities), which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space;
require significant management attention and resources to remedy any damages that result;
subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or
adversely impact our reputation among our tenants, operators and investors generally.
Although our Advisor and other parties that provide us with services essential to our operations intend to continue to implement industry-standard security measures, there can be no assurance that those measures will be sufficient, and any material adverse effect experienced by our Advisor and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us.
We depend on our Advisor and itsProperty Manager to provide us with executive officers, key personnel and other key real estate professionals atall services required for us to conduct our operations and our operating performance may be impacted by any adverse changes in the financial health or reputation of our Advisor.
We have no employees. Personnel and services that we require are provided to us under contracts with our Advisor and its affiliates including our Property Manager. We depend on our Advisor and our Property Manager to identify suitable investment opportunities for us. Severalmanage our operations and acquire and manage certain of the other keyour real estate professionals at our Advisor are also the key real estate professionals at AR Global and other entities advised by affiliates of AR Global. Many investment opportunities that are suitable for us may also be suitable for other entities advised directly or indirectly AR Global.
We and other entities advised directly or indirectly by AR Global also rely on these real estate professionals, to supervise the property management and leasing of properties. These executive officers and key real estate professionals, as well as AR Global, are not prohibited from engaging, directly or indirectly, in any business or from possessing interests in other businesses and ventures, including businesses and ventures involved in the acquisition, development, ownership, leasing or sale of real estate investments.
In addition, we may acquire properties in geographic areas where other entities advised by affiliates of AR Global own properties. Also, we may acquire properties from, or sell properties to, other entities advised by affiliates of AR Global. If one of the other entities advised by affiliates of AR Global attracts a tenant that we are competing for, we could suffer a loss of revenue due to delays in locating another suitable tenant.
assets. Our Advisor faces conflicts of interest relating to joint ventures, which could result in a disproportionate benefit to the other venture partners at our expense.
We may enter into joint ventures with other entities advised by affiliates of AR Global for the acquisition, development or improvement of properties. Our Advisor may have conflicts of interest in determining which entities advised by affiliates of AR Global should enter into any particular joint venture agreement. The co-venturer may have economic or business interests or goals that are or may become inconsistent with our business interests or goals. In addition, our Advisor may face a conflict in structuring the terms of the relationship between our interests and the interest of the affiliated co-venturer and in managing the joint venture. Due to the role of our Advisor and its affiliates, agreements and transactions between the co-venturersmakes all decisions with respect to any joint venture will not have the benefitmanagement of arm's-length negotiation of the type normally conducted between unrelated co-venturers, which may result in the co-venturer receiving benefits greater than the benefits that we receive. In addition, we may assume liabilities relatedour company, subject to the joint venture that exceedssupervision of, and any guidelines established by, the percentage of our investment in the joint venture.

board.
Our Advisor and AR Global and their officers and employees and certainsuccess depends to a significant degree upon the contributions of our executive officers and other key personnel face competing demands relating to their time, and this may cause our operating results to suffer.
Our Advisor and its officers and employees and certain of our executive officers and other key personnel and its respective affiliates are key personnel, general partners, sponsors, managers, owners and advisors of other real estate investment programs, including entities advised by affiliates of AR Global, some of which have investment objectives and legal and financial obligations similar to ours and may have other business interests as well. Because these individuals have competing demands on their time and resources, they may have conflicts of interest in allocating their time between our business and these other activities. If these conflicts occur, the returns on our investments may suffer.
All of our executive officers, some of our directors and the key real estate and other professionals assembled by our Advisor and our Property Manager face conflicts of interest related to their positions or interests in affiliates of AR Global, which could hinder our ability to implement our business strategy.
All of our executive officers, some of our directors and the key real estate and other professionals assembled by our Advisor and Property Manager are also executive officers, directors, managers, key professionals or holders of a direct or indirect interests in our Advisor and our Property Manager or AR Global-affiliated entities. Through AR Global’s affiliates, some of these persons work on behalf of entities advised directly or indirectly by the parent of our Sponsor. As a result, they have loyalties to each of these entities, which loyalties could conflict with the fiduciary duties they owe to us and could result in action or inaction detrimental to our business. Conflicts with our business and interests are most likely to arise from (a) allocation of investments and management time and services between us and the other entities, (b) our purchase of properties from, or sale of properties to, entities advised by affiliates of our Advisor, (c) investments with entities advised by affiliates of our Advisor, (d) compensation to our Advisor and (e) our relationship with our Advisor and our Property Manager. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to pay distributions to our stockholders and to maintain or increase the value of our assets.
Our Advisor faces conflicts of interest relating to the structure of the compensation it may receive.
Under our advisory agreement, the Advisor is entitled to substantial minimum compensation regardless of performance as well as incentive compensation. In addition, the limited partnership agreement of our OP requires it to pay a subordinated incentive listing distribution to Special Limited Partner in connection with a listing or other liquidity event, such as the sale of our assets, or if we terminate the advisory agreement, even for cause as permitted by the advisory agreement. The Special Limited Partner is also entitled under the limited partnership agreement of our OP to participate in net sales proceeds. See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K for further information. These arrangements, coupled with the fact that the Advisor does not maintain a significant equity interest in us, may result in the Advisor taking actions or recommending investments that are riskier or more speculative than an advisor with a more significant investment in us might take or recommend.

Risks Related to our Corporate Structure
The limit on the number of shares a person may own may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted (prospectively or retroactively) by the Board, no person may own more than 9.8% in value of the aggregate of our outstanding shares of our capital stock or more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of shares of our capital stock. This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for holders of our common stock.
Our charter permits the Board to authorize the issuance of stock with terms that may subordinate the rights of common stockholders or discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
Our charter permits the Board to authorize the issuance of up to 350.0 million shares of stock. In addition, the Board, without any action by our stockholders, may amend our charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of stock that we have authority to issue. The Board may classify or reclassify any unissued common stock or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any such stock. Thus, the Board could authorize the issuance of preferred stock with terms and conditions that could have a priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for holders of our common stock.
We have a classified board, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.

The Board is divided into three classes of directors. At each annual meeting, directors of one class are elected to serve until the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify. The classification of our directors may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might result in a premium price for our stockholders.
Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
Under Maryland law, "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:
any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation's outstanding voting stock; or
an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of, directly or indirectly, 10% or more of the voting power of the then outstanding stock of the corporation.
A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he or she otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of directors.
After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:
80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and
two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
These super-majority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. The business combination statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, the Board has exempted any business combination involving our Advisor or any affiliate of our Advisor. Consequently, the five-year prohibition and the super-majority vote requirements will not apply to business combinations between us and our Advisor or any affiliate of our Advisor. As a result, our Advisor and any affiliate of our Advisor may be able to enter into business combinations with us that may not be in the best interests of our stockholders, without compliance with the super-majority vote requirements and the other provisions of the statute. The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.
Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of any duty owed by any of our directors or officer or other employees to us or our stockholders, (c) any action asserting a claim against the us or any of our directors or officers or other employees arising pursuant to any provision of Maryland law, our charter or our bylaws, or (d) any action asserting a claim against us or any of our directors or officers or other employees that is governed by the internal affairs doctrine for certain types of actions and proceedings that may be initiated by our stockholders with respect to us, our directors, our officers or our employees. This choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable.  Alternatively, if a court were to find this provision of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving these matters in other jurisdictions.
Maryland law limits the ability of a third party to buy a large stake in us and exercise voting power in electing directors, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.

The Maryland Control Share Acquisition Act provides that holders of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved by the stockholders by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter, excluding all shares of stock owned by the acquirer, by officers or by employees who are directors of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer can exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within specified ranges of voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A “control share acquisition” means the acquisition of issued and outstanding control shares. The control share acquisition statute does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation.
Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions of our stock by any person. There can be no assurance that this provision will not be amended or eliminated at any time in the future.
If our stockholders do not agree with the decisions of the Board, our stockholders only have limited control over changes in our policies and operations and may not be able to change our policies and operations.
The Board determines our major policies, including our policies regarding investments, financing, growth, debt capitalization, REIT qualification and distributions. The Board may amend or revise these and other policies without a vote of the stockholders except to the extent that the policies are set forth in our charter. Under Maryland General Corporation Law and our charter, our stockholders have a right to vote only on the following:
the election or removal of directors;
amendment of our charter, except that the Board may amend our charter without stockholder approval to (a) increase or decrease the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have the authority to issue, (b) effect certain reverse stock splits, and (c) change our name or the name or other designation or the par value of any class or series of our stock and the aggregate par value of our stock;
our liquidation or dissolution;
certain reorganizations of our company, as provided in our charter; and
certain mergers, consolidations or sales or other dispositions of all or substantially all our assets, as provided in our charter.
All other matters are subject to the discretion of the Board.
If we conduct equity offerings or issue additional shares in the future, the value of your investments may be adversely affected.
Our existing stockholders do not have preemptive rights to any shares issued by us in the future. Our charter currently authorizes us to issue 350.0 million shares of stock, of which 300.0 million shares are classified as common stock and 50.0 million shares are classified as preferred stock. Subject to any limitations set forth under Maryland law, the Board may amend our charter from time to time to increase or decrease the aggregate number of authorized shares of stock or the number of authorized shares of any class or series of stock, or may classify or reclassify any unissued shares into other classes or series of stock without the necessity of obtaining stockholder approval. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Stockholders will suffer dilution (both economic and percentage interest) of their equity investment in us, (a) from the sale of additional shares in the future, including those issued pursuant to the DRIP; (b) if we sell securities that are convertible into shares of our common stock; (c) if we issue shares to our Advisor as payment of fees under our advisory agreement and other agreements; or (d) if we issue shares of our common stock to sellers of properties acquired by us in connection with an exchange of limited partnership interests of our OP. In addition, the Partnership Agreement contains provisions that would allow, under certain circumstances, other entities, including other entities advised by affiliates of AR Global, to merge into or cause the exchange or conversion of their interest for interests of our OP. Because the limited partnership interests may, in the discretion of the Board, be exchanged for shares of our common stock, any merger, exchange or conversion between our OP and another entity ultimately could result in the issuance of a substantial number of shares of our common stock, thereby diluting the percentage ownership interest of other stockholders.
Payment of fees to our Advisor and its affiliates, reduces cashincluding Edward M. Weil, Jr., our chief executive officer, and Scott Lappetito, our chief financial officer, treasurer and secretary. Neither our Advisor nor any of its affiliates has an employment agreement with these key personnel and we cannot guarantee that all, or any particular one, of these individuals will remain employed by our Advisor or one of its affiliates and otherwise available for investment and other uses including payment of distributions to our stockholders.
Our Advisor its affiliatescontinue to perform services for usus. Further, we do not maintain key person life insurance on any person. We believe that our success depends, in connection withlarge part, upon the selection and acquisitionability of our investments, the managementAdvisor to hire, retain or contract for services of our properties,highly skilled managerial, operational and the administration of our investments. They are paid substantial feesmarketing personnel. Competition for these services, which reduces cash available for investment, other corporate purposes, including payment of distributions to our stockholders.

We depend on our OP and its subsidiaries for cash flow and are effectively structurally subordinated in right of payment to the obligations of our OP and its subsidiaries, which could adversely affect our ability to pay distributions to our stockholders.
Our only significant assetskilled personnel is our interest in our OP. We conduct, and intend to continue conducting, all of our business operations through our OP. Accordingly, our only source of cash to pay our obligations is distributions from our OP and its subsidiaries of their net earnings and cash flows. We cannot assure our stockholders that our OP or its subsidiaries will be able to, or be permitted to, pay distributions to us that will enable us to pay distributions to our stockholders from cash flows from operations. Each of our OP’s subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from these entities. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our OP and its subsidiaries will be able to satisfy the claims of our stockholders only after all of our and our OPs and its subsidiaries liabilities and obligations have been paid in full.

General Risks Related to Investments in Real Estate
Our operating results will be affected by economic and regulatory changes that have an adverse impact on the real estate market in general, and we cannot assure our stockholders that we will be profitable or that we will realize growth in the value of our real estate properties.
Our operating results are subject to risks generally incident to the ownership of real estate, including:
changes in general economic or local conditions;
changes in supply of or demand for competing properties in an area;
changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive;
changes in tax, real estate, environmental and zoning laws;
periods of high interest rates and tight money supply; and
changes in tenants' ability to pay their rental obligations due to unfavorable market conditions affecting business operations.
These and other risks may prevent us from being profitable or from realizing growth or maintaining the value of our real estate properties.
Our property portfolio has a high concentration of properties located in four states. Our properties may be adversely affected by economic cycles and risks inherent to those states.
The following four states represented 10% or more of our consolidated annualized rental income on a straight-line basis for the fiscal year ended December 31, 2018:
StatePercentage of Straight-Line Rental Income
Florida16.6%
Georgia10.1%
Michigan13.1%
Pennsylvania10.2%

Any adverse situation that disproportionately affects the states listed above may have a magnified adverse effect on our portfolio. Real estate markets are subject to economic downturns, as they have been in the past, and we cannot predict how economic conditions will impact this market in both the short and long term. Declines in the economy or a decline in the real estate market in these states could hurt our financial performance and the value of our properties. Factors that may negatively affect economic conditions in these states include:
business layoffs or downsizing;
industry slowdowns;
relocations of businesses;
climate change;
changing demographics;
increased telecommuting and use of alternative work places;
infrastructure quality;
any oversupply of, or reduced demand for, real estate;
concessions or reduced rental rates under new leases for properties where tenants defaulted;
increased insurance premiums;
state budgets and payment to providers under Medicaid or other state healthcare programs; and
changes in reimbursement for healthcare services from commercial insurers.
If a tenant or lease guarantor declares bankruptcy or becomes insolvent, we may be unable to collect balances due under relevant leases.
Any of our tenants, or any guarantor of a tenant’s lease obligations, could become insolvent or be subject to a bankruptcy proceeding pursuant to Title 11 of the United States Code. A bankruptcy filing of our tenants or any guarantor of a tenant’s lease obligations would result in a stay of all efforts by us to collect pre-bankruptcy debts from these entities or their assets, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be required to be paid currently. If a lease is assumed by the tenant, all pre-bankruptcy balances owing under it must be paid in full. If a lease is rejected by a tenant in bankruptcy, we would have a general unsecured claim for damages. If a lease is rejected, it is unlikely we would receive any payments from the tenant because our claim is capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid as of the date of the bankruptcy filing (post-bankruptcy rent would be payable in full). This claim could be paid only if funds were available, and then only in the same percentage as that realized on other unsecured claims.
A tenant or lease guarantor bankruptcy could delay efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. A tenant or lease guarantor bankruptcy could cause a decrease or cessation of rental payments that would mean a reduction in our cash flow and the amount available for distributions to our stockholders. In the event of a bankruptcy, we cannot assure our stockholders that the tenant or its trustee will assume our lease, and that our cash flow and the amounts available for distributions to our stockholders will not be adversely affected.
If a sale-leaseback transaction is recharacterized in a tenant's bankruptcy proceeding, our financial condition and ability to pay distributions to our stockholders could be adversely affected.
We may enter into sale-leaseback transactions, whereby we purchase a property and then lease the same property back to the person from whom we purchased it. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback may be recharacterized as either a financing or a joint venture, and either type of recharacterization could adversely affect our business. If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor. In that event, we would no longer have the right to sell or encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under the lease. The tenant/debtor might have the ability to propose a plan restructuring the term, interest rate and amortization schedule of its outstanding balance. If this plan were confirmed by the bankruptcy court, we would be bound by the new terms. If the sale-leaseback were recharacterized as a joint venture, our lessee and we could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property. Either of these outcomes could adversely affect our cash flow and the amount available for distributions to our stockholders.

Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.
If we enter into sale-leaseback transactions, we will use commercially reasonable efforts to structure any sale-leaseback transaction we enter into so that the lease will be characterized as a “true lease” for tax purposes, thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, we cannot assure our stockholders that the Internal Revenue Service (the “IRS”) will not challenge this characterization. In the event that any sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to the property would be disallowed. If a sale-leaseback transaction were so recharacterized, we might fail to satisfy the REIT qualification “asset tests” or “income tests” and, consequently, lose our REIT status effective with the year of recharacterization. Alternatively, the amount of our REIT taxable income could be recalculated which might also cause us to fail to meet the distribution requirement for a taxable year.
Properties may have vacancies for a significant period of time.
A property may have vacancies either due to the continued default of tenants under their leases or the expiration of leases. If vacancies continue for a long period of time, we may suffer reduced revenues resulting in less cash to be distributed to stockholders. In addition, properties' market values depend principally upon the value of the cash flow generated by the properties. Prolonged vacancies reduce this cash flow which would likely, therefore, reduce the value of the affected property.
We may obtain only limited warranties when we purchase a property and would have only limited recourse if our due diligence did not identify any issues that lower the value of our property.
The seller of a property often sells the property in its "as is" condition on a "where is" basis and "with all faults," without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all our invested capital in the property as well as the loss of rental income from that property if a situation or loss occurs after the fact for which we have limited or no remedy.
We may be unable to secure funds for future tenant improvements or capital needs.
To attract new replacement tenants, or in some cases secure renewal of a lease, we may expend substantial funds for tenant improvements and refurbishments. In addition, we are typically responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops, even if our leases with tenants may require tenants to pay routine property maintenance costs. If we need additional capital in the future to improve or maintain our properties or for any other reason, we will have to obtain financing from other sources, such as cash flow from operations, borrowings, property sales or future equity offerings to fund these capital requirements. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, we may not be able to lease or re-lease space on attractive terms, if at all.
We have acquired or financed, and may continue to acquire or finance, properties with lock-out provisions which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
Lock-out provisions, such as the provisions contained in certain mortgage loans we have entered into, could materially restrict our ability to sell or otherwise dispose of properties or refinance indebtedness, including by requiring the payment of a yield maintenance premium in connection with the required prepayment of principal upon a sale, disposition, or refinancing. Lock-out provisions may also prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties. Lock-out provisions could also impair our ability to take other actions during the lock-out period that may otherwise be in the best interests of our stockholders. In particular, lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control. Payment of yield maintenance premiums in connection with dispositions or refinancings could adversely affect our results of operations and cash available for distributions.
Rising expenses could reduce cash flow.
The properties that we own or may acquire are subject to operating risks common to real estate in general, any or all of which may negatively affect us. If any property is not fully occupied or if rents are being paid in an amount that is insufficient to cover operating expenses, we could be required to expend funds with respect to that property for operating expenses. Properties may be subject to increases in tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance and administrative expenses. Leases may not be negotiated on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs.

Damage from catastrophic weather and other natural events and climate change could result in losses to us.
Certain of our properties are located in areas that may experience catastrophic weather and other natural events from time to time, including hurricanes or other severe weather, flooding fires, snow or ice storms, windstorms or, earthquakes. These adverse weather and natural events could cause substantial damages or losses to our properties which could exceed our insurance coverage. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected property, as well as anticipated future revenue from that property. We could also continue to be obligated to repay any mortgage indebtedness or other obligations related to the property. Any such loss could materially and adversely affect our business and our financial condition and results of operations.
To the extent that significant changes in the climate occur, we may experience extreme weather and changes in precipitation and temperature and rising sea levels, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Should the impact of climate change be material in nature, including destruction of our properties, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected.
In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties or to protect them from the consequence of climate change.
We may suffer uninsured losses relating to real property or have to pay expensive premiums for insurance coverage.
Our general liability coverage, property insurance coverage and umbrella liability coverage on all our properties may not be adequate to insure against liability claims and provide for the costs of defense. Similarly, we may not have adequate coverage against the risk of direct physical damage or to reimburse us on a replacement cost basis for costs incurred to repair or rebuild each property. Moreover, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with such catastrophic events could sharply increase the premiums we pay for coverage against property and casualty claims.
This risk is particularly relevant with respect to potential acts of terrorism. The Terrorism Risk Insurance Act of 2002 (the “TRIA”), under which the U.S. federal government bears a significant portion of insured losses caused by terrorism, will expire on December 31, 2020,intense, and there can be no assurance that Congressour Advisor will actbe successful in attracting and retaining skilled personnel. If our Advisor loses or is unable to renewobtain the services of skilled personnel due to, among other things, an overall labor shortage, lack
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of skilled labor, increased turnover or replacelabor inflation, caused by COVID-19 or as a result of other general macroeconomic factors, our Advisor’s ability to manage our business and implement our investment strategies could be delayed or hindered.
Any adverse changes in the TRIA followingfinancial condition or financial health of, or our relationship with, our Advisor or Property Manager, including any change resulting from an adverse outcome in any litigation could hinder their ability to successfully manage our operations and our investments. Additionally, changes in ownership or management practices, the occurrence of adverse events affecting our Advisor or its expiration.affiliates or other companies advised by our Advisor or its affiliates could create adverse publicity and adversely affect us and our relationship with lenders, tenants, operators or counterparties.
We may in the future acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which would expose us to additional risks.
We may in the future acquire or originate first mortgage debt loans, mezzanine loans, preferred equity or securitized loans, CMBS, preferred equity and other higher-yielding structured debt and equity investments. Doing so would expose us not only to the risks and uncertainties we are currently exposed to through our direct investments in real estate but also to additional risks and uncertainties attendant to investing in and holding these types of investments, such as:
risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments;
increased competition from entities engaged in mortgage lending and, or investing in our target assets;
deterioration in the performance of properties securing our investments may cause deterioration in the performance of our investments and, potentially, principal losses to us;
fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments;
difficulty in redeploying the proceeds from repayments of our existing loans and investments;
the illiquidity of certain of these investments;
lack of control over certain of our loans and investments;
the potential need to foreclose on certain of the loans we originate or acquire, which could result in losses;
additional risks, including the risks of the securitization process, posed by investments in CMBS and other similar structured finance investments, as well as those we structure, sponsor or arrange; use of leverage may create a mismatch with the duration and interest rate of the investments that we finance;
risks related to the operating performance or trading price volatility of any publicly-traded and private companies primarily engaged in real estate businesses we invest in; and
the need to structure, select and more closely monitor our investments such that we continue to maintain our qualification as a REIT and our exemption from registration under the Investment Company Act of 1940, as amended.

Risks Related to our Indebtedness

Our level of indebtedness may increase our business risks.
As of December 31, 2021, we had total outstanding indebtedness of $1.1 billion. We may incur additional indebtedness in the future for various purposes. The amount of our indebtedness could have material adverse consequences for us, including:
hindering our ability to adjust to changing market, industry or economic conditions;
limiting our ability to access the capital markets to raise additional equity or debt on favorable terms or at all, whether to refinance maturing debt, to fund acquisitions, to fund dividends and other distributions or for other corporate purposes;
limiting the amount of free cash flow available for future operations, acquisitions, dividends and other distributions, stock repurchases or other uses; and
making us more vulnerable to economic or industry downturns, including interest rate increases.
In most instances, we acquire real properties by using either existing financing or borrowing new funds. In addition, we may incur mortgage debt and pledge the underlying property as security for that debt to obtain funds to acquire additional real properties or for other corporate purposes. We may also borrow if we need funds to satisfy the REIT tax qualification requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. We also may borrow if we otherwise deem it necessary or advisable to assure that we maintain our qualification as a REIT.
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If there is a shortfall between the cash flow from a property and the cash flow needed to service mortgage debt on that property, especially if we acquire the property when it is being developed or under construction, we may use additional borrowings to fund the shortfall. Using debt increases the risk of loss because defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default. For U.S. federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. In this event, we may be unable to pay the amount of distributions required in order to maintain our REIT status. We may give full or partial guarantees to lenders of mortgage debt to the entities that own our properties. In those cases, we will be responsible to the lender for repaying the debt if it is not paid by the entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.
Our Credit Facility contains various covenants that may restrict our ability to take certain actions and may restrict our ability to use our cash and make investments.
Our Credit Facility contains various covenants that may restrict our ability to take certain actions for example, we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Company meets certain requirements. We may, however, pay dividends on the Series A Preferred Stock and Series B Preferred Stock, or any other preferred stock we may issue and any cash distributions necessary to maintain our status as a REIT. The restrictions on paying cash distributions will no longer apply starting in the quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter, we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, among other things. In the eventpast, we have not chosen to make the election. There can be no assurance as to if, or when, we will be able to satisfy these conditions or make the required election; moreover, we will only be permitted to pay cash distributions if the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock or Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after we make the election and begin paying distributions.
The lenders waived any defaults or events of defaults under the covenant requiring a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges that may have occurred during the TRIA is not renewedfiscal quarter ended September 31, 2021 as well as any additional default or replaced, terrorism insuranceevents of default resulting therefrom prior to November 12, 2021. The lenders have also adjusted this covenant for a period starting November 12, 2021 and lasting until the earlier of December 31, 2022 and the date on which we irrevocably elect to terminate the covenant relief period.There can be no assurance our lenders will consent to any future amendments, or waivers or adjustments that may become difficultnecessary to comply with our Credit Facility, and a breach of our Credit Facility would, among other things, impact our ability to make draws on our Credit Facility, and could require us to repay amounts borrowed under our Credit Facility earlier than we otherwise would have been required to pay.
Covenants in our Credit Facility also require us to maintain a combination of cash, cash equivalents and availability for future borrowings under our Revolving Credit Facility totaling at least $50.0 million. As of December 31, 2021, we had $59.7 million of cash and cash equivalents, and $236.6 million was available for future borrowings under our Revolving Credit Facility. Further, our Credit Facility also restricts how we may use our sources of liquidity. Until the first day of the Commencement Quarter (as defined herein), we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or impossibleequity issuance) to obtainprepay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met.
The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base. Availability has been, and may continue to be, adversely affected by the decreases in net operating income at reasonable coststhe properties comprising the borrowing base from the effects of the COVID-19 pandemic and may persist for some time. Our ability to increase the amount of cash we generate from property operations depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties on favorable terms 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 favorable terms and conditions, if at all, particularly if we do not have a source of capital available that will allow us to do so. Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, particularly due to the COVID-19 pandemic, and there can be no assurance we will be successful in achieving this objective. Because shares of common stock are only offered and sold pursuant to our distribution reinvestment plan (“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 we pay distributions in stock instead of cash, so this source of capital is available unless and until we
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are able to resume paying cash distributions on our common stock. There is also no assurance that participation in the DRIP will be maintained at current or higher levels if the DRIP becomes a source of capital in the future.
Other financing arrangements have restrictive covenants.
The agreements governing our borrowings contain provisions that affect or restrict our policies regarding dividends and other distributions and our operations, require us to satisfy financial coverage ratios, and may restrict our ability to, among other things, incur additional indebtedness, make certain investments, replace our Advisor, discontinue insurance coverage, merge with another company, and create, incur or assume liens. These or other limitations may adversely affect our flexibility and our ability to achieve our investment and operating objectives.
Changes in the debt markets could have a material adverse impact on our earnings and financial condition.
The commercial real estate debt markets are subject to volatility, resulting in, from time to time, the tightening of underwriting standards by lenders and credit rating agencies and reductions in the availability of financing. For example, recent credit and capital market conditions have been characterized by volatility and a tightening of credit standards. This may impact our ability to access capital on favorable terms, in a timely manner, or at all, which could make obtaining funding for our capital needs more challenging or expensive. We may also face a heightened level of interest rate risk as the U.S. Federal Reserve Board begins to taper its quantitative easing program and begins to raise interest rates. All of these actions will likely lead to increases in borrowing costs.
If our overall cost of borrowings increases, either due to increases in the index rates or due to increases in lender spreads, we will need to factor such increases into pricing and projected returns for any future acquisitions. This may result in adverse impacts and additional costs to us.
Changesfuture acquisitions generating lower overall economic returns. Volatility in the costdebt markets, may negatively impact our ability to borrow monies to finance the purchase of, or availability of insurance dueother activities related to, our real estate assets may be negatively impacted. If we are unable to borrow monies on terms and conditions that we find acceptable, our ability to purchase properties and meet other capital requirements may be limited, and the non-renewalreturn on the properties we do purchase may be lower. In addition, we may find it difficult, costly or impossible to refinance maturing indebtedness.
Furthermore, the state of the TRIAdebt markets could have an impact on the overall amount of capital being invested in real estate, which may result in price or for other reasonsvalue decreases of real estate assets and could expose us to uninsured casualty losses. If any of our properties incurs a casualty loss that is not fully insured,negatively impact the value of our assets will be reduced by any uninsured loss. In addition, other than any working capital reserve or other reserves weassets.
Increases in interest rates may establish, we have no source of funding to repair or reconstruct any uninsured property. Also, to the extent we must pay unexpectedly large amountsmake it difficult for insurance, we could suffer reduced earnings that would result in lower distributions to stockholders.
Additionally, mortgage lenders insist in some cases that commercial property owners purchase coverage against terrorism as a condition for providing mortgage loans. Accordingly, to the extent terrorism risk insurance policies are not available at reasonable costs, if at all, our abilityus to finance or refinance indebtedness secured by our properties.
We have borrowed, and may continue to borrow monies, secured and unsecured by our properties. Increases in interest rates may adversely impact our ability to refinance our indebtedness, including the indebtedness secured by our properties, couldas the loans come due or we otherwise desire to do so on favorable terms, or at all. If interest rates are higher when the indebtedness is refinanced, we may not be impaired. In such instances,able to refinance indebtedness secured by the properties and we may be required to provide other financial support, either through financial assurancesobtain equity to repay the loan or self-insurance, to cover potential losses. We may not have adequate, or any, coverageincrease the collateral for the losses.loan.
Terrorist attacks and other acts of violence, civilian unrest or war may affectIncreasing interest rates could increase the markets in which we operate our business and our profitability.
Our properties are located in major metropolitan areas as well as densely populated sub-markets that are susceptible to terrorist attack. Because our properties are generally open to the public, they are exposed to a number of incidents that may take place within their premises and that are beyond our control or ability to prevent, which may harm our consumers and visitors. If an act of terror, a mass shooting or other violence were to occur, we may lose tenants or be forced to close one or moreamount of our properties for some time. If any of these incidents were to occur, the relevant property could face material damage to its imagedebt payments and could experience a reduction of business traffic due to lack of confidence in the premises’ security. In addition, we may be exposedadversely affected by uncertainty surrounding the LIBOR.
We have incurred, and may continue to civil liability and be required to indemnify the victims, and our insurance premiums could rise, any of which could adversely affect us.
In addition, any kind of terrorist activity or violent criminal acts, including terrorist acts against public institutions or buildings or modes of public transportation (including airlines, trains or buses) could have a negative effectincur, variable-rate debt. Increases in interest rates on our businessvariable-rate debt would increase our interest cost.
We have mortgages, credit facilities and derivative agreements that have terms that are based on the London Interbank Offered Rate (“LIBOR”). As of December 31, 2021, we have nine designated interest rate swaps with a notional amount of $578.5 million, which effectively fixes a portion of our variable-rate debt. In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings effective December 31, 2021. The remaining USD LIBOR settings, including the USD LIBOR rates currently relevant to us, will continue to be published through June 30, 2023. We are monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. In some instances, transitioning to an alternative rate may require negotiation with lenders and other counterparties and could present challenges. Certain of our properties. More generally, any terrorist attack, other act of violence or war, including armed conflicts, could result in increased volatility in, or damage to, the worldwide financial markets and economy, including demand for properties and availability of financing. Increased economic volatility could adversely affect our tenants’ abilities to conduct their operations profitably or our ability to borrow money or issue capital stock at acceptable prices andagreements that have a material adverse effectterms that are based on our financial condition, results of operations and ability to pay distributions to our stockholders.

Real estate-related taxes may increase and if these increases are not passed on to tenants, our cash available for distributions will be reduced.
From time to time our property taxes increase as property values or assessmentLIBOR have alternative rates change or for other reasons. An increasealready contained in the assessed valuationagreements while others do not. We anticipate that we will either utilize the alternative rates contained in the agreements or negotiate a replacement reference rate for LIBOR with the lenders and derivative counterparties. The consequences of a property for real estate tax purposes will result inthese developments cannot be entirely predicted and could include an increase in the related real estate taxes on that property. There is no assurance that leases will be negotiated on a basis that passes such taxes on to the tenant.
Properties may be subject to restrictions on their use that affect our ability to operate a property, which may adversely affect our operating costs.
Somecost of our properties mayvariable rate debt. The consequences of these developments cannot be contiguous to other parcels of real property, comprising part of the same commercial center. In connection with such properties, there are significant covenants, conditionsentirely predicted and restrictions restricting the operation of such properties and any improvements on such properties, and related to granting easements on such properties. Moreover, the operation and management of the contiguous properties may impact such properties. Compliance with covenants, conditions and restrictions may adversely affect our operating costs and reduce the amount of funds that we have available to pay distributions.
Our operating results may be negatively affected by potential development and construction delays and resultant increased costs and risks.
We have acquired and developed, and maycould include an increase in the future acquire and develop, properties upon which we will construct improvements. In connection with our development activities, we are subject to uncertainties associated with re-zoning for development, environmental concerns of governmental entities or community groups and our builder or partner's ability to build in conformity with plans, specifications, budgeted costs, and timetables. Performance also may be affected or delayed by conditions beyond our control. We may incur additional risks when we make periodic progress payments or other advances to builders before they complete construction. If a builder or development partner fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance, but there can be no assurance any legal action would be successful. These and other factors can result in increased costs of a project or losscost of our investment. In addition,variable rate indebtedness.
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Any hedging strategies we willutilize may not be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property. Ifsuccessful in mitigating our projections are inaccurate, we may pay too much for a property, and our return on our investment could suffer.risks.
In August 2015, we entered into an asset purchase agreement and development agreement to acquire land and construction in progress, and subsequently fund the remaining construction, of a development property in Jupiter, Florida. As of December 31, 2018, we have funded $8.6 million in excess of our $72.0 million funding commitment for the construction. We have and may continue to at our election, provide additional fundingenter into hedging transactions to ensure completionmanage risk of the construction.interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or own real estate assets. To the extent that we fund additional monies for the completion of the development, Palm, the developer of the facility, is responsible for reimbursing us for any amounts funded. Palm is also responsible for completing the development and obtaining a final CO. However, Palm is in default of the development agreement and has ceased providing services under the development agreement. There is no assurance as to when and if Palm will comply with its obligations, and this has resulted in delays in obtaining the CO. We are currently working to obtain the CO, but there can be no assurance as to how long this process will take, or ifuse derivative financial instruments, we will be ableexposed to complete it at all. Untilcredit, basis and legal enforceability risks. Derivative financial instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. In this context, credit risk is the COfailure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is obtained, we will not receive income frompositive, the property, andcounterparty owes us, which creates credit risk for us. Basis risk occurs when the amount of cash we are able to generate to fund distributions to our stockholders will continue to be adversely affected. We have paid, and expect to continue to pay, ongoing maintenance expenses related toindex upon which the property and other costs. In addition, certain related parties to Palm have failed to pay rental obligations due to us at other properties we own where they are tenants. We are working to resolve our various disputes with Palm, but therecontract is no assurance we will be able to do so. Failure to resolve these has had, and could continue to have, an adverse effect on our business. See “— Risks Related to Our Properties and Operations — Due to a dispute withbased is more or less variable than the developer, we have funded excess development costs at our development property in Jupiter, Florida and have not yet received any rental income fromindex upon which the property. There can be no assurance as to when we will begin to generate cash from this investment, if at all.”
We may invest in unimproved real property. For purposes of this paragraph, "unimproved real property" does not include properties acquired forhedged asset or liability is based, thereby making the purpose of producing rental or other operating income, properties under development or construction, and properties under contract for development or in planning for development within one year. Returns from development of unimproved properties are also subject tohedge less effective. Finally, legal enforceability risks associated with re-zoning the land for development and environmental concerns of governmental entities or community groups. If we invest in unimproved property other than property we intend to develop, a stockholder's investment in our shares will be subject to theencompass general contractual risks, associated with investments in unimproved real property.
We compete with third parties in acquiring properties and other investments and attracting credit worthy tenants.
We compete with many other entities engaged in real estate investment activities, including individuals, corporations, private investment funds, bank and insurance company investment accounts, other REITs, real estate limited partnerships, and other entities engaged in real estate investment activities, many of which have greater resources than we do. Larger REITs may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. In addition, the number of entities and the amount of funds competing for suitable investments may increase. Any such increase would result in increased demand for these assets and therefore increased prices paid for them.

We also compete with other comparable properties for tenants, which impacts our ability to rent space and the amount of rent charged. We could be adversely affected if additional competitive properties are built in locations near our properties, causing increased competition for creditworthy tenants. This could result in decreased cash flow from our properties and may require us to make capital improvements to properties that we would not have otherwise made, further impacting property cash flows.
Discovery of previously undetected environmentally hazardous conditions may adversely affect our operating results.
We are subject to various federal, state and local laws and regulations that (a) regulate certain activities and operations that may have environmental or health and safety effects, such as the management, generation, release or disposal of regulated materials, substances or wastes, (b) impose liability for the costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances, and (c) regulate workplace safety. Compliance with these laws and regulations could increase our operational costs. Violation of these laws may subject us to significant fines, penalties or disposal costs, which could negatively impact our results of operations, financial position and cash flows. Under various federal, state and local environmental laws (including those of foreign jurisdictions), a current or previous owner or operator of currently or formerly owned, leased or operated real property may be liable for the cost of removal or remediation of hazardous or toxic substances on, under or in such property. The costs of removal or remediation could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Certain environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances, including asbestos-containing materials into the air, and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with exposure to released hazardous substances. In addition, when excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property or development project.
Accordingly, we may incur significant costs to defend against claims of liability, to comply with environmental regulatory requirements, to remediate any contaminated property, or to pay personal injury claims.
Moreover, environmental laws also may impose liens on property or other restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us or our Property Manager and its assignees from operating such properties. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations or the discovery of currently unknown conditions or non-compliances may impose material liability under environmental laws.
If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect our cash flows.
If we decide to sell any of our properties, in some instances we may sell our properties by providing financing to purchasers. If we do so, we will bear the risk that the purchaser may default on its debt, requiring us to seek remedies, a process which may be time-consuming and costly. Further, the borrower may have defenses that could limit or eliminate our remedies. In addition, even in the absence of a purchaser default, the distribution of the proceeds of sales to our stockholders, or their reinvestment in other assets,counterparty will be delayed until the promissory notes or other property we may accept upon the sale are actually paid, sold, refinanced or otherwise disposed of. In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of years.
We assume additional operational risks and are subject to additional regulation and liability because we depend on eligible independent contractors to manage some of our facilities.
In our SHOP segment, we invest in SHOPs under a structure permitted by the RIDEA. As of December 31, 2018, we had 17 eligible independent contractors operating 58 SHOPs which represented 42.7% of our gross asset value. Some of these properties were recently transitioned from our triple-net leased facilities segment to our SHOP segment. We may in the future, transition other triple-net leased facilities, which may or may not be experiencing declining performance, to third-party managed facilities under a structure permitted by RIDEA, in connection with which they would also transition from our triple-net leased healthcare facilities segment to our SHOP segment. There can be no assurance these transitions will improve performance of the properties, and they will also increase our exposure to risks associated with operating in this structure.
RIDEA permits REITs, such as us, to lease certain types of healthcare facilities that we own or partially own to a TRS, provided that our TRS hires an independent qualifying management company to operate the facility. Under the RIDEA  structure, the independent qualifying management company, which we also refer to as an operator, receives a management fee from our TRS for operating the facility as an independent contractor. As the owner of the facility, we assume most of the operational risk because we lease our facility to our own partially- or wholly-owned subsidiary rather than a third party operator. We are therefore responsible for any operating deficits incurred by the facility.
The income we generate from these properties is subject to a number of operational risks including fluctuations in occupancy levels and resident fee levels, increases in the cost of food, materials, energy, labor (as a result of unionization or otherwise) or

other services, rent control regulations, national and regional economic conditions, the imposition of new or increased taxes, capital expenditure requirements, professional and general liability claims, and the availability and cost of professional and general liability insurance. Although we have various rights as the property owner under our management agreements, we rely on the personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment of our operators to set appropriate resident fees, provide accurate property-level financial results for our properties in a timely manner and to otherwise operate our SHOPs in compliance withbreach the terms of, our management agreements and all applicable laws and regulations. We also depend on our operators to attract and retain skilled management personnel who are responsible for the day-to-day operations of our SHOPs. A shortage of nurses or other trained personnel or general inflationary pressures may force the operator to enhance pay and benefit packages to compete effectively for personnel, but it may not be able to offset these added costs by increasing the rates charged to residents. Any increase in labor costs and other property operating expenses, any failure to attract and retain qualified personnel, or significant changes in the operator's senior management or equity ownership could adversely affect the income we receive from our SHOPs and have a material adverse effect on us.
The operator, which would be our TRS when we use a RIDEA lease structure, of a healthcare facility is generally required to be the holder of the applicable healthcare license. Any delay in obtaining the license, or failure to obtain one at all, could result in a delay or an inability to collect a significant portion of our revenue on the applicable property. Furthermore, this licensing requirement subjects us (through our ownership interest in our TRS) to various regulatory laws, including those described above. Most states regulate and inspect healthcare facility operations, patient care, construction and the safety of the physical environment. If one or more of our healthcare real estate facilities fails to comply with applicable laws, our TRS, if it holds the healthcare license and is the entity enrolled in government health care programs, would be subject to penalties including loss or suspension of license, certification or accreditation, exclusion from government healthcare programs (i.e., Medicare, Medicaid), administrative sanctions, civil monetary penalties, and in certain instances, criminal penalties. Additionally, when we receive individually identifiable health information relating to residents of our TRS-operated healthcare facilities, we are subject to federal and state data privacy and confidentiality laws and rules, and could be subject to liability in the event of an audit, complaint, or data breach. Furthermore, if our TRS holds the healthcare license, it could have exposure to professional liability claims arising out of an alleged breach of the applicable standard of care rules.
Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.
We have made investments in certain assets through joint ventures and may continue to enter into joint ventures, partnerships and other co-ownership arrangements (including preferred equity investments) for the purpose of making investments. In such event, we may not be in a position to exercise sole decision-making authority regarding the joint venture. Investments in joint ventures may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their required capital contributions. Co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments may also haveperform its obligations under, the potential risk of impasses on decisions, such as a sale, because neither we nor the co-venturer would have full control over the joint venture. Disputes between us and co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers or directors from focusing their time and effort on our business. Consequently, actions by or disputes with co-venturers might result in subjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our co-venturers.derivative contract.
Costs associated with complying with the Americans with Disabilities Act may affect cash available for distributions.
Our properties are and will be subject to the Americans with Disabilities Act of 1990 (the "Disabilities Act"). Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act has separate compliance requirements for "public accommodations" and "commercial facilities" that generally require that buildings and services, including restaurants and retail stores, be made accessible and available to people with disabilities. The Disabilities Act's requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties, or, in some cases, an award of damages. There is no assurance that we will be able to acquire properties or allocate the burden on the seller or other third party, such as a tenant, to ensure compliance with the Disabilities Act. If we cannot, our funds used for Disabilities Act compliance may affect cash available for distributions and the amount of distributions paid to our stockholders.
Net leases may not result in fair market lease rates over time.
Some of our rental income is generated by net leases, which generally provide the tenant greater discretion in using the leased property than ordinary property leases, such as the right to freely sublease the property, to make alterations in the leased premises and to terminate the lease prior to its expiration under specified circumstances. Furthermore, net leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases in future years will fail to result in fair market rental rates during those years.

We may be unable to renew leases or re-lease space as leases expire.
We may be unable to renew expiring leases on terms and conditions that are as, or more, favorable as the terms and conditions of the expiring leases. In addition, vacancies may occur at one or more of our properties due to a default by a tenant on its lease or expiration of a lease. Healthcare facilities in general and MOBs in particular tend to be specifically suited for the particular needs of their tenants and major renovations and expenditures may be required in order for us to re-lease vacant space. Vacancies may reduce the value of a property as a result of reduced cash flow generated by the property.
Our properties may be subject to impairment charges.
We periodically evaluate our real estate investments for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, tenant performance and legal structure. For example, the early termination of, or default under, a lease by a major tenant may lead to an impairment charge. If we determine that an impairment has occurred, we would be required to make a downward adjustment to the net carrying value of the property. Impairment charges also indicate a potential permanent adverse change in the fundamental operating characteristics of the impaired property. There is no assurance that these adverse changes will be reversed in the future and the decline in the impaired property's value could be permanent.
Our real estate investments are relatively illiquid, and therefore we may not be able to dispose of properties when we desire to do so or on favorable terms.
Investments in real properties are relatively illiquid. We may not be able to quickly alter our portfolio or generate capital by selling properties. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. If we need or desire to sell a property or properties, we cannot predict whether we will be able to do so at a price or on the terms and conditions acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Further, we may be required to invest monies to correct defects or to make improvements before a property can be sold. We can make no assurance that we will have funds available to correct these defects or to make these improvements. Moreover, in acquiring a property or incurring debt securing a property, we may agree to restrictions that prohibit the sale of that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These types of provisions restrict our ability to sell a property.
In addition, applicable provisions of the Code impose restrictions on the ability of a REIT to dispose of properties that are not applicable to other types of real estate companies. Thus, we may be unable to realize our investment objectives by selling or otherwise disposing of a property, or refinancing debt secured by the property, at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy.
Potential changes in U.S. accounting standards regarding operating leases may make the leasing of our properties less attractive to our potential tenants, which could reduce overall demand for our leasing services.
Under current authoritative accounting guidance for leases, a lease is classified by a tenant as a capital lease if the significant risks and rewards of ownership are considered to reside with the tenant. Under capital lease accounting for a tenant, both the leased asset and liability are reflected on their balance sheet. If the lease does not meet any of the criteria for a capital lease, the lease is considered an operating lease by the tenant, and the obligation does not appear on the tenant’s balance sheet; rather, the contractual future minimum payment obligations are only disclosed in the footnotes thereto. Thus, entering into an operating lease can appear to enhance a tenant’s balance sheet in comparison to direct ownership. The Financial Accounting Standards Board (the "FASB") and the International Accounting Standards Board (the "IASB") conducted a joint project to reevaluate lease accounting. In June 2013, the FASB and the IASB jointly finalized exposure drafts of a proposed accounting model that would significantly change lease accounting. In March 2014, the FASB and the IASB deliberated aspects of the joint project, including the lessee and lessor accounting models, lease term, and exemptions and simplifications. The final standards were released in February 2016 and will become effective for us in 2019. We are currently evaluating the impact of this new guidance. Changes to the accounting guidance could affect both our accounting for leases as well as that of our current and potential tenants. These changes may affect how the real estate leasing business is conducted. For example, if the accounting standards regarding the financial statement classification of operating leases are revised, then companies may be less willing to enter into leases in general or desire to enter into leases with shorter terms because the apparent benefits to their balance sheets could be reduced or eliminated. This in turn could cause a delay in investing our offering proceeds and make it more difficult for us to enter into leases on terms we find favorable.

Risks Related to the Healthcare Industry

Our real estate investments are concentrated in healthcare-related facilities, and we may be negatively impacted by adverse trends in the healthcare industry.
We own and seek to acquire a diversified portfolio of healthcare-related assets including MOBs, SHOPs and other healthcare-related facilities. We are subject to risks inherent in concentrating investments in real estate and, in particular, healthcare-related assets. A downturn in the commercial real estate industry generally could significantly adversely affect the value of our properties. A downturn in the healthcare industry could particularly negatively affect our lessees'lessees’ ability to make lease payments to us and our ability to pay dividends and other distributions to our stockholders. These adverse effects could be more pronounced than if we diversified our investments outside of real estate or if our portfolio did not include a concentration in healthcare-related assets.
Furthermore, the healthcare industry currently is experiencing rapid regulatory changes and uncertainty; changes in the demand for and methods of delivering healthcare services; changes in third partythird-party reimbursement policies; significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas; expansion of insurance providers into patient care; continuing pressure by private and governmental payors to reduce payments to providers of services; and increased scrutiny of billing, referral and other practices by federal and state authorities. These factors may adversely affect the economic performance of some or all of our tenants and, in turn, our revenues.revenues and cash flows.
Certain of our properties in our MOB Segment may not have efficient alternative uses, so the loss of a tenant may cause us to not be able to find a replacement or cause us to spend considerable capital to adapt the property to an alternative use.
Some of our properties and the properties we will seek to acquire are healthcare-related assets that may only be suitable for similar healthcare-related tenants. If we or our tenants terminate the leases for these properties or our tenants lose their regulatory authority to operate such properties, we may not be able to locate suitable replacement tenants to lease the properties for their specialized uses. Alternatively, we may be required to spend substantial amounts to adapt the properties to other uses.
Our properties and tenants may be unable to compete successfully.
The properties we have acquired and will acquire may face competition from nearby hospitals and other medical facilities that provide comparable services. Some of those competing facilities are owned by governmental agencies and supported by tax revenues, and others are owned by nonprofit corporations and may be supported to a large extent by endowments and charitable contributions. These types of support are not available to our properties. Similarly, our tenants face competition from other medical practices in nearby hospitals and other medical facilities. Additionally, the introduction and explosion of new stakeholders competing with traditional providers in the healthcare market, including companies such as Amazon.com Inc., JPMorgan Chase & Co., Apple Inc., CVS Health Corporation, as well as telemedicine, telehealth and mhealth, are disrupting the healthcare industry. Our tenants' failure to compete successfully with these other practices and providers could adversely affect their ability to make rental payments, which could adversely affect our rental revenues.
Further, from time to time and for reasons beyond our control, referral sources, including physicians and managed care organizations, may change their lists of hospitals or physicians to which they refer patients. This could adversely affect our tenants' ability to make rental payments, which could adversely affect our rental revenues.
The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could result in the inability of our tenants to make rent payments to us.
The healthcare industry is heavily regulated by federal, state and local governmental bodies. TheOur tenants in medical facilities we acquire generally are subject to laws and regulations covering, among other things, licensure, certification for participation in government programs, relationships with physicians and other referral sources, and the privacy and security of patient health information. Changes in these laws and regulations could negatively affect the ability of our tenants to make lease payments to us and our ability to pay distributions to our stockholders.us. In mostsome states, skilled nursinghealthcare facilities and hospitals are subject to various state CON laws requiring governmental approval prior to the development or expansion of healthcare facilities and services. The approval process in these states generally requires a facility to demonstrate the need for additional or expanded healthcare facilities or services. CONs, where applicable, can also be conditions to regulatory approval of changes in ownership or control of licensed facilities, addition of beds, investment in major capital equipment, introduction of new services, termination of services previously approved through the CON process and other control or operational changes. Many of our medical facilities and their tenants may require a license or CON to operate. Failure to obtain a license or CON, or loss of a required license or CON, would prevent a facility from operating in the manner intended by the tenant and may restrict an operator'soperator’s ability to expand properties and grow the operator'soperator’s business in certain circumstances, which could have an adverse effect on the operator'soperator’s or tenant'stenant’s revenues, and in turn, negatively impact their ability to make rental payments under, and otherwise comply with the terms of their leases with us. State CON laws are not uniform throughout the United States and are subject to change. Additionally, in CON states, regulators are increasingly concentrating their activities on outpatient facilities and long-term care as those are expanding sectors of the health care industry. We cannot predict the impact of state CON laws on our improvement of medical facilities or the operations of our tenants. In addition, state CON laws often materially impact the ability of competitors to enter into the marketplace of our facilities. The repeal of CON laws could allow competitors to freely operate in previously closed markets. This could negatively affect the ability of our tenants' abilitiestenants’ to make currentrental payments to us. In limited circumstances, loss of state licensure or certification

or closure of a facility could ultimately result in loss of authority to operate the facility and require new CON authorization to re-institute operations.
Furthermore, uncertainty surrounding the implementation of the Affordable Care Act may adversely affect our operators. As the primary vehicle for comprehensive healthcare reform in the United States, the Affordable Care Act was designed to reduce the number of individuals in the United States without health insurance and change the ways in which healthcare is organized, delivered and reimbursed. The Affordable Care Act has faced ongoing legal challenges, including litigation seeking to invalidate some or all of the law or the manner in which it has been interpreted. In December 2017, a tax reform bill passed by the House of Representatives and the Senate was signed into law by President Trump, which repeals the penalty on individuals for failing to maintain health insurance as required under the Affordable Care Act effective in 2019. Therefore, starting in 2019, individuals may cancel their health insurance because there will be no penalty for failing to maintain such insurance. Additionally, in December 2018, a federal judge in the Northern District of Texas ruled that because Congress repealed this penalty on individuals, the individual mandate under the Affordable Care Act is thereby unconstitutional, and therefore, because the remainder of the Affordable Care Act is inseverable from the individual mandate, the entire Affordable Care Act is also unconstitutional. This decision was not, however, an injunction that would halt the enforcement of the Affordable Care Act or a final judgment. Nevertheless, if an injunction or a final judgment is made which declares the Affordable Care Act unconstitutional, states may not have to comply with its requirements, which could impact health insurance coverage for individuals. The legal challenges and legislative initiatives to roll back the Affordable Care Act continuecontinues and the outcomes are uncertain. In June of 2021, the Supreme Court of the United States for a third time declined to invalidate the Affordable Care Act. There is no assurance that future litigation or legislative initiatives will not attempt to do so. The regulatory uncertainty and the potential impact on our tenants and operators could have an adverse material effect on their ability to satisfy their contractual obligations. Further, we are unable to predict the scope of future federal, state and local regulations and legislation, including Medicare and Medicaid statutes and regulations or judicial decisions, or the intensity of enforcement efforts with respect to such regulations and legislation, and any
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changes in the regulatory or judicial framework may have a material adverse effect on our tenants, which, in turn, could have a material adverse effect on us.
The expansion in health insurance coverage under the Affordable Care Act is likely going to continue to erode in 20192022 as cuts in advertising and outreach during the marketplace open-enrollment periods, shorter open enrollment periods, and other changes have left many Americans uncertain about their ability to access and be eligible for coverage. Additionally, the repeal of the individual mandate penalty included in the TCJA, recent actions to increase the availability of insurance policies that do not include Affordable Care Act minimum benefit standards, and support for Medicaid work requirements will likely impact the market. Accordingly, current and future payments under federal and state healthcare programs may not be sufficient to sustain a facility’s operations, which could adversely affect its ability to satisfy its contractual obligations, including making rental payments under, and otherwise complying with the terms of, the facility’s leases and other agreements with us.
The Affordable Care Act includes program integrity provisions that both create new authorities and expand existing authorities for federal and state governments to address fraud, waste and abuse in federal health programs. In addition, the Affordable Care Act expands reporting requirements and responsibilities related to facility ownership and management, patient safety and care quality. In the ordinary course of their businesses, our operators may be regularly subjected to inquiries, investigations and audits by federal and state agencies that oversee these laws and regulations. If they do not comply with the additional reporting requirements and responsibilities, the ability of our operators' abilityoperators’ to participate in federal health programs may be adversely affected. Moreover, there may be other aspects of the comprehensive healthcare reform legislation for which regulations have not yet been adopted, which, depending on how they are implemented, could materially and adversely affect our operators, and therefore our business, financial condition, results of operations and ability to pay distributions to our stockholders.operators.
The Affordable Care Act also requires the reporting and return of overpayments. Healthcare providers that fail to report and return an overpayment could face potential liability under the FCA and the CMPL and exclusion from federal healthcare programs. Accordingly, if our operators fail to comply with the Affordable Care Act’s requirements, they may be subject to significant monetary penalties and excluded from participation in Medicare and Medicaid, which could materially and adversely affect their ability to pay rent and satisfy other financial obligations to us.

Reductions or changes in reimbursement from third-party payors, including Medicare and Medicaid, or delays in receiving these reimbursements, could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us.
Sources of revenue for ourOur tenants may includereceive payments from the federal Medicare program, state Medicaid programs, private insurance carriers and health maintenance organizations, among others. Efforts by such payors to reduce healthcare costs have intensified in recent years and will likely continue, which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenants. The Medicare and Medicaid programs have adopted a variety of initiatives which have been incorporated and expanded by private insurance carriers, including health maintenance organizations and other health plans, to extract greater discounts and impose more stringent cost controls upon healthcare provider operations. Examples include, but are not limited to, changes in reimbursement rates and methodologies, such as bundled payments, capitation payments and discounted fee structures. As a result, our tenants and operators may face significant limits on the scope of services reimbursed and on reimbursement rates and fees. All of these changes could impact the ability of our operators'operators and tenants'tenants’ ability to pay rent or other obligations to us. In addition, operators and tenants in certain states have experienced delays; some of which are, have been, and may be late in receiving reimbursements, which have adversely affected their ability to make rent payments to us. In addition, theus.Further, failure of any of our operators or tenants to comply with various laws and regulations could jeopardize their ability to continue participating in Medicare, Medicaid and other government-sponsored payment programs.
The healthcare industry continues to face various challenges, including increased government and private payor pressure on healthcare providers to control or reduce costs. Coverage expansions under the Affordable Care Act through the Medicaid expansion and health insurance exchanges may be scaled back or eliminated in the future because the Affordable Care Act has faceddue to ongoing legal challenges and the future status of the Affordable Care Act is unknown. Moreover, President Trump’s administration has stated its intention to make changes to the Medicaid program and has permitted states to establish eligibility restrictions for Medicaid recipients, and there can be no assurance what these changes might entail. We cannot ensure that of our operators or tenants who currently depend on governmental or private payer reimbursement will be adequately reimbursed for the services they provide. The uncertain status of the Affordable Care Act and federal health care programs and the impact it may have on our tenants affects our ability to plan.
Any slowdown in the United States economy can negatively affect state budgets, thereby putting pressure on states to decrease spending on state programs including Medicaid. The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in state Medicaid programs due to unemployment and declines in family incomes. Historically, some states have attempted to reduce Medicaid spending by limiting benefits and tightening Medicaid eligibility requirements. Most states have all, or a portion of their Medicaid population enrolled in an MCO (Managed Care Organization). Potential reductions to Medicaid program spending in response to state budgetary pressures could negatively impact the ability of our tenants and operators to successfully operate their businesses.
Our tenants and operators may continue to experience a shift in payor mix away from fee-for-service payors, resulting in an increase in the percentage of revenues attributable to managed care payors, and general industry trends that include pressures to control healthcare costs. In addition, some of our tenants may be subject to value-based purchasing programs, which base reimbursement on the quality and efficiency of care provided by facilities and require the public reporting of quality data and preventable adverse events to receive full reimbursement. Pressures to control healthcare costs and a shift away from traditional health insurance reimbursement to managed care plans have resulted in an increase in the number of patients whose healthcare
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coverage is provided under managed care plans, such as health maintenance organizations and preferred provider organizations. MACRAMedicare Access and CHIP Reauthorization Act (“MACRA”) has also established a new payment framework, which modified certain Medicare payments to eligible clinicians, representing a fundamental change to physician reimbursement. These changes could have a material adverse effect on the financial condition of some or all of our tenants in our properties. The financial impact on our tenants and operators could restrict their ability to make rent payments to us.
Required regulatory approvals can delay or prohibit transfers of our healthcare facilities.
Transfers of healthcare facilities to successor tenants or operators are typically subject to regulatory approvals or ratifications, including, but not limited to, change of ownership approvals, zoning approvals, and Medicare and Medicaid provider arrangements that are either not required, or enjoy reduced requirements, in connection with transfers of other types of commercial operations and other types of real estate. The replacement of any tenant or operator could be delayed by the regulatory approval process of any federal, state or local government agency necessary for the transfer of the facility or the replacement of the operator licensed to manage the facility. If we are unable to find a suitable replacement tenant or operator upon favorable terms, or at all, we may take possession of a facility, which could expose us to successor liability, require us to indemnify subsequent operators to whom we transfer the operating rights and licenses, or require us to spend substantial time and funds to preserve the value of the property and adapt the facility to other uses, all of which may materially adversely affect our business, results ofuse. Furthermore, transitioning to a new tenant or operator could cause disruptions at the operations and financial condition.

For example, our property in Lutz, Florida, which had been leased to one of the NuVista Tenants, transitioned to the SHOP segment as of January 1, 2018. In connection with this transition, we replacedproperties and, if there is a tenant with a TRS and engaged a third party to operate the property. During 2018,delay in the new operator obtained a Medicare license. Prior to thetenant or operator obtaining thisits Medicare license, we were unabledelays in our ability to bill Medicare for services performed and accumulated receivables. We were able to bill and collect the majority of these receivables during the year ended December 31, 2018; however, $0.7 million of these receivables are not collectible. We have reserved for the uncollectible receivables, resulting in bad debt expense during the year ended December 31, 2018, which is included in property operating and maintenance expense on the consolidated statement of operations. There can be no assurance as to the collectibility of these Medicare receivables. We may incur additional bad debt expense in connection with future transitions of properties to our SHOP segment due to the delay the new operator may experience in obtaining a Medicare license. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Palm and the NuVista Tenants" for further details.receive reimbursements from Medicare.
A reduction in Medicare payment rates for skilled nursing facilities may have an adverse effect on the Medicare reimbursements received by certain of our tenants.
Several government initiatives have resulted in reductions in funding of the Medicare and Medicaid programs and additional changes in reimbursement regulations by the Centers for Medicare & Medicaid Services ("CMS"(“CMS”), contributing to enhanced pressure to contain healthcare costs and additional operational requirements, which has impacted the ability of our tenants' abilitytenants and operators to make rent payments to us. The Medicare and Medicaid programs have adopted a variety of initiatives which have been incorporated and expanded by private insurance carriers, including health maintenance organizations and other health plans, to extract greater discounts and impose more stringent cost controls upon healthcare provider operations. As a result, our tenants and operators may face reductions in reimbursement rates and fees. Operators in certain states have experienced delays in receiving reimbursements, which has adversely affected their ability to make rent payments to us. Similar delays, or reductions in reimbursements, may continue to impose financial and operational challenges for our tenants and operators, which may affect their ability to make contractual payments to us.
On April 16, 2015, President Obama signed MACRA into law, which among other things, permanently repealed the Sustainable Growth Rate formula ("SGR"), and provided for an annual rate increase of 0.5% for physicians through 2019. MACRA established a new payment framework, called the Quality Payment Program, which modified certain Medicare payments to “eligible clinicians,” including physicians, dentists, and other practitioners. MACRA represents a fundamental change in physician reimbursement and threatens physician reimbursement under Medicare. A final rule updating certain Quality Payment Program regulations was published on effective on January 1, 2018. The implications of MACRA are uncertain and will depend on future regulatory activity and physician activity in the marketplace. MACRA may encourage physicians to move from smaller practices to larger physician groups or hospital employment, leading to further industry consolidation.
In addition, on July 31, 2018, CMS announced a final rule that projects increased aggregate Medicare payments to skilled nursing facilities by approximately $820 million for fiscal year 2019. If these rate increases and payments under Medicare to our tenants do not continue or increase, our tenants may have difficulty making rent payments to us.
Furthermore, under a program facilitated by the CMS known as the SNF Value-Based Purchasing Program, CMS began withholding 2% of SNF Medicare payments beginning October 1, 2018, to fund an incentive payment pool. CMS will then redistribute 50-70% of the withheld payments back to high performing SNFs. The lowest ranked 40% of facilities will receive payments that are less than what they otherwise would have received without the program. As a result, certain of our tenants could receive less in Medicare reimbursement payments, which could adversely affect their ability to make rent payments to us earn less.
There have been numerous initiatives on the federal and state levels for comprehensive reforms affecting the payment for, and availability of, healthcare services. We may own and acquire skilled nursing facility assets that rely on revenue from Medicaid or Medicare. Our tenants have, and may continue to experience, limited increases or reductions in Medicare payments and aspects of certain of these government initiatives, such as further reductions in funding of the Medicare and Medicaid programs, additional changes in reimbursement regulations by CMS, enhanced pressure to contain healthcare costs by Medicare, Medicaid and other payors, and additional operational requirements may adversely affect their ability to make rental payments. For example, CMS is focused on reducing what it considers to be payment errors by identifying, reporting, and implementing actions to reduce payment error vulnerabilities. In November 2018, CMS announced its successes in reducing the 2018 Medicare improper payment rate and specifically called out successes of its actions to address improper payments in home health and skilled nursing facility claims.
In addition, CMS is currently in the midst of transitioning Medicare from a traditional fee for service reimbursement modelmodels to a capitated system, which means medical providers are given a set fee per patient regardless of treatment required, and value-based and bundled payment approaches, where the government pays a set amount for each beneficiary for a defined period of time, based on that person'sperson’s underlying medical needs, rather than based on the actual services provided. Providers and facilities are increasing responsible to care for and be financially responsible for certain populations of patients under the population health models and this shift in patient management paradigm is creating and will continue to create unprecedented challenges for providers.

providers and impact their ability to pay rent to us.
Certain of our facilities may be subject to pre- and post-payment reviews and audits by governmental authorities, which could result in recoupments, denials or delay of payments and could adversely affect the profitability of our tenants.
Certain of our facilities may be subject to periodic pre- and post-payment reviews and audits by governmental authorities. If the review or audit shows a facility is not in compliance with federal and state requirements, previous payments to the facility may be recouped and future payments may be denied or delayed. Recoupments, denials or delay of payments could adversely affect the profitability of our tenants and hinder their ability to make rent payments to us.
Events that adversely affect the ability of seniors and their families to afford daily resident fees at our SHOPs could cause our occupancy rates and resident fee revenues to decline.
Assisted and independent living services generally are not reimbursable under government reimbursement programs, such as Medicare and Medicaid. Substantially allMost of the resident fee revenues generated by our SHOPs, therefore, are derived from private pay sources consisting of the income or assets of residents or their family members. The rates for these residents are set by the facilities based on local market conditions and operating costs. In light of the significant expense associated with building new
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properties and staffing and other costs of providing services, typically only seniors with income or assets that meet or exceed the comparable region median can afford the daily resident and care fees at our SHOPs, and aSHOPs. A weak economy, depressed housing market or changes in demographics could adversely affect their continued ability to do so. If the managersoperators of our SHOPs are unable to attract and retain seniors that have sufficient income, assets or other resources to pay the fees associated with assisted and independent living services, the occupancy rates, resident fee revenues and results of operations of our SHOPs could decline.
Residents in our SHOPs may terminate leases.
State regulations generally require assisted living communities to have a written lease agreement with each resident that permits the resident to terminate his or her lease for any reason on reasonable notice, unlike typical apartment lease agreements that have initial terms of one year or longer. Due to these lease termination rights and the advanced age of the residents, the resident turnover rate in our SHOPs may be difficult to predict. A large number of resident lease agreements may terminate at or around the same time, and the affected units may remain unoccupied.
Some tenants of our healthcare-related assets are subject tomust comply with fraud and abuse laws, the violation of which by a tenant may jeopardize the tenant'stenant’s ability to make rent payments to us.
There are various federal and state laws prohibiting fraudulent and abusive business practices by healthcare providers who participate in, receive payments from or are in a position to make referrals in connection with government-sponsored healthcare programs, including the Medicare and Medicaid programs.
Our lease arrangements with certain tenants may also be subject to these fraud and abuse laws. These laws include the Federal Anti-Kickback Statute, which prohibits, among other things, the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, the referral of any item or service reimbursed by Medicare or Medicaid; the Federal Physician Self-Referral Prohibition (commonly referred to as the "Stark Law"“Stark Law”), which, subject to specific exceptions, restricts physicians from making referrals for specifically designated health services for which payment may be made under Medicare or Medicaid programs to an entity with which the physician, or an immediate family member, has a financial relationship; the FCA, which prohibits any person from knowingly presenting false or fraudulent claims for payment to the federal government, including claims paid by the Medicare and Medicaid programs; and the CMPL, which authorizes the U.S. Department of Health and Human Services to impose monetary penalties for certain fraudulent acts. Additionally, some states may have laws similar to the Federal Anti-Kickback Statute and the Stark Law expanding their respective prohibitions to private insurance.
Each of these laws includes substantial criminal or civil penalties for violations that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments or exclusion from the Medicare and Medicaid programs. In 2016, the scope of the Office of Inspector General's authority to enforce the CMPL was increased. Certain laws, such as the FCA, allow for individuals to bring whistleblower actions on behalf of the government for violations thereof. Individuals have tremendous potential financial gain in bringing whistleblower claims as the FCA statute provides that the individual will receive a portionbetween 15% and 30% of the money recouped. Additionally, violations of the FCA can result in treble damages. Significant enforcement activity has been the result of actions brought by these individuals. Additionally, certain states in which the facilities are located also have similar fraud and abuse laws. Federal and state adoption and enforcement of such laws increase the regulatory burden and costs, and potential liability, of healthcare providers. Investigation by a federal or state governmental body for violation of fraud and abuse laws, and these state laws have their own penalties which may be in additional to federal penalties.
Investigation by a federal or state governmental body for violation of fraud and abuse laws or imposition of any of these penalties upon one of our tenants could jeopardize that tenant'stenant’s business, its reputation, and its ability to operate or to make rent payments. Increased funding for investigation and enforcement efforts, accompanied by an increased pressure to eliminate government waste, has led to a significant increase in the number of investigations and enforcement actions over the past several years, a trend which is not anticipated to decrease considerably.
Tenants of our healthcare-related assets may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their rent payments to us.
As is typical in the healthcare industry, certain types of tenants of our healthcare-related assets may often become subject to claims that their services have resulted in patient injury or other adverse effects. The insurance coverage maintained by these

tenants may not cover all claims made against them noror continue to be available at a reasonable cost, if at all. In some states, insurance coverage for the risk of punitive damages arising from professional liability and general liability claims or litigation may not, in certain cases, be available to these tenants due to state law prohibitions or limitations of availability. As a result, these types of tenants operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits. Recently, there has been an increase in governmental investigations of certain healthcare providers, particularly in the area of Medicare/Medicare and Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Insurance may not be available to cover such losses. Any adverse determination in a legal proceeding or governmental investigation, whether currently asserted or arising in the future, could have a material adverse effect on a tenant'stenant’s financial condition. If a tenant is unable to obtain or maintain insurance coverage, if judgments are obtained in excess
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of the insurance coverage, if a tenant is required to pay uninsured punitive damages, or if a tenant is subject to an uninsurable government enforcement action, the tenant could be exposed to substantial additional liabilities, which may affect the tenant'stenant’s business, operations and ability to pay rent to us.
We may experience adverse effects as a result of potential financial and operational challenges faced by the operators of any seniors housing facilities and skilled nursing facilities we own or acquire.
Operators of any seniors housing facilities and skilled nursing facilities may face operational challenges from potentially reduced revenue streams and increased demands on their existing financial resources. OurThe resources of our skilled nursing operators' revenues likelyunits are primarily derived from governmentally funded reimbursement programs, such as Medicare and Medicaid. Accordingly, our facility operators will beare subject to the potential negative effects of decreased reimbursement rates or other changes in reimbursement policy or programs offered through such reimbursement programs. Our operators'Their revenue may also be adversely affected as a result of falling occupancy rates or slow lease-ups for assisted and independent living facilities due to various factors, including the recentongoing COVID-19 pandemic and its effects and turmoil in the capital debt and real estate markets. In addition, our facility operators may incur additional demands on their existing financial resources as a result of increases in seniors housing facility operator liability, insurance premiums and other operational expenses. The economic deterioration of an operator could cause such operator to file for bankruptcy protection. The bankruptcy or insolvency of an operator may adversely affect the income produced by the property or properties it operates. Our financial position could be weakened and our ability to pay distributions could be limited if any of our seniors housing facility operators were unable to meet their financial obligations to us.
Our operators'The performance and economic condition of our operators may be negatively affected if they fail to comply with various complex federal and state laws that govern a wide array of referrals, relationships and licensure requirements in the senior healthcare industry. The violation of any of these laws or regulations by a seniors housing facility operator may result in the imposition of fines or other penalties that could jeopardize that operator'soperator’s ability to make payment obligationspayments to us or to continue operating its facility. In addition, legislative proposals are commonly being introduced or proposed in federal and state legislatures that could affect major changes in the seniors housing sector, either nationally or at the state level. ItAny such legislation could materially impact our operators in an adverse fashion.
We may change our targeted investments without stockholder consent.
We have acquired and expect to continue to acquire a diversified portfolio of healthcare-related assets including MOBs, SHOPs and other healthcare-related facilities. However, the board may change our investment policies in its sole discretion. We may change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, initially anticipated by increasing our exposure to, among other things, interest rate risk, default risk and real estate market fluctuations.
If we internalize our management functions, we would be required to pay a transition fee and would not have the right to retain our management or personnel.
We may engage in an internalization transaction and become self-managed in the future. If we internalize our management functions, under the terms of our advisory agreement we would be required to pay a transition fee to our Advisor upon termination of the advisory agreement in connection with an internalization that could be up to 4.5 times the compensation paid to our Advisor in the previous year, plus expenses. We also would not have any right to retain our executive officers or other personnel of our Advisor who currently manage our day-to-day operations. An inability to manage an internalization transaction effectively could thus result in our incurring excess costs and suffering deficiencies in our disclosure controls and procedures or our internal control over financial reporting. These deficiencies could cause us to incur additional costs, and our management’s attention could be diverted from most effectively managing our investments, which could result in litigation and resulting associated costs in connection with the internalization transaction.
We may terminate our advisory agreement in only limited circumstances, which may require payment of a termination fee.
We have limited rights to terminate our Advisor. The initial term of our advisory agreement expires on February 16, 2027, but is impossibleautomatically renewed upon expiration for consecutive ten-year terms unless notice of termination is provided by either party 365 days in advance of the expiration of the term. Further, we may terminate the agreement only under limited circumstances. In the event of a termination in connection with a change in control of us, we would be required to saypay a termination fee that could be up to four times the compensation paid to our Advisor in the previous year, plus expenses. The limited termination rights will make it difficult for us to renegotiate the terms of the advisory agreement or replace our Advisor even if the terms of the advisory agreement are no longer consistent with the terms generally available to externally-managed REITs for similar services.
Our business and operations could suffer if our Advisor or any certainty whether this proposed legislationother party that provides us with services essential to our operations experiences system failures or cyber incidents or a deficiency in cybersecurity.
The internal information technology networks and related systems of our Advisor and other parties that provide us with services essential to our operations (including our tenant operators and other third-party operators of our healthcare facilities) are vulnerable to damage from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our
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operations could result in a material disruption to our business. We may also incur additional costs to remedy damages caused by these disruptions.
As reliance on technology has increased, so have the risks posed to those systems. Our Advisor and other parties that provide us with services essential to our operations must continuously monitor and develop their networks and information technology to prevent, detect, address and mitigate the risk of unauthorized access, misuse, computer viruses, and social engineering, such as phishing. Our Advisor is continuously working, including with the aid of third-party service providers, to install new, and to upgrade existing, network and information technology systems, to create processes for risk assessment, testing, prioritization, remediation, risk acceptance, and reporting, and to provide awareness training around phishing, malware and other cyber risks to ensure that our Advisor and other parties that provide us with services essential to our operations are protected against cyber risks and security breaches and that we are also therefore so protected. However, these upgrades, processes, new technology and training may not be sufficient to protect us from all risks. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques and technologies used in attempted attacks and intrusions evolve and generally are not recognized until launched against a target. In some cases, attempted attacks and intrusions are designed not to be detected and, in fact, may not be detected.
The remediation costs and lost revenues experienced by a subject of an intentional cyberattack or other event which results in unauthorized third-party access to systems to disrupt operations, corrupt data or steal confidential information may be significant and significant resources may be required to repair system damage, protect against the threat of future security breaches or to alleviate problems, including reputational harm, loss of revenues and litigation, caused by any breaches. Additionally, any failure to adequately protect against unauthorized or unlawful processing of personal data, or to take appropriate action in cases of infringement may result in significant penalties under privacy law.
Furthermore, a security breach or other significant disruption involving the information technology networks and related systems of our Advisor or any other party that provides us with services essential to our operations could:
result in misstated financial reports, violations of loan covenants, missed reporting deadlines or missed permitting deadlines;
affect our ability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;
result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information (including information about our tenant operators and other third-party operators of our healthcare facilities, as well as the patients or residents at those facilities), which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space;
require significant management attention and resources to remedy any damages that result;
subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or
adversely impact our reputation among our tenants, operators and investors generally.
Although our Advisor and other parties that provide us with services essential to our operations intend to continue to implement industry-standard security measures, there can be no assurance that those measures will be adopted or, if adopted, whatsufficient, and any material adverse effect such legislation wouldexperienced by our Advisor and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us.
We depend on our facility operatorsAdvisor and Property Manager to provide us with executive officers, key personnel and all services required for us to conduct our operations and our seniors housing operations.operating performance may be impacted by any adverse changes in the financial health or reputation of our Advisor.
We have no employees. Personnel and services that we require are provided to us under contracts with our Advisor and its affiliates including our Property Manager. We depend on our Advisor and our Property Manager to manage our operations and acquire and manage certain of our real estate assets. Our Advisor makes all decisions with respect to the management of our company, subject to the supervision of, and any guidelines established by, the board.
Our success depends to a significant degree upon the contributions of our executive officers and other key personnel of our Advisor and its affiliates, including Edward M. Weil, Jr., our chief executive officer, and Scott Lappetito, our chief financial officer, treasurer and secretary. Neither our Advisor nor any of its affiliates has an employment agreement with these key personnel and we cannot guarantee that all, or any particular one, of these individuals will remain employed by our Advisor or one of its affiliates and otherwise available to continue to perform services for us. Further, we do not maintain key person life insurance on any person. We believe that our success depends, in large part, upon the ability of our Advisor to hire, retain or contract for services of highly skilled managerial, operational and marketing personnel. Competition for skilled personnel is intense, and there can be no assurance that our Advisor will be successful in attracting and retaining skilled personnel. If our Advisor loses or is unable to obtain the services of skilled personnel due to, among other things, an overall labor shortage, lack
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of skilled labor, increased turnover or labor inflation, caused by COVID-19 or as a result of other general macroeconomic factors, our Advisor’s ability to manage our business and implement our investment strategies could be delayed or hindered.
Any adverse changes in the financial condition or financial health of, or our relationship with, our Advisor or Property Manager, including any change resulting from an adverse outcome in any litigation could hinder their ability to successfully manage our operations and our investments. Additionally, changes in ownership or management practices, the occurrence of adverse events affecting our Advisor or its affiliates or other companies advised by our Advisor or its affiliates could create adverse publicity and adversely affect us and our relationship with lenders, tenants, operators or counterparties.
We may in the future acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which would expose us to additional risks.
We may in the future acquire or originate first mortgage debt loans, mezzanine loans, preferred equity or securitized loans, CMBS, preferred equity and other higher-yielding structured debt and equity investments. Doing so would expose us not only to the risks and uncertainties we are currently exposed to through our direct investments in real estate but also to additional risks and uncertainties attendant to investing in and holding these types of investments, such as:
risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments;
increased competition from entities engaged in mortgage lending and, or investing in our target assets;
deterioration in the performance of properties securing our investments may cause deterioration in the performance of our investments and, potentially, principal losses to us;
fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments;
difficulty in redeploying the proceeds from repayments of our existing loans and investments;
the illiquidity of certain of these investments;
lack of control over certain of our loans and investments;
the potential need to foreclose on certain of the loans we originate or acquire, which could result in losses;
additional risks, including the risks of the securitization process, posed by investments in CMBS and other similar structured finance investments, as well as those we structure, sponsor or arrange; use of leverage may create a mismatch with the duration and interest rate of the investments that we finance;
risks related to the operating performance or trading price volatility of any publicly-traded and private companies primarily engaged in real estate businesses we invest in; and
the need to structure, select and more closely monitor our investments such that we continue to maintain our qualification as a REIT and our exemption from registration under the Investment Company Act of 1940, as amended.

Risks Associated with Debt Financing and InvestmentsRelated to our Indebtedness

Our level of indebtedness may increase our business risks.
As of December 31, 2018,2021, we had total outstanding gross indebtedness of $1.1 billion. We may incur additional indebtedness in the future for various purposes. The amount of thisour indebtedness could have material adverse consequences for us, including:
hindering our ability to adjust to changing market, industry or economic conditions;
limiting our ability to access the capital markets to raise additional equity or debt on favorable terms or at all, whether to refinance maturing debt, to fund acquisitions, to fund dividends and other distributions or for other corporate purposes;
limiting the amount of free cash flow available for future operations, acquisitions, dividends and other distributions, stock repurchases or other uses; and
making us more vulnerable to economic or industry downturns, including interest rate increases.
In most instances, we acquire real properties by using either existing financing or borrowing new funds. In addition, we may incur mortgage debt and pledge all or some of our real propertiesthe underlying property as security for that debt to obtain funds to acquire additional real properties or for other corporate purposes. We may also borrow if we need funds to satisfy the REIT tax qualification requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. We also may borrow if we otherwise deem it necessary or advisable to assure that we maintain our qualification as a REIT.
There is no limit on the amount we may borrow against any single improved property. High debt levels would cause us to incur higher interest charges, would result in higher debt service payments and could cause restrictive covenants to become applicable from time to time.
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If there is a shortfall between the cash flow from a property and the cash flow needed to service mortgage debt on that property, especially if we acquire the property when it is being developed or under construction.construction, we may use additional borrowings to fund the shortfall. Using leveragedebt increases the risk of loss because defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, thus reducing the value of our stockholders’ investment in us.default. For U.S. federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. In this event, we may be unable to pay the amount of distributions required in order to maintain our REIT status. We may give full or partial guarantees to lenders of mortgage debt to the entities that own our properties. When we provide a guaranty on behalf of an entity that owns one of our properties,In those cases, we will be responsible to the lender for repaying the debt if it is not paid by the entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.
Our NewCredit Facility contains various covenants that may restrict our ability to take certain actions and may restrict our ability to use our cash and make investments.
Our Credit Facility contains various covenants that may restrict our ability to take certain actions for example, we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Company meets certain requirements. We may, however, pay dividends on the Series A Preferred Stock and Series B Preferred Stock, or any other preferred stock we may issue and any cash distributions necessary to maintain our status as a REIT. The restrictions on paying cash distributions will no longer apply starting in the quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter, we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, among other things. In the past, we have not chosen to make the election. There can be no assurance as to if, or when, we will be able to satisfy these conditions or make the required election; moreover, we will only be permitted to pay cash distributions if the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock or Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after we make the election and begin paying distributions.
The lenders waived any defaults or events of defaults under the covenant requiring a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges that may have occurred during the fiscal quarter ended September 31, 2021 as well as any additional default or events of default resulting therefrom prior to November 12, 2021. The lenders have also adjusted this covenant for a period starting November 12, 2021 and lasting until the earlier of December 31, 2022 and the date on which we irrevocably elect to terminate the covenant relief period.There can be no assurance our lenders will consent to any future amendments, or waivers or adjustments that may become necessary to comply with our Credit Facility, and a breach of our Credit Facility would, among other things, impact our ability to make draws on our Credit Facility, and could require us to repay amounts borrowed under our Credit Facility earlier than we otherwise would have been required to pay.
Covenants in our Credit Facility also require us to maintain a combination of cash, cash equivalents and availability for future borrowings under our Revolving Credit Facility totaling at least $50.0 million. As of December 31, 2021, we had $59.7 million of cash and cash equivalents, and $236.6 million was available for future borrowings under our Revolving Credit Facility. Further, our Credit Facility also restricts how we may use our sources of liquidity. Until the first day of the Commencement Quarter (as defined herein), we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met.
The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base. Availability has been, and may continue to be, adversely affected by the decreases in net operating income at the properties comprising the borrowing base from the effects of the COVID-19 pandemic and may persist for some time. Our ability to increase the amount of cash we generate from property operations depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties on favorable terms 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 favorable terms and conditions, if at all, particularly if we do not have a source of capital available that will allow us to do so. Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, particularly due to the COVID-19 pandemic, and there can be no assurance we will be successful in achieving this objective. Because shares of common stock are only offered and sold pursuant to our distribution reinvestment plan (“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 we pay distributions in stock instead of cash, so this source of capital is available unless and until we
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are able to resume paying cash distributions on our common stock. There is also no assurance that participation in the DRIP will be maintained at current or higher levels if the DRIP becomes a source of capital in the future.
Other financing arrangements have restrictive covenants relating tocovenants.
The agreements governing our operations and distributions.
Our New Credit Facility and other financing arrangementsborrowings contain provisions that affect or restrict our distributionpolicies regarding dividends and operating policies,other distributions and our operations, require us to satisfy financial coverage ratios, and may restrict our ability to, among other things, incur additional indebtedness, make certain investments, replace our Advisor, discontinue insurance coverage, merge with another company, and create, incur or assume liens. These or other limitations may adversely affect our flexibility and our ability to achieve our investment and operating objectives. See "—Risks Related to Our Properties and Operations — Provisions
Changes in our New Credit Facility currently restrict us from increasing the rate we pay distributions to our stockholders, and there can be no assurance that we will be able to continue paying distributions at the current rate, or at all."
The debt markets may be volatile.
Volatility or disruption in debt markets could resulthave a material adverse impact on our earnings and financial condition.
The commercial real estate debt markets are subject to volatility, resulting in, from time to time, the tightening of underwriting standards by lenders increasing the cost for debt financing or limitingand credit rating agencies and reductions in the availability of debt financing. For example, recent credit and capital market conditions have been characterized by volatility and a tightening of credit standards. This may impact our ability to access capital on favorable terms, in a timely manner, or at all, which could make obtaining funding for our capital needs more challenging or expensive. We may also face a heightened level of interest rate risk as the U.S. Federal Reserve Board begins to taper its quantitative easing program and begins to raise interest rates. All of these actions will likely lead to increases in borrowing costs.
If theour overall cost of borrowings increase,increases, either bydue to increases in the index rates or bydue to increases in lender spreads, we will need to factor such increases into the economics ofpricing and projected returns for any future acquisitions. This may result in future acquisitions generating lower overall economic returns. IfVolatility in the debt markets, experience volatility or disruptions,may negatively impact our ability to borrow monies to finance the purchase of, or other activities related to, our real estate assets willmay be negatively impacted.
If we are unable to borrow monies on terms and conditions that we find acceptable, we likely will haveour ability to reduce the number ofpurchase properties we can purchase,and meet other capital requirements may be limited, and the return on the properties we do purchase may be lower. In addition, we may find it difficult, costly or impossible to refinance indebtedness which is maturing.maturing indebtedness.
In addition,Furthermore, the state of the debt markets could have an impact on the overall amount of capital available to investbeing invested in real estate, which may result in price or value decreases of real estate assets. Thisassets and could negatively impact the value of our assets after the time we acquire them.assets.
Increases in mortgageinterest rates may make it difficult for us to finance or refinance indebtedness secured by our properties.
We have incurred,borrowed, and may continue to incur, mortgage debt. We run the risk of being unableborrow monies, secured and unsecured by our properties. Increases in interest rates may adversely impact our ability to refinance our mortgageindebtedness, including the indebtedness secured by our properties, as the loans when they come due or we otherwise desire to do so on favorable terms, or at all. If interest rates are higher when the indebtedness is refinanced, we may not be able to refinance indebtedness secured by the properties and we may be required to obtain equity financing to repay the mortgageloan or to increase the property as securitycollateral for the loan may be subject to foreclosure.loan.
Increases inIncreasing interest rates could increase the amount of our debt payments and adversely affect our ability to pay distributions to our stockholders and we may be adversely affected by uncertainty surrounding the LIBOR.
We have incurred, and may continue to incur, variable-rate debt. Increases in interest rates on our variable-rate debt would increase our interest costs, which could reduce our cash flowscost.
We have mortgages, credit facilities and our ability to pay distributions to our stockholders. If we refinance long-term debt at increased interest rates it may reducederivative agreements that have terms that are based on the cashLondon Interbank Offered Rate (“LIBOR”). As of December 31, 2021, we have available to pay distributions to our stockholders. In addition, if we need to repay existing debt during periodsnine designated interest rate swaps with a notional amount of rising interest rates, we could be required to liquidate one or more of our investments in properties at times that may not permit realization of the maximum return on such investments.
Some or all$578.5 million, which effectively fixes a portion of our variable-rate indebtedness may use the London Inter-Bank Offered Rate (“LIBOR”) or similar rates as a benchmark for establishing the applicable interest rate. LIBOR rates increased in 2018 and may continue to increase in future periods. If we need to repay existing debt during periods of rising interest rates, we may need to sell one or more of our investments in properties even though we would not otherwise choose to do so.
Moreover, indebt. In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. TheAs a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC") has proposed thatwhich identified the Secured Overnight Financing Rate ("SOFR"(“SOFR”) is the rate that represents best practice as theits preferred alternative to USD-LIBOR for useLIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings effective December 31, 2021. The remaining USD LIBOR settings, including the USD LIBOR rates currently relevant to us, will continue to be published through June 30, 2023. We are monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. In some instances, transitioning to an alternative rate may require negotiation with lenders and other counterparties and could present challenges. Certain of our agreements that have terms that are currently indexed to USD-LIBOR. ARRC has proposedbased on LIBOR have alternative rates already contained in the agreements while others do not. We anticipate that we will either utilize the alternative rates contained in the agreements or negotiate a paced market transition plan to SOFR from USD-LIBORreplacement reference rate for LIBOR with the lenders and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR.derivative counterparties. The consequenceconsequences of these developments cannot be entirely predicted butand could include an increase in the cost of our variable rate debt. The consequences of these developments cannot be entirely predicted and could include an increase in the cost of our variable rate indebtedness.

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Any hedging strategies we utilize may not be successful in mitigating our risks.
We have and may continue to enter into hedging transactions to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or own real estate assets. To the extent that we use derivative financial instruments, in connection with these risks, we will be exposed to credit, basis and legal enforceability risks. Derivative financial instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract.

Risks Related to Conflicts of Interest

Our Advisor faces conflicts of interest relating to the purchase and leasing of properties and these conflicts may not be resolved in our favor, which could adversely affect our investment opportunities.
We rely on our Advisor and its executive officers and other key real estate professionals at our Advisor and our Property Manager to identify suitable investment opportunities for us. Several of these individuals are also executive officers or key real estate professionals at AR Global and other entities advised by affiliates of AR Global. Many investment opportunities that are suitable for us may also be suitable for other entities advised by affiliates of AR Global. We do not have any agreements with any of these entities that govern the allocation of investment opportunities. Thus, the executive officers and real estate professionals at our Advisor could direct attractive investment opportunities to other entities advised by affiliates of AR Global.
We and other entities advised by affiliates of AR Global also rely on these executive officers and other key real estate professionals to supervise the property management and leasing of properties. These individuals, as well as AR Global, as an entity are not prohibited from engaging, directly or indirectly, in any business or from possessing interests in other businesses and ventures, including businesses and ventures involved in the acquisition, development, ownership, leasing or sale of real estate investments.
In addition, we may acquire properties in geographic areas where other entities advised by affiliates of AR Global own properties, and if we may acquire properties from, or sell properties to, other entities advised by affiliates of AR Global. If one of the other entities advised by affiliates of AR Global attracts a tenant that we are competing for, we could suffer a loss of revenue due to delays in locating another suitable tenant.
Our Advisor faces conflicts of interest relating to joint ventures, which could result in a disproportionate benefit to the other venture partners at our expense.
We may enter into joint ventures with other entities advised by affiliates of AR Global for the acquisition, development or improvement of properties. Our Advisor may have conflicts of interest in determining which entities advised by affiliates of AR Global should enter into any particular joint venture agreement. The co-venturer may have economic or business interests or goals that are or may become inconsistent with our business interests or goals. In addition, our Advisor may face a conflict in structuring the terms of the relationship between our interests and the interest of the affiliated co-venturer and in managing the joint venture. Due to the role of our Advisor and its affiliates, agreements and transactions between the co-venturers with respect to any joint venture will not have the benefit of arm’s-length negotiation of the type normally conducted between unrelated co-venturers, which may result in the co‑venturer receiving benefits greater than the benefits that we receive. In addition, we may assume liabilities related to the joint venture that exceeds the percentage of our investment in the joint venture.
Our Advisor, AR Global and their officers and employees and certain of our executive officers and other key personnel face competing demands relating to their time, and this may cause our operating results to suffer.
Our Advisor, AR Global and their officers and employees and certain of our executive officers and other key personnel and their respective affiliates are key personnel, general partners, sponsors, managers, owners and advisors of other real estate investment programs, including entities advised by affiliates of AR Global, some of which have investment objectives and legal and financial obligations similar to ours and may have other business interests as well. Because these entities and individuals have competing demands on their time and resources, they may have conflicts of interest in allocating their time between our business and these other activities.
All of our executive officers, some of our directors and the key real estate and other professionals assembled by our Advisor and our Property Manager face conflicts of interest related to their positions or interests in entities related to AR Global, which could hinder our ability to implement our business strategy.
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All of our executive officers, and the key real estate and other professionals assembled by our Advisor and Property Manager are also executive officers, directors, managers, key professionals or holders of a direct or indirect interests in our Advisor, our Property Manager or other AR Global-affiliated entities. Through AR Global’s affiliates, some of these persons work on behalf of entities advised by affiliates of AR Global. In addition, all of our executive officers and some of our directors serve in similar capacities for other entities advised by affiliates of our Advisor. As a result, they have duties to each of these entities, which duties could conflict with the duties they owe to us and could result in action or inaction detrimental to our business. Conflicts with our business and interests are most likely to arise from (a) allocation of investments and management time and services between us and the other entities; (b) compensation to our Advisor or Property Manager; (c) our purchase of properties from, or sale of properties to, entities advised by affiliates of our Advisor; and (d) investments with entities advised by affiliates of our Advisor. Conflicts of interest may hinder our ability to implement our business strategy, and, if we do not successfully implement our business strategy.
Our Advisor faces conflicts of interest relating to the structure of the compensation it may receive.
Under our advisory agreement, the Advisor is entitled to substantial minimum compensation regardless of performance as well as incentive compensation. The variable base management fee payable to the Advisor under the advisory agreement increases proportionately with the cumulative net proceeds of any equity (including convertible equity and certain convertible debt but excluding proceeds from the DRIP) raised by us. In addition, the limited partnership agreement of our OP requires it to pay a subordinated incentive listing distribution to the “Special Limited Partner,” an affiliate of our Advisor, in connection with a listing or other liquidity event, such as the sale of all or substantially all of our assets, or if we terminate the advisory agreement, even for “cause.” The Special Limited Partner is also entitled to participate in the distribution of net sales proceeds. These arrangements may result in the Advisor taking actions or recommending investments that are riskier or more speculative absent these compensation arrangements. In addition, these fees and other compensation payable to the Advisor reduce the cash available for investment or other corporate purposes.

Risks Related to our Corporate Structure

Our common stock is not traded on a national securities exchange, and our SRP, which provides for repurchases only in the event of death or disability of a stockholder, is suspended. Stockholders may have to hold their shares for an indefinite period of time.
Our common stock is not listed on a national securities exchange and there is otherwise no active trading market for the shares and our SRP is suspended. Even if not suspended, our SRP includes numerous restrictions that limit a stockholder’s ability to sell shares of common stock to us, including limiting repurchases only to stockholders that have died or become disabled, limiting the total value of repurchases pursuant to our SRP to the amount of proceeds received from issuances of common stock pursuant to the DRIP and limiting repurchases in any fiscal semester to 2.5% of the average number of shares outstanding during the previous fiscal year. These limits are subject to the authority of the board to identify another source of funds for repurchases under the SRP. The board may also reject any request for repurchase of shares at its discretion or amend, suspend or terminate our SRP upon notice in its discretion. Shares that are repurchased will be repurchased at a price equal to the applicable Estimated Per-Share NAV and may be at a substantial discount to the price the stockholder paid for the shares. We are also restricted from making any share repurchases until the Commencement Quarter and, after that, to the extent they would be aggregated with dividends and other distributions to our stockholders under the covenant in our Credit Facility, all of which may further limit the amount that may be repurchased.
The Estimated Per-Share NAV of our common stock is based upon subjective judgments, assumptions and opinions about future events, and may not reflect the amount that our stockholders might receive for their shares.
We intend to publish an updated Estimated Per-Share NAV as of December 31, 2021 shortly after filing this Annual Report on Form 10-K. Our Advisor has engaged an independent valuer to perform appraisals of our real estate assets in accordance with valuation guidelines established by the board. As with any methodology used to estimate value, the valuation methodologies that will be used by any independent valuer to value our properties involve subjective judgments concerning factors such as comparable sales, rental and operating expense data, capitalization or discount rate, and projections of future rent and expenses.
Under our valuation guidelines, our independent valuer estimates the market value of our principal real estate and real estate-related assets, and our Advisor makes a recommendation as to the net value of our real estate and real estate-related assets and liabilities taking into consideration such estimate provided by the independent valuer. Our Advisor reviews the valuation provided by the independent valuer for consistency with our valuation guidelines and the reasonableness of the independent valuer’s conclusions. The independent directors of the board oversee and review the appraisals and valuations and make a final determination of the Estimated Per-Share NAV. The independent directors of the board rely on our Advisor’s input, including its view of the estimate and the appraisals performed by the independent valuer, but the independent directors of the board may, in their discretion, consider other factors. Although the valuations of our real estate assets by the independent valuer are reviewed by our Advisor and approved by the independent directors of the board, neither our Advisor nor the
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independent directors of the board will independently verify the appraised value of our properties and valuations do not necessarily represent the price at which we would be able to sell any asset. As a result, the appraised value of a particular property may be greater or less than its potential realizable value, which would cause our Estimated per-share NAV to be greater or less than the potential realizable value of our assets.
The price at which shares of our common stock may be sold under the DRIP and the price at which shares of our common stock may be repurchased by us pursuant to the SRP are based on Estimated Per-Share NAV and may not reflect the price that our stockholders would receive for their shares in a market transaction, the proceeds that would be received upon our liquidation or the price that a third-party would pay to acquire us.
Because Estimated Per-Share NAV is only determined annually, it may differ significantly from our actual per‑share net asset value at any given time.
Our board estimates the per-share net asset value of our common stock only on an annual basis. In connection with any valuation, the board estimate of the value of our real estate and real estate-related assets will be partly based on appraisals of our properties. Because the process of making this estimate is conducted annually, this process may not account for material events that occur after the estimate has been completed for that year. Material events could include the appraised value of our properties substantially changing actual property operating results differing from what we originally budgeted or dividends and other distributions to stockholders exceeding cash flow generated by us. Any such material event could cause a change in the Estimated Per-Share NAV that would not be reflected until the next valuation. Also, cash dividends and other distributions in excess of our cash flows provided by operations could decrease our Estimated Per-Share NAV. The Estimated Per-Share NAV reflected Stock Dividends actually issued as of December 31, 2020, but has not been adjusted to reflect or consider any of the other stock dividends that were issued and will not be adjusted for stock dividends paid or that may be issued in the future until the Board determines a new Estimated Per-Share NAV which is expected in early April 2022. Dividends paid in the form of additional shares of common stock will, all things equal, cause the value of each share of common stock to decline because the number of shares outstanding increases when dividends paid in stock are issued reducing the Estimated Per-Share NAV. The Estimated Per-Share NAV may not reflect the value of shares of our common stock at any given time, and our estimated per-share NAV may differ significantly from our actual per-share net asset value at any given time.
The trading price of our Series A Preferred Stock and Series B Preferred Stock may fluctuate significantly.
The trading price of our Series A Preferred Stock and Series B Preferred Stock may be volatile and subject to significant price and volume fluctuations in response to market and other factors, and is impacted by a number of factors, many of which are outside our control. Among the factors that could affect the trading price are:
our financial condition, including the level of our indebtedness, and performance;
our ability to grow through property acquisitions, the terms and pace of any acquisitions we may make and the availability and terms of financing for those acquisitions;
the financial condition of our tenants, including tenant bankruptcies or defaults;
actual or anticipated quarterly fluctuations in our operating results and financial condition;
the amount and frequency of our payment of dividends and other distributions;
additional sales of equity securities, including Series A Preferred Stock, Series B Preferred Stock, common stock or any other equity interests, or the perception that additional sales may occur;
the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, and fixed income debt securities;
our reputation and the reputation of AR Global and its affiliates or other entities advised by AR Global and its affiliates;
uncertainty and volatility in the equity and credit markets;
increases in interest rates;
inflation and continuing increases in the real or perceived inflation rate;
changes in revenue or earnings estimates, if any, or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
failure to meet analyst revenue or earnings estimates;
strategic actions by us or our competitors, such as acquisitions or restructurings;
the extent of investment in our Series A Preferred Stock and Series B Preferred Stock by institutional investors;
the extent of short-selling of our Series A Preferred Stock and Series B Preferred Stock;
general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies;
failure to maintain our REIT status;
changes in tax laws;
domestic and international economic factors unrelated to our performance; and
all other risk factors addressed elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2021.
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Moreover, although shares of Series A Preferred Stock and Series B Preferred Stock are listed on The Nasdaq Global Market, there can be no assurance that the trading volume for shares will provide sufficient liquidity for holders to sell their shares at the time of their choosing or that the trading price for shares will equal or exceed the price paid for the shares. Because the shares of Series A Preferred Stock and Series B Preferred Stock carry a fixed dividend rate, the trading price in the secondary market will be influenced by changes in interest rates and will tend to move inversely to changes in interest rates. In particular, an increase in market interest rates may result in higher yields on other financial instruments and may lead purchasers of shares of Series A Preferred Stock and Series B Preferred Stock to demand a higher yield on their purchase price, which could adversely affect the market price of those shares. An increase in interest rates available to investors could also reduce the value of our common stock.
The limit on the number of shares a person may own may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted (prospectively or retroactively) by the board, no person may own more than 9.8% in value of the aggregate of our outstanding shares of our capital stock or more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of shares of our capital stock. This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for holders of our common stock.
The terms of our Series A Preferred Stock, Series B Preferred Stock, and the terms of other preferred stock we may issue, may discourage a third- party from acquiring us in a manner that might result in a premium price to stockholders.
The change of control conversion and redemption features of the Series A Preferred Stock and Series B Preferred Stock may make it more difficult for a party to acquire us or discourage a party from seeking to acquire us. Upon the occurrence of a change of control, holders of Series A Preferred Stock and Series B Preferred Stock will, under certain circumstances, have the right to convert some of or all their shares of Series A Preferred Stock and Series B Preferred Stock into shares of our common stock (or equivalent value of alternative consideration) and under these circumstances we will also have a change of control redemption right to redeem shares of Series A Preferred Stock and Series B Preferred Stock. Upon exercise of this conversion right, the holders will be limited to a maximum number of shares of our common stock pursuant to a predetermined ratio. These features of the Series A Preferred Stock and Series B Preferred Stock may have the effect of discouraging a third-party from seeking to acquire us or of delaying, deferring or preventing a change of control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interests. We may also issue other classes or series of preferred stock that could also have the same effect.
We may issue additional equity securities in the future.
Our stockholders do not have preemptive rights to any shares issued by us in the future. Our charter authorizes us to issue up to 350,000,000 shares of stock, consisting of 300,000,000 shares of common stock, par value $0.01 per share, and 50,000,000 shares of preferred stock, par value $0.01 per share. As of December 31, 2021, we had the following stock issued and outstanding: (i) 99,281,754 shares of common stock; (ii) 3,977,144 shares of Series A Preferred Stock; and (iii) 3,630,000 shares of Series B Preferred Stock. Subject to the approval rights of holders of our Series A Preferred Stock and Series B Preferred Stock regarding authorization or issuance of equity securities ranking senior to the Series A Preferred Stock or Series B Preferred Stock, the board, without approval of our common stockholders, may amend our charter from time to time to increase or decrease the aggregate number of authorized shares of stock, or the number of authorized shares of any class or series of stock or may classify or reclassify any unissued shares into other classes or series of stock without obtaining stockholder approval and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of the stock.
All of our authorized but unissued shares of stock may be issued in the discretion of the board. The issuance of additional shares of our common stock could dilute the interests of the holders of our common stock, and any issuance of shares of preferred stock senior to our common stock, such as our Series A Preferred Stock and Series B Preferred Stock, or any incurrence of additional indebtedness, could affect our ability to pay distributions on our common stock. The issuance of additional shares of preferred stock ranking equal or senior to our Series A Preferred Stock and Series B Preferred Stock, including preferred stock convertible into shares of our common stock, could dilute the interests of the holders of common stock, Series A Preferred Stock, Series B Preferred Stock and any issuance of shares of preferred stock senior to our Series A Preferred Stock, Series B Preferred Stock or incurrence of additional indebtedness could affect our ability to pay dividends on, redeem or pay the liquidation preference on our Series A Preferred Stock and Series B Preferred Stock. These issuances could also adversely affect our Estimated Per-Share NAV or the trading price of our Series A Preferred Stock and Series B Preferred Stock.
We may issue shares in public or private offerings in the future, including shares of our common stock issued as awards to our officers, directors and other eligible persons, pursuant to the advisory agreement in payment of fees thereunder and pursuant to the DRIP. We may also issue OP Units to sellers of properties we acquire which, subject to satisfying certain requirements,
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would give the holder of OP Units the option to redeem OP Units for shares of our common stock or cash at our option. We also may issue securities that are convertible into shares of our common stock.
Because our decision to issue equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. The issuance of additional equity securities could adversely affect stockholders.
We have a classified board, which may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.
The board is divided into three classes of directors. At each annual meeting, directors of one class are elected to serve until the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify. The classification of our directors may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might result in a premium price for our stockholders.
Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.
Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include, but are not limited to, a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:
any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or
an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of, directly or indirectly, 10% or more of the voting power of the then outstanding stock of the corporation.
A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he or she otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of directors.
After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:
80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and
two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. The business combination statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, the board has exempted any business combination involving our Advisor or any affiliate of our Advisor. Consequently, the five-year prohibition and the super-majority vote requirements will not apply to business combinations between us and our Advisor or any affiliate of our Advisor. As a result, our Advisor and any affiliate of our Advisor may be able to enter into business combinations with us that may not be in the best interests of our stockholders, without compliance with the super-majority vote requirements and the other provisions of the statute. The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.
Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, other than actions arising under federal securities laws; (b) any Internal Corporate Claim, as such term is defined in the Maryland General Corporation Law (the “MGCL”), or any successor provision thereof, including, without limitation, (i) any action asserting a claim of breach of any duty owed by any of our directors, officers or other employees to us or to our stockholders or (ii) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL, our charter or our bylaws; or (c) any other action asserting a claim against us or any of our
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directors, officers or other employees that is governed by the internal affairs doctrine. Our bylaws also provide that unless we consent in writing, none of the foregoing actions, claims or proceedings may be brought in any court sitting outside the State of Maryland and the federal district courts are, to the fullest extent permitted by law, the sole and exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable. Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving these matters in other jurisdictions.
Maryland law limits the ability of a third-party to buy a large stake in us and exercise voting power in electing directors, which may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.
The Maryland Control Share Acquisition Act provides that holders of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved by the stockholders by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter, excluding all shares of stock owned by the acquirer, by officers or by employees who are directors of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer can exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within specified ranges of voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A “control share acquisition” means the acquisition of issued and outstanding control shares. The Maryland Control Share Acquisition Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation.
Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions of our stock by any person. There can be no assurance that this provision will not be amended or eliminated at any time in the future.
If our stockholders do not agree with the decisions of the board, our stockholders only have limited control over changes in our policies and operations and may not be able to change our policies and operations.
The board determines our major policies, including our policies regarding investments, financing, growth, debt capitalization, REIT qualification and dividends and other distributions. The board may amend or revise these and other policies without a vote of the stockholders except to the extent that the policies are set forth in our charter. Under MGCL and our charter, our common stockholders have a right to vote only on the following:
the election or removal of directors;
amendment of our charter, except that the board may amend our charter without stockholder approval to (a) increase or decrease the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have the authority to issue, (b) effect certain reverse stock splits, and (c) change our name or the name or other designation or the par value of any class or series of our stock and the aggregate par value of our stock;
our liquidation or dissolution;
certain reorganizations of our company; and
certain mergers, consolidations or sales or other dispositions of all or substantially all our assets
All other matters are subject to the discretion of the board. Holders of our Series A Preferred Stock and Series B Preferred Stock have extremely limited voting rights.
The stockholder rights plan adopted by our board of directors may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.
Our board of directors previously adopted a stockholder rights plan that will expire in May 2023 or sooner under certain circumstances. In connection with the rights plan, in December 2020, we paid a dividend of one common share purchase right for each share of our common stock outstanding as authorized by our board in its discretion. If a person or entity, together with its affiliates and associates, acquires beneficial ownership of 2.0% or more of our then outstanding common stock, subject to certain exceptions, each right would entitle its holder (other than the acquirer, its affiliates and associates) to purchase additional shares of our common stock at a substantial discount to the then current per share estimated net asset value. In addition, under certain circumstances, we may exchange the rights (other than rights beneficially owned by the acquirer, its affiliates and associates), in whole or in part, for shares of common stock on a one-for-one basis. The stockholder rights plan could make it more difficult for a third-party to acquire the Company or a large block of our common stock without the approval of our board or directors, which may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.
We depend on our OP and its subsidiaries for cash flow and are structurally subordinated in right of payment to the obligations of our OP and its subsidiaries.
We conduct, and intend to continue conducting, all of our business operations through our OP, and, accordingly, we rely on distributions from our OP and its subsidiaries to provide cash to pay our obligations. There is no assurance that our OP or its
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subsidiaries will be able to, or be permitted to, pay distributions to us that will enable us to pay dividends and other distributions to our stockholders and meet our other obligations. Each of our OP’s subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from these entities. In addition, any claims we may have will be structurally subordinated to all existing and future liabilities and obligations of our OP and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our OP and its subsidiaries will be available to satisfy the claims of our creditors or to pay dividends and other distributions to our stockholders only after all the liabilities and obligations of our OP and its subsidiaries have been paid in full.
We indemnify our officers, directors, our Advisor and its affiliates against claims or liability they may become subject to due to their service to us, and our rights and the rights of our stockholders to recover claims against our officers, directors, our Advisor and its affiliates are limited.
Maryland law provides that a director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the corporation’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, subject to certain limitations set forth therein or under Maryland law, our charter provides that no director or officer will be liable to us or our stockholders for monetary damages and permits us to indemnify our directors and officersfrom liability and advance certain expenses to them in connection with claims or liability they may become subject to due to their service to us, and we are not restricted from indemnifying our Advisor or its affiliates on a similar basis. We have entered into indemnification agreements consistent with Maryland law and our charter with our directors and officers, certain former directors and officers, our Advisor and AR Global. We and our stockholders may have more limited rights against our directors, officers, employees and agents, and our Advisor and its affiliates, than might otherwise exist under common law, which could reduce the recovery of our stockholders and our recovery against them. In addition, we may be obligated to fund the defense costs incurred by our directors, officers, employees and agents or our Advisor and its affiliates in some cases. Subject to conditions and exceptions, we also indemnify our Advisor and its affiliates from losses arising in the performance of their duties under the advisory agreement and have agreed to advance certain expenses to them in connection with claims or liability they may become subject to due to their service to us.
U.S. Federal Income Tax Risks

Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and potentially state and local tax, and would adversely affect our operations and the market price of our common stock.tax.
We elected to be taxed as a REIT, commencing with our taxable year ended December 31, 2013 and intend to operate in a manner that would allow us to continue to qualify as a REIT.REIT for U.S. federal income tax purposes. However, we may terminate our REIT qualification inadvertently, or if the Board determines that not qualifying as a REITdoing so is in our best interests, or inadvertently.interests. Our qualification as a REIT depends upon our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. TheWe have structured and intend to continue structuring our activities in a manner designed to satisfy all the requirements to qualify as a REIT. However, the REIT qualification requirements are extremely complex and interpretation of the U.S. federal income tax laws governing qualification as a REIT is limited. Furthermore, any opinion of our counsel, including tax counsel, as to our eligibility to qualify or remain qualified as a REIT is not binding on the IRSInternal Revenue Service (the “IRS”) and is not a guarantee that we will qualify, or continue to qualify, as a REIT. Accordingly, we cannot be certain that we will be successful in operating so we can qualify or remain qualified as a REIT. Our ability to satisfy the asset tests depends on our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income or quarterly asset requirements also requires usdepends on our ability to successfully manage the composition of our income and assets on an ongoing basis. Accordingly, if certain of our operations were to be recharacterized by the IRS, such recharacterization would jeopardize our ability to satisfy all requirements for qualification as a REIT. Furthermore, future legislative, judicial or administrative changes to the U.S. federal income tax laws could be applied retroactively, which could result in our disqualification as a REIT.
If we fail to continue to qualify as a REIT for any taxable year, and we do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax on our taxable income at the corporate rate. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT qualification. Losing our REIT qualification would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributionsamounts paid to stockholders that are treated as dividends for U.S. federal income tax purposes would no longer qualify for the dividends paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.
Even if we qualify as a REIT, in certain circumstances, we may incur tax liabilities that would reduce our cash available for distribution to our stockholders.
Even if we qualify and maintain our status as a REIT, we may be subject to U.S. federal, state and local income taxes. For example, net income from the sale of properties that are "dealer"“dealer” properties sold by a REIT and that do not meet a safe harbor available under the Code (a "prohibited transaction"“prohibited transaction” under the Code) will be subject to a 100% tax. We may not make sufficient distributions to avoid excise taxes
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applicable to REITs. Similarly, if we were to fail an income test (and did not lose our REIT status because such failure was due to reasonable cause and not willful neglect) we would be subject to tax on the income that does not meet the income test requirements. We also may decide to retain net capital gaingains we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also will be subject to corporate tax on any undistributed REIT taxable income. We also may be subject to state and local taxes on our income or property, including franchise, payroll and transfer taxes, either directly or at the level of ourthe OP or at the level of the other companies through which we indirectly own our assets, such as any TRSs, which are subject to full U.S. federal, state, local and foreign corporate-level income taxes.tax. Any taxes we pay directly or indirectly will reduce our cash available for distribution to our stockholders.

flow.
To continue to qualify as a REIT, we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives and reduce anour stockholders’ overall return.
In order to continue to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. We will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we paymake with respect to any calendar year are less than the sum of (a) 85% of our ordinary income, (b) 95% of our capital gain net income and (c) 100% of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on investments in real estate assets and it is possible that we might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these distributions. It is possible thatAlthough we might not always be ableintend to make distributions sufficient to meet the annual distribution requirements and to avoid U.S. federal income and excise taxes on our earnings while we qualify as a REIT.REIT, it is possible that we might not always be able to do so.
Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.
We will use commercially reasonable efforts to structure any sale-leaseback transaction we enter into so that the lease will be characterized as a “true lease” for U.S. federal income tax purposes, thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, the IRS may challenge this characterization. In the event that any sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to the property would be disallowed. If a sale-leaseback transaction were so recharacterized, we might fail to continue to satisfy the REIT qualification “asset tests” or “income tests” and, consequently, lose our REIT status effective with the year of recharacterization. Alternatively, the amount of our REIT taxable income could be recalculated which might also cause us to fail to meet the distribution requirement for a taxable year.
Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on an investment in our shares.tax.
For so long as we qualify as a REIT, our ability to dispose of property during the first few years following acquisition may be restricted to a substantial extent as a result of our REIT qualification. Under applicable provisions of the Code regarding prohibited transactions by REITs, while we qualify as a REIT and provided we do not meet a safe harbor available under the Code, we will be subject to a 100% penalty tax on the net income recognized onfrom the sale or other disposition of any property (other than foreclosure property) that we own, directly or indirectly through any subsidiary entity, including ourthe OP, but generally excluding TRSs, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of a trade or business. Whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property. We intend to avoid the 100% prohibited transaction tax by (a) conducting activities that may otherwise be considered prohibited transactions through a TRS (but such TRS wouldwill incur corporate rate income taxes with respect to any income or gain recognized by it), (b) conducting our operations in such a manner so that no sale or other disposition of an asset we own, directly or indirectly through any subsidiary, will be treated as a prohibited transaction, or (c) structuring certain dispositions of our properties to comply with the requirements of the prohibited transaction safe harbor available under the Code for properties that, among other requirements, have been held for at least two years. Despite our present intention, no assurance can be given that any particular property we own, directly or through any subsidiary entity, including ourthe OP, but generally excluding TRSs, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business.
Our TRSs are subject to corporate-level taxes and our dealings with our TRSs may be subject to a 100% excise tax.
A REIT may own up to 100% of the stock of one or more TRSs. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 20% (25% for our taxable years beginning prior to January 1, 2018) of the gross value of a REIT'sREIT’s assets may consist of stock or securities of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross income from operations pursuant to management contracts. We may lease some of our seniors housing properties that are "qualified
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qualified health care properties"properties to one or more TRSs which, in turn, contract with independent third-party management companies to operate such "qualifiedthose “qualified health care properties"properties” on behalf of suchthose TRSs. WeIn addition, we may use one or more TRSs generally for other activities as well, such as to hold properties for sale in the ordinary course of a trade or business or to hold assets or conduct activities that we cannot conduct directly as a REIT. A TRS will beis subject to applicable U.S. federal, state, local and foreign income tax on its taxable income.income, as well as limitations on the deductibility of its interest expenses. In addition, the Code imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's-lengtharm’s-length basis.
If ourthe OP failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT.
If the IRS were to successfully challenge the status of ourthe OP as a partnership or disregarded entity for U.S. federal income tax purposes, itthe OP would be taxable as a corporation. In such event, this would reduce the amount of distributions that ourthe OP could make to us. This also would result in our failing to qualify as a REIT, and becoming subject to a corporate-level tax on our income. This substantially would reduce our cash available to pay dividends and other distributions and the yield onto our stockholders' investment.stockholders. In addition, if any of the partnerships or limited liability companies through which ourthe OP owns its properties, in whole or in part, loses its characterization as a partnership and is otherwise not disregarded for U.S. federal income tax purposes, suchthe partnership or limited liability company would be subject to taxation as a corporation, thereby reducing distributions to the OP. Such a recharacterization of an underlying property owner could also threaten our ability to maintain our REIT qualification.

If our "qualified“qualified health care properties"properties” are not properly leased to a TRS or the managers of such "qualifiedthose “qualified health care properties"properties” do not qualify as "eligible“eligible independent contractors," we could fail to qualify as a REIT.
In general, under the REIT rules, we cannot directly operate any of our seniors housing properties that are "qualified“qualified health care properties"properties” and can only indirectly participate in the operation of "qualifiedqualified health care properties"properties on an after-tax basis through leases of suchby leasing those properties to independent health care facility operators or ourto TRSs. A "qualifiedqualified health care property" includesproperty is any real property, and(and any personal property incident to suchthat real property,property), which is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility,facilities, congregate care facility, qualified continuing care facility, or other licensed facility which extends medical or nursing or ancillary services to patients and which is operated by a provider of suchthose services whichthat is eligible for participation in the Medicare program with respect to suchthat facility. Furthermore, rent paid by a lessee of a qualified health care property that is a "related“related party tenant"tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. However, a TRS that leases "qualifiedqualified health care properties"properties from us will not be treated as a "related“related party tenant"tenant” with respect to our "qualified“qualified health care properties"properties” that are managed by an independent management company, so long as the independent management company qualifies as an "eligible“eligible independent contractor."
Each of the management companies that enters into a management contract with our TRSs must qualify as an "eligibleAn “eligible independent contractor" under the REIT rules in order for the rent paid to us by our TRSs that lease "qualified health care properties" to be qualifying income for purposes of the REIT gross income tests. An "eligible independent contractor"contractor” is an independent contractor that, at the time such contractor enters into a management or other agreement with a TRS to operate a "qualified“qualified health care property," is actively engaged in the trade or business of operating "qualified“qualified health care properties"properties” for any person not related as defined in the Code, to us or the TRS. Among other requirements in order to qualify as an independent contractor, a manager must not own, directly or applying attribution provisions of the Code, more than 35% of the shares of our outstanding shares of stock (by value), and no person or group of persons can own more than 35% of the shares of our outstanding sharesstock and 35% of the ownership interests of the manager (taking into account only owners of more than 5% of our shares and, with respect to ownership interest in such managers that are publicly traded, only holders of more than 5% of such ownership interests). The ownership attribution rules that apply for purposes of the 35% thresholds are complex. There can be no assurance that the levels of ownership of our stockshares by our managers and their owners will not be exceeded.
If our leases to ourwith TRSs are not respected as true leases for U.S. federal income tax purposes, we likely would fail to qualify as a REIT.
To qualify as a REIT, we must satisfy two gross income tests, under which specified percentages of our gross income must be derived from certain sources, such as “rents from real property.” RentsRent paid by TRSs to ourthe OP by our TRSs pursuant to the lease of our ��qualified“qualified healthcare properties” will constitute a substantial portion of our gross income. In order for suchFor that rent to qualify as “rents from real property” for purposes of the REIT gross income tests, the leases must be respected as true leases for U.S. federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. If our leases are not respected as true leases for U.S. federal income tax purposes, we may fail to qualify as a REIT.
We may choose to make distributions in shares of our owncommon stock, in which case our stockholders may be required to pay U.S. federal income taxes in excess of the cash portion of distributions stockholdersthey receive.
In connection with our qualification as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order to satisfy this requirement, we may make distributions with respect to our common stock that are payable in cash and/or shares of our common stock (which could account for up to 80% of the aggregate amount of such distributions) at the election of each stockholder. Taxable stockholders receiving such distributions will be required to include the full amount of such distributions as ordinary dividend income to the extent of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, U.S.
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stockholders may be required to pay U.S. federal income taxes with respect to such distributions in excess of the cash portion of the distribution received.
Accordingly, U.S. stockholders receiving a distribution of shares of our sharescommon stock may be required to sell shares received in such distribution or may be required to sell other stock or assets owned by them, at a time that may be disadvantageous, in order to satisfy any tax imposed on such distribution. If a U.S. stockholder sells the stock thatshares it receives as part of the distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market pricevalue of our stockthe shares at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such distribution, including in respect of all or a portion of such distribution that is payable in stock, by withholding or disposing of part of the shares included in such distribution and using the proceeds of such disposition to satisfy the withholding tax imposed. In addition,Because there is no established trading market for shares of our shares, thuscommon stock, stockholders may not be able to sell shares of our common stock in order to pay taxes owed on dividend income.

The taxation of distributions to our stockholders can be complex; however, distributions to stockholders that we make to our stockholdersare treated as dividends for U.S. federal income tax purposes generally will be taxable as ordinary income, which may reduce our stockholdersstockholders’ after-tax anticipated return from an investment in us.
DistributionsAmounts that we makepay to our taxable stockholders out of current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be treated as dividends for U.S. federal income tax purposes and will be taxable as ordinary income. For tax years beginning after December 31, 2017, noncorporateNoncorporate stockholders are entitled to a 20% deduction with respect to these ordinary REIT dividends which would, if allowed in full, result in a maximum effective federal income tax rate on themthese ordinary REIT dividends of 29.6% (or 33.4% including the 3.8% surtax on net investment income); although,however, the 20% deduction is scheduled to sunsetwill end after December 31, 2025.
However, a portion of the amounts that we pay to our distributionsstockholders generally may (1)(a) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that the extent the distributionsthey are attributable to net capital gain recognized by us, (2)(b) be designated by us as qualified dividend income, taxable at capital gains rates, generally to the extent they are attributable to dividends we receive from our TRSs, or (3)(c) constitute a return of capital generally to the extent that they exceed our accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital is not taxable, but has the effect of reducing the tax basis of a stockholder'sstockholder’s investment in shares of our common stock. DistributionsAmounts paid to our stockholders that exceed our current and accumulated earnings and profits and a stockholder’s tax basis in shares of our common stock generally will be taxable as capital gain.
Our stockholders may have tax liability on distributions that they elect to reinvest in shares of our common stock, but they would not receive the cash from such distributions to pay such tax liability.
Stockholders who participate in the DRIP will be deemed to have received, and for U.S. federal income tax purposes will be taxed on, the amountdistributions reinvested in shares of our common stock to the extent the amount reinvested wasdistributions were not a tax-free return of capital. In addition, our stockholders arewill be treated for tax purposes as having received an additional distribution to the extent the shares are purchased at a discount to fair market value. As a result, unless a stockholder is a tax-exempt entity, it may have to use funds from other sources to pay its tax liability on the value of thedistributions reinvested in shares of our common stock received.pursuant to the DRIP.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
TheCurrently, the maximum tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates is 20%.23.8%, including the 3.8% surtax on net investment income. Dividends payable by REITs, however, generally are not eligible for this reduced rate.rate and, as described above, through December 31, 2025, will be subject to an effective rate of 33.4%, including the 3.8% surtax on net investment income. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocksstock of non-REIT corporations that pay dividends, which could adversely affect the value of the sharesstock of REITs, including shares of our common stock. Tax rates could be changed in future legislation.
Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code may limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets, or in certain cases to hedge previously acquired hedges entered into to manage risks associated with property that has been disposed of or liabilities that have been extinguished, if properly identified under applicable Treasury Regulations, does not constitute "gross income"“gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRSsthe TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest
45

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rates than we would otherwise want to bear. In addition, losses in a TRS generally will not provide any tax benefit, except for being carried forward against future taxable income of suchthe TRS.
Complying with REIT requirements may force us to forgo or liquidate otherwise attractive investment opportunities.
To qualifymaintain our qualification as a REIT, we must ensure that we meet the REIT gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and certain kinds of mortgage-related securities. The remainder of our investment in securities (other than securities that qualify for the 75% asset test and securities of qualified REIT subsidiaries and TRSs) generally cannot exceed 10% of the outstanding voting securities of any one issuer, 10% of the total value of the outstanding securities of any one issuer, or 5% of the value of our assets as to any one issuer. In addition, no more than 20% of the value of our total assets may consist of stock or securities of one or more TRSs and no more than 25% of our assets may be represented byconsist of publicly offered REIT debt instruments that do not otherwise qualify under the 75% asset test. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate assets from our portfolio or not make otherwise attractive investments in order to maintain our qualification as a REIT.

The ability of the Board to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to our stockholders.
Our charter provides that the Board may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interestinterests to continue to qualify as a REIT. While we intend to maintain our qualification as a REIT, we may terminate our REIT election if we determine that qualifying as a REIT is no longer in our best interests. If we cease to be a REIT, we would become subject to corporate-level U.S. federal income tax on our taxable income (as well as any applicable state and local corporate tax) and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the return earned on an investment invalue of our shares.stock.
We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability.
In recent years, numerous legislative, judicialliability, reduce our operating flexibility, and administrative changes have been made inreduce the provisionsvalue of U.S. federal income tax laws applicable to investments similar to an investment in shares of our common stock. Additional changes
Changes to the tax laws are likely to continue tomay occur, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in shares of our sharesstock or on the market value or the resale potential of our assets. Our stockholders are urged to consult with theiran independent tax advisorsadvisor with respect to the impact of recent legislation on their investment in our shares and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in shares of our shares.stock.
Although REITs generally receive better tax treatment than entities taxed as regularnon-REIT “C corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a non-REIT “C corporation. As a result, our charter provides the Board with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation,non-REIT “C corporation”, without the vote of our stockholders. The Board has fiduciary duties to us and our stockholders and could only cause such changes in our tax treatment if it determines in good faith that such changes are in theour best interest of us and our stockholders.interests.
The share ownership restrictions of the Code for REITs and the 9.8% share ownership limit in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.
In order to qualify as a REIT, five or fewer individuals, as defined in the Code, may not own, actually or constructively, more than 50% in value of ourthe issued and outstanding shares of our stock at any time during the last half of each taxable year, other than the first year for which a REIT election is made. Attribution rules in the Code determine if any individual or entity actually or constructively owns our shares of our stock under this requirement. Additionally, at least 100 persons must beneficially own our shares of our stock during at least 335 days of a taxable year for each taxable year, other than the first year for which a REIT election is made. To help ensure that we meet these tests, among other purposes, our charter restricts the acquisition and ownership of our shares of our stock.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT while we so qualify. Unless exempted by the Board, for so long as we qualify as a REIT, our charter prohibits, among other limitations on ownership and transfer of shares of our stock, any person from beneficially or constructively owning (applying certain attribution rules under the Code) more than 9.8% in value of the aggregate of our outstanding shares of our stock and more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of ourthe outstanding shares of our stock. The Board may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of the 9.8% ownership limit would result in the termination of our qualification as a REIT. These restrictions on transferability and ownership will not apply, however, if the Board determines that it is no longer in our best interestinterests to continue to qualify as a REIT or that compliance with the restrictions is no longer required in order for us to continue to so qualify as a REIT.
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These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for shares of our common stock or otherwise be in the best interestinterests of the stockholders.
Non-U.S. stockholders will be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on dividends and other distributions received from us and upon the disposition of shares of our shares.stock.
Subject to certain exceptions, distributions received from usamounts paid to non-U.S. stockholders will be treated as dividends of ordinaryfor U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits. Such dividends ordinarily will be subject to U.S. withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, unless the distributionsdividends are treated as "effectively connected"“effectively connected” with the conduct by the non-U.S. stockholder of a U.S. trade or business. Pursuant to the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), capitalCapital gain distributions attributable to sales or exchanges of "U.S.“U.S. real property interests" ("USRPIs"interests” (“USRPIs”), generally will be taxed to a non-U.S. stockholder (other than a qualified“qualified foreign pension plan,fund”, certain entities wholly owned by a qualified“qualified foreign pension planfund” and certain foreign publicly tradedpublicly-traded entities) as if such gain were effectively connected with a U.S. trade or business.

However, a capital gain distribution will not be treated as effectively connected income if (a) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the U.S. and (b) the non-U.S. stockholder does not own more than 10% of any class of our stock at any time during the one-year period ending on the date the distribution is received.
Gain recognized by a non-U.S. stockholder upon the sale or exchange of shares of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA. Our common. Shares of our stock will not constitute a USRPI so long as we are a "domestically-controlled“domestically-controlled qualified investment entity." A domestically-controlled qualified investment entity includes a REIT if at all times during a specified testing period, less than 50% in value of such REIT'sREIT’s stock is held directly or indirectly by non-U.S. stockholders. There isWe believe, but there can be no assurance, that we will be a domestically-controlled qualified investment entity.
Even if we do not qualify as a domestically-controlled qualified investment entity at the time a non-U.S. stockholder sells or exchanges shares of our stock, gain arising from such a sale or exchange would not be subject to U.S. taxation as a sale of a USRPI if: (a) the shares are of a class of our stock that is “regularly traded,” as defined by applicable Treasury regulations, on an established securities market, and (b) such non-U.S. stockholder owned, actually and constructively, 10% or less of the outstanding shares of our stock of that class at any time during the five-year period ending on the date of the sale.
Potential characterization of dividends and other distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.
If (a) we are a "pension-held“pension-held REIT," (b) a tax-exempt stockholder has incurred (or is deemed to have incurred) debt to purchase or hold shares of our common stock, or (c) a holder of commonshares of our stock is a certain type of tax-exempt stockholder, dividends on, and gains recognized on the sale of commonshares of our stock by such tax-exempt stockholder may be subject to U.S. federal income tax as unrelated business taxable income under the Code.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties
The following table presents certain additional information about the properties we owned as of December 31, 2018:2021:
Portfolio 
Number
of Properties
 
Rentable
Square Feet
 
Percent Leased (1)
 
Weighted Average Remaining Lease Term (2)
 
Gross Asset Value (4)
          (In thousands)
Medical Office Buildings 111 3,886,201
 88.4% 4.8 $1,055,873
Triple-Net Leased Healthcare Facilities (3):
          
Seniors Housing — Triple Net Leased 4 102,753
 100.0% 12.0 55,000
Hospitals 6 514,962
 90.7% 7.4 133,540
Post Acute / Skilled Nursing 9 486,316
 100.0% 9.7 139,565
Total Triple-Net Leased Healthcare Facilities 19 1,104,031
 95.7% 8.9 328,105
Seniors Housing — Operating Properties 58 4,152,207
 85.7% N/A 1,100,763
Land 2 N/A
 N/A N/A 3,665
Construction in Progress 1 N/A
 N/A N/A 90,829
Portfolio, December 31, 2018 191 9,142,439
 
   $2,579,235
PortfolioNumber
of Properties
Rentable
Square Feet
Percent Leased (1)
Weighted Average Remaining Lease Term (2)
Gross Asset Value (3)
(In thousands)
Medical Office and Other Healthcare Related Buildings1465,018,036 91.5%4.9$1,424,581 
Seniors Housing — Operating Properties544,133,166 74.1%(4)N/A1,160,878 
Land2— N/AN/A3,665 
Total Portfolio2029,151,202 $2,589,124 
_______________
(1)
Inclusive of leases signed but not yet commenced as of December 31, 2018.
(2)
Weighted-average remaining lease term in years is calculated based on square feet as of December 31, 2018.
(3)
Revenues for our triple-net leased healthcare facilities generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms and do not vary based on the underlying operating performance of the properties.
(4)
Gross Asset Value represents the total real estate investments, at cost, assets held for sale at carrying value, net of gross market lease intangible liabilities.
N/ANot applicable.

(1)Inclusive of leases signed but not yet commenced as of December 31, 2021.

(2)Weighted-average remaining lease term in years is calculated based on square feet as of December 31, 2021.
(3)Gross asset value represents total real estate investments, at cost ($2.6 billion total as of December 31, 2021), net of gross market lease intangible liabilities ($23.5 million total as of December 31, 2021). Impairment charges are already reflected within gross asset value.
(4)Weighted by unit count as of December 31, 2021. As of December 31, 2021, we had 4,494 rentable units in our SHOP segment.
N/A    Not applicable.
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The following table details the geographic distribution, by state, of our portfolio as of December 31, 2018:2021:
StateNumber of Properties
Annualized Rental Income (1)
Annualized Rental Income as a Percentage of the Total PortfolioRentable Square FeetPercentage of Portfolio
Rentable Square Feet
Rentable Units in SHOP Segment
(In thousands)
Alabama1$176 0.1 %5,564 0.1 %
Arizona149,091 2.9 %509,642 5.6 %
Arkansas313,488 4.4 %248,783 2.7 %299
California816,373 5.3 %446,723 4.9 %247
Colorado31,796 0.6 %67,016 0.7 %
Florida2354,662 17.7 %1,099,729 12.0 %812
Georgia1527,411 8.9 %792,191 8.7 %624
Idaho13,331 1.1 %55,846 0.6 %95
Illinois2125,947 8.4 %857,836 9.4 %356
Indiana74,337 1.4 %194,035 2.1 %
Iowa1429,600 9.6 %585,667 6.4 %679
Kansas14,679 1.5 %49,360 0.5 %71
Kentucky23,921 1.3 %92,875 1.0 %114
Louisiana1621 0.2 %17,830 0.2 %
Maryland1938 0.3 %36,260 0.4 %
Massachusetts3846 0.3 %36,563 0.4 %
Michigan1115,344 5.0 %420,298 4.6 %311
Minnesota11,248 0.4 %36,375 0.4 %
Mississippi31,715 0.6 %73,859 0.8 %
Missouri27,872 2.6 %96,016 1.0 %146
Nevada23,264 1.1 %86,342 0.9 %
New York42,633 0.9 %119,602 1.3 %
North Carolina2761 0.2 %68,122 0.7 %
Ohio57,863 2.5 %172,085 1.9 %
Oklahoma21,092 0.4 %47,407 0.5 %
Oregon28,747 2.8 %267,748 2.9 %252
Pennsylvania1729,468 9.6 %1,442,824 15.8 %257
South Carolina21,103 0.4 %52,527 0.6 %
Tennessee33,233 1.0 %177,489 1.9 %
Texas1312,809 4.2 %506,122 5.5 %152
Virginia11,526 0.3 %62,165 0.7 %
Washington12,031 0.7 %52,900 0.6 %
Wisconsin1310,590 3.4 %373,401 4.1 %79
Total202$308,516 100 %9,151,202 100 %4,494
__________
(1)    Annualized rental income on a straight-line basis for the leases in place in the property portfolio as of December 31, 2021, which includes tenant concessions such as free rent, as applicable, as well as annualized gross revenue from our SHOPs for the fourth quarter of 2021.
48

State Number of Buildings 
Annualized Rental Income (1)
 Annualized Rental Income as a Percentage of the Total Portfolio Rentable Square Feet 
Percentage of Portfolio
Rentable Square Feet
    (In thousands)      
Alabama 1 $159
 % 5,564
 0.1%
Arizona 14 14,712
 4.2% 509,069
 5.6%
Arkansas 3 15,493
 4.4% 248,783
 2.7%
California 7 13,261
 3.8% 366,031
 4.0%
Colorado 2 1,669
 0.5% 59,483
 0.7%
Florida 23 57,986
 16.6% 1,205,202
 13.2%
Georgia 15 35,055
 10.1% 821,265
 9.0%
Idaho 1 2,731
 0.8% 55,846
 0.6%
Illinois 17 18,649
 5.3% 641,836
 7.0%
Indiana 5 3,660
 1.0% 163,035
 1.8%
Iowa 14 29,845
 8.6% 585,667
 6.4%
Kansas 1 4,485
 1.3% 49,360
 0.5%
Kentucky 2 2,754
 0.8% 92,875
 1.0%
Louisiana 1 631
 0.2% 17,830
 0.2%
Maryland 1 940
 0.3% 36,260
 0.4%
Michigan 19 45,529
 13.1% 707,689
 7.7%
Minnesota 1 1,096
 0.3% 36,375
 0.4%
Mississippi 3 1,511
 0.4% 73,859
 0.8%
Missouri 3 10,438
 3.0% 124,650
 1.4%
Nevada 2 3,255
 0.9% 86,342
 0.9%
New York 6 5,413
 1.6% 245,861
 2.7%
North Carolina 2 1,313
 0.4% 68,122
 0.7%
Ohio 2 824
 0.2% 49,994
 0.5%
Oregon 3 10,536
 3.0% 288,774
 3.2%
Pennsylvania 11 35,449
 10.2% 1,326,662
 14.5%
South Carolina 2 948
 0.3% 52,527
 0.6%
Tennessee 3 3,657
 1.0% 175,652
 1.9%
Texas 11 12,654
 3.6% 466,105
 5.1%
Virginia 3 5,177
 1.4% 234,090
 2.6%
Washington 1 1,855
 0.5% 52,900
 0.6%
Wisconsin 12 6,927
 2.2% 294,731
 3.2%
Total 191 $348,612
 100.0% 9,142,439
 100.0%
Table of Contents

(1)Annualized rental income on a straight-line basis for the leases in place in the property portfolio as of December 31, 2018, which includes tenant concessions such as free rent, as applicable, as well as gross revenue from our SHOPs.

Future Minimum Lease Payments
The following table presents future minimum base rental cash payments due to us (excluding the SHOP segment) over the next ten years and thereafter as of December 31, 2018.2021. The SHOP segment is excluded as the leases of units with residents are generally for annual periods or month to month. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to performance thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.
(In thousands) Future Minimum
Base Rent Payments
(In thousands)Future Minimum
Base Rent Payments
2019 $96,178
2020 91,848
2021 85,563
2022 77,205
2022$105,694 
2023 65,504
202394,047 
2024 59,793
202485,918 
2025 53,407
202575,192 
2026 49,648
202667,200 
2027 37,335
202749,341 
2028 27,309
202834,897 
2029202928,994 
2030203025,961 
2031203122,174 
Thereafter 57,437
Thereafter59,946 
 $701,227
$649,364 
Future Lease Expirations Table
The following is a summary of lease expirations for the next ten years at the properties we owned (excluding the SHOP segment) as of December 31, 2018:2021:
Year of ExpirationNumber of Leases Expiring
Annualized Rental Income (1)
Annualized Rental Income as a Percentage of the Total PortfolioLeased Rentable Square FeetPercent of Portfolio Rentable Square Feet Expiring
(In thousands)
202282$12,020 11.4%487,343 10.7%
2023688,201 7.8%344,005 7.5%
202410211,968 11.3%544,981 11.9%
2025577,023 6.6%291,457 6.4%
20268218,076 17.1%1,024,609 22.4%
20277313,763 12.9%728,860 16.1%
2028278,382 7.9%324,316 7.1%
2029162,810 2.7%124,687 2.7%
2030183,258 3.1%142,269 3.1%
2031113,437 3.3%124,082 2.7%
Total536$88,938 84.1%4,136,609 90.6%
Year of Expiration Number of Leases Expiring 
Annualized Rental Income(1)
 Annualized Rental Income as a Percentage of the Total Portfolio Leased Rentable Square Feet Percent of Portfolio Rentable Square Feet Expiring
    (In thousands)      
2019 63 $7,711
 5.5% 335,145
 7.5%
2020 79 8,922
 6.4% 412,086
 9.2%
2021 66 9,763
 7.0% 386,551
 8.6%
2022 56 13,101
 9.4% 526,391
 11.7%
2023 49 6,274
 4.5% 264,764
 5.9%
2024 64 8,482
 6.1% 357,624
 8.0%
2025 16 2,260
 1.6% 92,828
 2.1%
2026 11 11,614
 8.3% 718,869
 16.0%
2027 29 9,248
 6.6% 487,421
 10.9%
2028 7 3,520
 2.5% 136,780
 3.0%
Total 440 $80,895
 57.9% 3,718,459
 82.9%
_____________

(1)Annualized rental income on a straight-line basis for the leases in place in the property portfolio as of December 31, 2018, excluding SHOPs, which includes tenant concessions such as free rent, as applicable.
(1)    Annualized rental income on a straight-line basis for the leases in place in the property portfolio as of December 31, 2021, excluding SHOPs, which includes tenant concessions such as free rent, as applicable.
Tenant Concentration
As of December 31, 2018,2021, we 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 more of total annualized rental income on a straight-line basis for our portfolio.
Significant Portfolio Properties
As of December 31, 2018,2021, the rentable square feet or annualized rental income on a straight-line basis of one property represented 5% or more of our total portfolio'sportfolio’s rentable square feet or annualized rental income on a straight-line basis:

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Wellington at Hershey'sHershey’s Mill - West Chester, PA
In December 2014, we purchased Wellington at Hershey'sHershey’s Mill, a seniors housing property located in West Chester, Pennsylvania. Wellington at Hershey'sHershey’s Mill, which is leased to our TRS and operated and managed on our behalf by an independenta third-party manager,operator in our SHOP segment, contains 491,710 rentable square feet and consists of 193 units dedicated to independent living patients and 64 units dedicated to assisted living patients and 36 units for patients requiring skilled nursing services.patients. As of December 31, 2018,2021, this property represented 5.4% of our total rentable square feet and 6.0%4.2% of our total annualized rental income on a straight-line basis.
Property Financings
See Note 4 — Mortgage Notes Payable, Net and Note 5 — Credit Facilities to our consolidated financial statements in this Annual Report on Form 10-K for property financings as of December 31, 20182021 and 2017.2020.


Item 3. Legal Proceedings.
We are not a party to, and none of our properties are subject to, any material pending legal proceedings.
Item 4. Mine Safety Disclosures.
Not applicable.

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PART II
Item 5. Market for Registrant'sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
No established public market currently exists for our shares of common stock. Until our shares are listed on a national exchange, if ever, our stockholders may not sell their shares unless the buyer meets the applicable suitability and minimum purchase requirements.
Our charter prohibits the ownership of more than 9.8% in value of the aggregate of our outstanding shares of stock or more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of shares of our stock by a single investor, unless exempted by the Board. Consequently, there is the risk that our stockholders may not be able to sell their shares at a time or price acceptable to them.
On March 29, 2018 the independent directors of the Board, who comprise a majority of the Board, with Edward M. Weil, Jr. abstaining, unanimously approved31, 2021, we published an Estimated Per-Share NAV of $20.25equal to $14.50 as of December 31, 2017.2020. We intend to publish an Estimated Per-Share NAV as of December 31, 20182021 shortly following theafter filing of this Annual Report on Form 10-K for the year ended December 31, 2018.2021.
Consistent with our valuation guidelines, we engaged Duff & Phelps,Kroll, LLC (“DuffKroll”, formerly, “Duff & Phelps”), an independent third-party real estate advisory firm, to perform appraisals of our real estate assets as of December 31, 2020 and provide a valuation range for each real estate asset. In addition, Duff & PhelpsKroll was engaged to review, and incorporate in its report our market value estimate regarding other assets, liabilities, and liabilitiesthe liquidation value of our outstanding shares of Series A Preferred Stock as of the valuation date.December 31, 2020.
Duff & PhelpsKroll has extensive experience estimating the fair value of commercial real estate. The method used by Duff & PhelpsKroll to appraise our real estate assets in the report furnished to the Advisor and the Board by Duff & PhelpsKroll (the "Duff & Phelps Real Estate Appraisal Report"“Kroll Report”) complies with the Institute of Portfolio Alternatives (formerly known as the Investment Program AssociationAssociation) Practice Guideline 2013-01 titled "Valuations“Valuations of Publicly Registered Non-Listed REITs," issued April 29, 2013. TheAlso, Kroll advised that the scope of work performed by Duff & Phelps was conducted in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. Other than its engagement as described above and its engagementengagements to provide certain purchase price allocation and other real estate valuation services, Duff & PhelpsKroll does not have any direct interests in any transaction with us.
Potential conflicts of interest between Duff & PhelpsKroll, on one hand and us or the Advisor, on the other hand, may arise as a result of (1) the impact of the findings of Duff & PhelpsKroll in relation to our real estate assets, or the assets of real estate investment programs sponsored by affiliates of the Advisor, on the value of ownership interests owned by, or incentive compensation payable to, our directors, officers or affiliates and those of the Advisor, or (2) Duff & PhelpsKroll performing valuation services for other programs sponsored by affiliates of the Advisor, as well as other services for us.
Duff & PhelpsKroll performed a full valuation of our real estate assets utilizing an income capitalization approach consisting of the Direct Capitalization Method or the Discounted Cash Flow Method and certain other approaches, including the acquisition price, disposition price, and sales comparison approach, all, as described further below.approach. These approaches are commonly used in the commercial real estate industry.
The Estimated Per-Share NAV is comprised of (i) the sum of (A) the estimated value of our real estate assets and (B) the estimated value of our other assets, minus (ii) the sum of (C) the estimated value of our debt and other liabilities, and (D) the liquidation value of any outstanding classes of preferred stock, (E) the estimate of the aggregate incentive fees, participations and limited partnership interests held by or allocable to the Advisor, our management or any of their respective affiliates based on our aggregate net asset value based on Estimated Per-Share NAV and payable in our hypothetical liquidation as of December 31, 2017,2020 (which was zero),divided by (ii)(iii) our number of shares of common sharesstock outstanding on a fully-diluted basis as of December 31, 2017,2020, which was 91,768,014.94,181,653. Common shares outstanding on a fully-diluted basis is defined as the sum of shares of common stock, including vested and unvested restricted shares of common stock, (“restricted shares”) and OP Units outstanding, while excluding Class B units.
The Estimated Per-Share NAV does not represent: (i) the price that our shares may trade for on a national securities exchange or a third party may pay for us, (ii) the amount a stockholder would obtain if he or she tried to sell his or her shares of common stock, or (iii) the amount a stockholder would realize in per share distributions if we sold all of our assets and settled all of our liabilities in a plan of liquidation. Further, there is no assurance that the methodology used to establish the Estimated Per-Share NAV would be acceptable to the Financial Industry Regulatory Authority for use on customer account statements, or that the Estimated Per-Share NAV will satisfy the applicable annual valuation requirements under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the Code with respect to employee benefit plans subject to ERISA and other retirement plans or accounts subject to Section 4975 of the Code.
The Estimated Per-Share NAV as of December 31, 20172020 of $20.25,$14.50, a value within the range determined by Duff & Phelps,Kroll, was unanimously adopted by the independent directors of the Board, who comprise a majority of the Board, with Mr. Weil abstaining, on March 29, 2018.31, 2021. The independent directors of the Board based their determination on the Advisor’s recommendation, which was based on the Advisor’s review of the Duff & Phelps Real Estate AppraisalKroll Report and on the Advisor’s own analysis, estimates and calculations and the fundamentals of the real estate assets. As part of their determination to approve an Estimated Per-Share NAV, the independent directors considered various factors, including information provided by Kroll, the impact of the Stock
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Dividend that the negative effect on Estimated Per-Share NAV of paying distributions

to our stockholders that exceeded cash flows from operations would be significantly lesswas issued in future periods due toJanuary 2021, the fact that in February 2018 we decreasedproperties held for sale or under contract for sale at December 31, 2020 were valued based on their contract sale prices and without giving consideration to the rate at which we pay distributions from an annual rate of $1.45 per share to $0.85 per share. The independent directorsreinvestment of the Board also consideredsale proceeds, the impact of the COVID-19 pandemic, and the fundamentals of the real estate assets included a review ofincluding geographic location, stabilization and credit quality of tenants. The Board is ultimately and solely responsible for the Estimated Per-Share NAV. Estimated Per-Share NAV was determined at a moment in time and will likely change over time as a result of changes to the value of individual assets as well as changes and developments in the real estate and capital markets, including changes in interest rates. As such, stockholders should not rely on the Estimated Per-Share NAV in making a decision to buy or sell shares of our common stock pursuant to our DRIP or our SRP, respectively.
In connection with the independent directors of the Board’s determination of Estimated Per-Share NAV, the Advisor concluded that, in a hypothetical liquidation at such Estimated Per-Share NAV, it would not be entitled to any incentive fees or performance-based restricted partnership units of our operating partnership designated as "Class“Class B Units." The Advisor determined the Estimated Per-Share NAV in a manner consistent with the definition of fair value under GAAP set forth in FASB’s Topic ASC 820, Fair Value Measurements and Disclosures.
Holders
As of February 28, 2019March 11, 2022 we had 91.9 million100,735,691 shares of common stock outstanding held by a total of 44,810 stockholders.44,358 stockholders of record.
Dividends and Other Distributions
We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013. As a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains, to our stockholders annually. gains.
The amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for dividends and other distribution, financial condition, provisions in our Credit Facility or other agreements that may restrict our ability to pay dividends and other distributions, capital expenditure requirements, as applicable, and annual dividends and other distribution requirements needed to maintain our status as a REIT under the Code. Under our Credit Facility, we will not be able to pay cash distributions on our common stock until we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million (giving effect to the aggregate amount of distributions projected to be paid by us during the quarter in which we have elected to commence paying cash distributions on common stock) and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%. As of December 31, 2021, our ratio of consolidated total indebtedness to consolidated total asset value for these purposes was 59.4%. Thus, our ability to make future cash distributions on our common stock will depend on our future cash flows and indebtedness and may further depend on our ability to obtain additional liquidity, which may not be available on favorable terms, or at all. The Board may reduce the amount of dividends or other distributions paid or suspend dividends or other distribution payments at any time prior to declaration. Therefore, dividends and other distribution payments are not assured. Any accrued and unpaid dividends payable with respect to our Series A Preferred Stock must be paid upon redemption of those shares. For further information on provisions in our Credit Facility that restrict the payment of dividends and other distributions, see Note 5 — Credit Facility, Net to our consolidated financial statements included in this Annual Report on Form 10-K and Item 1A “Risk Factors. - We have not paid our distributions on our common stock in cash since 2020, and there can be no assurance we will pay distributions on our common stock in cash in the future.”
The following table details the tax treatment of the dividends and other distributions paid during the years ended December 31, 2018, 20172020 and 2016, respectively:2019, respectively, retroactively adjusted for the effects of the stock dividends. All common dividends in the year ended December 31, 2021, and a portion of common dividends issued in the year ended December 31, 2020, were issued as stock dividends, which do not represent taxable dividends to our shareholders for U.S. federal income tax purposes. All dividends paid on the Series A Preferred Stock were considered 100% return of capital for income for tax purposes for the years ended December 31, 2021 and 2020. There were no dividends paid on the Series B Preferred Stock, as the first dividend payment was made in January, 2022.
Year Ended December 31,
20202019
Return of capital (1)
100 %$0.42 100 %$0.83 
Capital gain dividend income— %— — %— 
Ordinary dividend income— %— — %— 
Total100.0 %$0.42 100.0 %$0.83 
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  Year Ended December 31,
  2018 2017 2016
Return of capital 100% $0.95
 99.7% $1.50
 86.8% $1.47
Capital gain dividend income % 
 0.3% 0.01
 0.5% 0.01
Ordinary dividend income % 
 % 
 12.7% 0.22
Total 100.0% $0.95
 100.0% $1.51
 100.0% $1.70
________
In May 2013,(1) Amount for December 31, 2020 represents actual cash distributions paid to common shareholders during the year ended 2020, but excludes the stock dividends which do not represent taxable dividends to our shareholders for U.S. federal income tax purposes.
Distributions to Common Stockholders
From March 1, 2018 until June 30, 2020, we began payinggenerally paid distributions on our common stock on a monthly basis at a rate equivalent of $1.70$0.85 per annum, per share of common stock. In March 2017,Distributions were generally paid by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.
On August 13, 2020, the Board changed our common stock distribution policy in order to preserve our liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with an amendment to the Credit Facility. Under the revised policy, distributions authorized by the Board on our shares of common stock, if and when declared, are paid on a quarterly basis in arrears in shares of our common stock valued at our estimated per share net asset value of common stock in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter. On October 1, 2020 and January 4, 2021, we declared a dividend payable entirely in stock equal to 0.01349 shares of our common stock on each share of our outstanding common stock. On April 2, 2021, July 1, 2021, October 1, 2021, and January 3, 2022, we declared a dividend payable entirely in stock equal to 0.014655 shares of our common stock on each share of our outstanding common stock. This amount was based on our prior cash distribution rate of $0.85 per share per annum. The Board may further change our common stock distribution policy at any time, further reduce the amount of distributions paid or suspend distribution payments at any time, and therefore distribution payments are not assured.
Dividends to Series A Preferred Stockholders
Dividends on our Series A Preferred Stock accrue in an amount equal to $1.84 per share each year ($0.46 per share per quarter) to Series A Preferred Stockholders, which is equivalent to 7.375% per annum on 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 to Series B Preferred Stockholders
Dividends on our Series B Preferred Stock accrue in an amount equal to $1.78 per share each year ($0.45 per share per quarter) to Series B Preferred Stockholders, which is equivalent to 7.125% per annum on 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.
Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In light of the amendment to the Credit Facility on August 10,2020, which provides that we may not repurchase shares of our common stock until the Commencement Quarter, the Board suspended repurchases under the SRP effective August 14, 2020. No further repurchase requests under the SRP may be made unless and until the SRP is reactivated. For additional information on the SRP, see Note 8 — Stockholders’ Equity to our consolidated financial statements included in this Annual Report on Form 10-K.
The following table summarizes our SRP activity for the period presented.
Number of Common Shares RepurchasedAverage Price per Share
Cumulative repurchases as of December 31, 20204,896,620 $20.60 
Year ended December 31, 2021— — 
Cumulative repurchases as of December 31, 20214,896,620 20.60 
Item 6. [Reserved].
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Item 7. 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. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. Please see “Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K for a description of these risks and uncertainties.
Overview
We are an externally managed real estate investment trust for U.S. federal income tax purposes (“REIT”) that focuses on acquiring and managing a diversified portfolio of healthcare-related real estate focused on medical office and other healthcare-related buildings and senior housing operating properties. Prior to December 31, 2021, we had three reportable segments 1) Former MOBs, 2) Former NNN and 3) SHOPs. As a result of strategic property divestitures in our Former NNN segment, and transitions of certain properties reported in our Former NNN segment into our SHOP segment, we have combined the properties in our Former NNN segment with the properties in our Former MOB segment to form a single set of MOBs. As a result, effective December 31, 2021 we have determined that we have two reportable segments, with activities related to investing in MOBs and SHOPs. All prior periods presented in this Annual Report on Form 10-K have been conformed to the presentation of our new reportable segment structure. As of December 31, 2021, we owned 202 properties located in 33 states and comprised of 9.2 million rentable square feet.
Substantially all of our business is conducted through the OP, a Delaware limited partnership, and its wholly owned subsidiaries. Our Advisor manages our day-to-day business with the assistance of our Property Manager. Our Advisor and Property Manager are under common control with 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. The Special Limited Partner, which is also under common control with AR Global, also has an interest in us through ownership of interests in our OP.
We operate in two reportable business segments for management and internal financial reporting purposes: MOBs and SHOPs. In our MOB operating segment, we own, manage, and lease single and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent. Our Property Manager or third party managers manage our MOBs. In our SHOP segment, we invest in seniors housing properties using the RIDEA structure. As of December 31, 2021, we had six eligible independent contractors operating 54 SHOPs (not including two land parcels). All of our properties across both business segments are located throughout the United States. Subsequent to December 31, 2021, we terminated one of our independent contractors who managed 20 SHOPs and those management duties were assumed by other existing eligible independent contractors effective March 1, 2022 which reduced our active independent contractors to five.
We have declared quarterly dividends entirely in shares of our common stock equal to 0.01349 shares of our common stock on each share of our outstanding common stock on October 1, 2020 and January 4, 2021. These stock dividends were issued on October 15, 2020 and January 15, 2021 to holders of record of our common stock at the close of business on October 8, 2020 and January 11, 2021, respectively. We have declared quarterly dividends entirely in shares of our common stock equal to 0.014655 shares of our common stock on each share of our outstanding common stock on April 2, 2021, July 1, 2021, October 1, 2021, and January 3, 2022. These stock dividends were issued on April 15, 2021, July 15, 2021, October 15, 2021, and January 15, 2022 to holders of record of our common stock at the close of business on April 8, 2021, July 8, 2021, October 8, 2021, and January 8, 2022, respectively. Dividends payable entirely in shares of our common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods. The aggregate impact of these stock dividends was an increase of 0.08871 shares, cumulatively, for every one share of common stock. No additional shares, except for the dividends paid in the form of additional shares of common stock, were issued during the year ended December 31, 2021. Additionally, other references to weighted-average shares outstanding and per-share amounts have been retroactively adjusted for the stock dividends and are noted as such throughout the accompanying financial statements and footnotes.
On March 31, 2021, we published a new Estimated Per-Share NAV equal to $14.50 as of December 31, 2020. Our previous Estimated Per-Share NAV was equal to $15.75 as of December 31, 2019. 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 which is expected in early April 2022. Dividends paid in the form of additional shares of common stock will, all things equal, cause the value of each share of common stock to decline because the number of shares outstanding will increase when dividends paid in stock are issued; however, each stockholder will receive the same number of new shares, the total value of our common stockholder’s investment, all things equal, will not change assuming no sales or other transfers. We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually.
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Management Update on the Impacts of the COVID-19 Pandemic
The COVID-19 global pandemic has created several risks and uncertainties that have had and may continue to have an impact on our business, including our financial condition, future results of operations and our liquidity. Negative impacts of the COVID-19 pandemic have caused some of our tenants to be unable to make rent payments to us timely, or at all. There may be a decline in the demand for tenants to lease real estate, as well as a negative impact on rental rates. The extent to which the ongoing global COVID-19 pandemic, including the outbreaks that have occurred and may occur in markets where we own properties, impacts our operations and those of our tenants and third-party operators, will continue to depend on future developments, including the scope, severity and duration of the pandemic, and the actions taken to contain the COVID-19 or treat its impact, among others, which are highly uncertain and cannot be predicted with confidence, but could be material.
As of December 31, 2021, our MOB segment had an occupancy of 91.5% with a weighted-average remaining lease term of 4.9 years, (based on annualized straight-line rent as of December 31, 2021), and our SHOP segment had an occupancy of 74.1% weighted by unit count. During the second, third and fourth quarters of 2021, we experienced relative stability in occupancy and operating costs in our SHOP portfolio, although future developments in the course of the pandemic may cause further adverse impacts on our occupancy and cost levels. Occupancy and operating costs in our MOB segment was relatively stable during these quarters. The negative impact of the pandemic on our results of operations and cash flows has impacted and could continue to impact our ability to comply with covenants in our Credit Facility, and the amount available for future borrowings thereunder. We would have been in default of a covenant contained in the Credit Facility requiring us to maintain a certain minimum fixed charge coverage ratio for the four fiscal quarter period ended September 30, 2021. We entered into an amendment to our Credit Facility on November 12, 2021, in which the lenders waived any defaults or event of defaults under the covenant requiring us to maintain a fixed charge coverage ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and reduced this covenant to 1.50 to 1.00 until the earlier of December 31, 2022 and the date on which we elect to terminate this relief, among other changes (see Liquidity and Capital Resources section below and seeNote 5 — Credit Facilities, Net to our consolidated financial statements included in this Annual Report on Form 10-K for additional Information).
For additional information on the risks and uncertainties associated with the COVID-19 pandemic, please see Item 1A. “Risk Factors — We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic” included in this Annual Report on Form 10-K for the year ended December 31, 2021.
Rent Collections
We experienced delays in rent collection in the second, third and fourth quarters of 2020 and the first quarter of 2021. We have taken several steps to mitigate the impact of the pandemic on our business. We have been in direct contact with our tenants and operators since the crisis began, cultivating open dialogue and deepening the fundamental relationships that we have carefully developed through prior transactions and historic operations. We have achieved mutually agreeable solutions with our tenants and in some cases, during the year ended December 31, 2020, we executed lease amendments wherein we agreed to defer payment. Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic. During the year ended December 31, 2021, we did not enter into any rent deferral agreements with any of our tenants and all amounts previously deferred under prior rent deferral agreements have been collected.
We collected approximately 100% of the original cash rent due for the fourth quarter of 2020 and throughout 2021 in our MOB segment. Cash rental payments for our 54 SHOPs is primarily paid by the residents through private payer insurance or directly, and to a lesser extent, by government reimbursement programs such as Medicaid and Medicare, therefore we have not provided the amount of quarterly cash rent collected for our SHOP segment.
“Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their original executed lease agreement at inception or as amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of rent collected during the period to the original cash rent due. Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements. Eliminating the impact of deferred rent paid, we collected nearly 100% of original cash rent due for each quarter of 2021.
A deferral agreement is an executed or approved amendment to an existing lease to defer a certain portion of cash rent due to a future period. During the year ended December 31, 2020, we granted rent deferrals for an aggregate of $0.4 million or less than 1% of original cash rent due for the year. No additional rent was deferred during the year ended December 31, 2021.
We have also granted rent concessions which serve to reduce revenue in our SHOP segment. We offered $0.1 million and $0.4 million of rent concessions during the years ended December 31, 2021 and 2020, respectively.
Seniors Housing Properties
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In early March 2020, we implemented preventative actions at all our seniors housing properties in our SHOP segment, including restrictions on visitation except in very limited and controlled circumstances, social distancing measures, and the screening of all persons entering these facilities. Some of the additional steps we have taken to address the COVID-19 pandemic include, enhanced training for staff members, the implementation of Telehealth to help residents be safe while keeping appointments with important, but non-emergency, health providers, virtual tours for potential new residents, and agreements between some of our facilities and local lab partners to provide testing services.
Starting 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 has trended lower since the second half of March 2020 to a low of 72.0% as of March 31, 2021 and has subsequently begun to recover, reaching 74.1% as of December 31, 2021, as government policies and implementation of infection control best practices and prospective residents’ concerns about communal-setting COVID-19 spread limited resident move-ins. We have also continued to experience lower inquiry volumes and reduced in-person tours. These and other impacts of the COVID-19 pandemic have affected and could continue to affect our ability to fill vacancies. The below table presents SHOP occupancy since the onset of the COVID-19 pandemic in March 2020:
As of
Number of Properties [1]
Rentable UnitsPercentage Leased
December 31, 2019594,926 85.1%
March 31, 2020635,198 84.4%
June 30, 2020635,198 79.2%
September 30, 2020675,350 77.4%
December 31, 2020594,878 74.5%
March 31, 2021554,682 72.0%
June 30, 2021544,530 73.2%
September 30, 2021544,494 74.3%
December 31, 2021544,494 74.1%
________
[1]Exclusive of two land parcels.
The declines in revenue we experienced during the year ended December 31, 2021 and 2020, as compared to the year ended December 31, 2019, were primarily attributable to the decline in occupancy in or SHOP segment, noted in the table above, and our SHOP disposals which reduced the average number of rentable units over the periods. In addition, starting in mid-March of 2020, operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies, as our operators took appropriate actions to protect residents and caregivers. At the SHOP facilities, we generally bear these cost increases, which were partially offset by funds received under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and to a lesser extent, cost recoveries for personal protective equipment from residents. See below for additional information on the CARES Act. There can be no assurance, however, that future developments in the course of the pandemic will not cause further adverse impacts to our occupancy and cost levels, and these trends may continue to impact us and have a material adverse effect on our revenues and income in the other quarters. We believe that our vaccination participation achieved in 2021 for both residents and staff populations have mitigated certain adverse impacts of COVID-19. Furthermore, as infections decline and more vaccinations and boosters are administered during 2022, our occupancy may further increase. However, there can be no assurance as to when or if we will be able to approach pre-pandemic levels of occupancy due to, among other factors, the ongoing vaccine hesitancy and resistance in certain segments of the population and the recent spread of more transmissible COVID-19 variants such as the Delta and Omicron variants.
The pandemic raises the risk of an elevated level of resident exposure to illness and restrictions on move-ins at our SHOPs, which has and could also continue to adversely impact occupancy and revenues as well as increase costs. We believe that the actions we have taken help reduce the incidences of COVID-19 at our properties, but there can be no assurance in this regard. There have been some incidences of COVID-19 among the residents and staff at certain of our seniors housing properties. Further incidences, or the perception that outbreaks may occur, could materially and adversely affect our revenues and income, as well as cause reputational harm to us and our tenants, managers and operators.
The extent to which the ongoing global COVID-19 pandemic, including the outbreaks that have occurred and may occur in markets where we own properties, impacts our operations and those of our tenants and third-party operators, will continue to depend on future developments, including the scope, severity and duration of the pandemic, and the actions taken to contain the COVID-19 or treat its impact, among others, which are highly uncertain and cannot be predicted with confidence, but could be material.
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On March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic. Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19. During the year ended December 31, 2021 we received $5.1 million from CARES Act grants. Previously, we received$3.6 million in grants during the year ended December 31, 2020. We have applied for additional funds under the CARES Act, however, there can be no assurance that any funds requested will actually be received. We consider the funds to be a grant contribution from the government and the full amount was recognized as a reduction of property operating expenses in our consolidated statement of operations during the years ended December 31, 2021 and 2020. There can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs.
Significant Accounting Estimates and Critical Accounting Policies
Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our consolidated financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates and critical accounting policies include:
Impacts of the COVID-19 Pandemic
As discussed above we have taken a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, in the second, third and fourth quarters of 2020, we executed lease amendments providing for deferral of rent.
For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which doesn’t apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases are being modified, the FASB and SEC have provided relief that allows companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief, (1) as if the changes were originally contemplated in the lease contract or (2) as if the deferred payments are variable lease payments contained in the lease contract.
For all other lease changes that did not qualify for FASB relief, we would be required to apply modification accounting including assessing classification under ASC 842. Some, but not all of our lease modifications qualify for the FASB relief. In accordance with the relief provisions, instead of treating these qualifying leases as modifications, we elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be no impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease. For leases not qualifying for this relief, we applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.
Revenue Recognition
Our revenues, which are derived primarily from lease contracts, include rent received from tenants in our triple-net MOBs. As of December 31, 2021 these leases had a weighted average remaining lease term of 4.9 years. Rent from tenants in our MOB 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 us to record a receivable for, and include in revenue from tenants on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When we acquire a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. We defer the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of our lease agreements, tenants are required to reimburse us for certain property operating expenses, in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Under ASC 842, we have elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, we have also elected to reflect prior revenue and reimbursements reported under ASC 842 also on a single line. For expenses paid directly by the tenant, under both ASC 842 and 840, we have reflected them on a net basis.
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Our revenues also include resident services and fee income primarily related to rent derived from lease contracts with residents in the Company’s SHOPs held using a structure permitted by RIDEA and to fees for ancillary services performed for SHOP residents, which are generally variable in nature. Rental income from residents in our SHOP segment is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. Fees for ancillary services are recorded in the period in which the services are performed.
We defer the revenue related to lease payments received from tenants and residents in advance of their due dates. Pursuant to certain of our lease agreements, tenants are required to reimburse us for certain property operating 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 costs of the respective properties.
Under ASC 842, we have 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, we have reflected them on a net basis.
We continually review receivables related to rent and unbilled rents receivable and determine 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 leasing standards, we are required to assess, based on credit risk only, if it is probable that we 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 we determine 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 we determine it is not probable that we 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 beginning on January 1, 2019, in accordance with accounting rules adopted after that date, on the accompanying consolidated statements of operations and comprehensive income (loss) in the period the related costs are incurred, as applicable.
Under ASC 842, which was adopted effective on January 1, 2019, uncollectable amounts are reflected as reductions in revenue. Under ASC 840, we recorded such amounts as bad debt expense as part of property operating expenses. During the years ended December 31, 2021, 2020 and 2019 such amounts were $1.1 million, $2.7 million, and $6.5 million, respectively, which include bad debt expense related to the NuVista and LaSalle Tenants (see Note 3Real Estate Investments, Net to the consolidated financial statements included in this Annual Report on Form 10-K for additional information).
Investments in Real Estate
Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.
At the time an asset is acquired, we evaluate the inputs, processes and outputs of the asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. See the “Purchase Price Allocation” section below for a discussion of the initial accounting for investments in real estate.
Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on our 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 years ended December 31, 2020, 2019 or 2018. 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. We evaluate probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. There were $0.1 million in real estate investments held for sale as of December 31, 2020 and none as of December 31, 2021 (see Note 3Real Estate Investments, Net to the consolidated financial statements included in this Annual Report on Form 10-K for additional information).
All of our leases as lessor prior to the adoption of new lease accounting rules on January 1, 2019, were accounted for as operating leases and they continue to be accounted for as operating leases under the transition guidance. We evaluate new leases originated after the adoption date (by us 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. 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 major part of remaining economic useful life of the asset (e.g.,
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equal to or greater than 75%), if 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 if the asset 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. For the three-year period ended December 31, 2021, we have no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.
We are also the lessee under certain land leases which were previously classified prior to adoption of lease accounting and will continue to be classified as operating leases under transition elections unless subsequently modified. These leases are reflected on the balance sheet and the rent expense is reflected on a straight-line basis over the lease term.
We generally determine the value of construction in progress based upon the replacement cost. During the construction period, we capitalize interest, insurance and real estate taxes until the development has reached substantial completion.
Purchase Price Allocation
In both a business combination and an asset acquisition, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as if vacant basis. Intangible assets may include the value of in-place leases and above-and below-market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. 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 years ended December 31, 2020, 2019 and 2018 were accounted for as asset acquisitions.
For acquired properties with leases classified as operating leases, we allocate the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values. In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. We also consider information obtained about each property as a result of our pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.
Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. We utilize various estimates, processes and information to determine the as-if vacant property value. We estimate fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, fair market lease rates and land values per square foot.
Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months. We also estimate costs to execute similar leases including leasing commissions, legal and other related expenses.
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.
The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the tenant. Characteristics considered by us 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. We did not record any intangible asset amounts related to customer relationships during the years ended December 31, 2021 and 2020.
Impairment of Long-Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, we review the property for impairment. This review is based on an estimate of the future undiscounted cash flows expected to result from the property’s use and eventual disposition. 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
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exists, due to the inability to recover the carrying value of a property, we would recognize an impairment loss in the consolidated statement 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 and used. For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings.
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.
Construction in progress, including capitalized interest, insurance and real estate taxes, is not depreciated until the development has reached substantial completion. The value of certain other intangibles such as certificates of need in certain jurisdictions are amortized over the expected period of benefit (generally the life of the related building).
The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.
The value of customer relationship intangibles, if any, is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.
Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.
Above-and Below-Market Lease Amortization
Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below-market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.
Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.
Equity-Based Compensation
The Company has a stock-based incentive award program for its directors, which is accounted for under the guidance of share based payments. The cost of services received in exchange for these stock awards is measured at the grant date fair value of the award and the expense for such awards is included in general and administrative expenses and is recognized over the service period (i.e., vesting) required or when the requirements for exercise of the award have been met.
CARES Act Grants
On March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic. Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19. We received $5.1 million and $3.6 million in these funds during the years ended December 31, 2021 and 2020, respectively, related to four of our SHOPs and considered the funds to be a grant contribution from the government. The full amounts received were recognized as a reduction of property operating expenses in the Company’s consolidated statement of operations for the years ended December 31, 2021 and 2020, respectively, to offset the incurred COVID-19 expenses. There can be no assurance that the program will be extended or any further amounts received.
Recently Issued Accounting Pronouncements
See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion.
Results of Operations
Same Store Properties
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Information based on Same Store, Acquisitions and Dispositions (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered. As of December 31, 2021, we owned 202 properties. There were 176 properties (our “Same Store” properties) owned for the entire years ended December 31, 2021 and 2020, including two vacant land parcels. Since January 1, 2020 and through December 31, 2021, we acquired 26 properties (our “Acquisitions”) and disposed of 17 properties (our “Dispositions”).
The following table presents a roll-forward of our properties owned from January 1, 2020 to December 31, 2021:

MOBSHOPTotal
Number of properties, December 31, 2019132 61 193 
Acquisition activity during the year ended December 31, 2020
Disposition activity during the year ended December 31, 2020(1)(8)(9)
Transition activity during the year ended December 31, 2020(4)— 
Number of properties, December 31, 2020132 61 193 
Acquisition activity during the year ended December 31, 20211717
Disposition activity during the year ended December 31, 2021(3)(5)(8)
Number of properties, December 31, 2021146 56 202 
Number of Same Store Properties (1)
124 52 176 
_______________
(1) Includes the acquisition of a land parcel adjacent to an existing property which is not considered an Acquisition.
In addition to the comparative period-over-period discussions below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s responses.
Below is a discussion of our results of operations for the years ended December 31, 2021 and2020. Please see the “Results of Operations” section located in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for a comparison of our results of operations for the year ended December 31, 2020 and 2019.
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Comparison of the Years Ended December 31, 2021 and 2020
Net loss attributable to common stockholders was $92.9 million and $78.8 million for the years ended December 31, 2021 and 2020, respectively. The following table shows our results of operations for the years ended December 31, 2021 and 2020 and the year to year change by line item of the consolidated statements of operations:
 Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$
Revenue from tenants$329,355 $381,612 $(52,257)
Operating expenses:  
Property operating and maintenance205,813 243,548 (37,735)
Impairment charges40,951 36,446 4,505 
Operating fees to related parties24,206 23,922 284 
Acquisition and transaction related2,714 173 2,541 
General and administrative16,828 21,572 (4,744)
Depreciation and amortization79,926 81,053 (1,127)
Total expenses370,438 406,714 (36,276)
Operating loss before gain on sale of real estate investments(41,083)(25,102)(15,981)
Gain on sale of real estate investments3,648 5,230 (1,582)
Operating loss(37,435)(19,872)(17,563)
Other income (expense):
Interest expense(47,900)(51,519)3,619 
Interest and other income61 44 17 
Loss on non-designated derivatives37 (102)139 
Total other expenses(47,802)(51,577)3,775 
Loss before income taxes(85,237)(71,449)(13,788)
Income tax expense(203)(4,061)3,858 
Net loss(85,440)(75,510)(9,930)
Net (income) loss attributable to non-controlling interests260 (303)563 
Allocation for preferred stock(7,762)(2,968)(4,794)
Net loss attributable to common stockholders$(92,942)$(78,781)$(14,161)
__________
NM — Not Meaningful
Net Operating Income
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to revenue from tenants less property operating and maintenance expenses. NOI excludes all other financial statement amounts included in net income (loss) attributable to common stockholders. We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. See “Non-GAAP Financial Measures” below for additional disclosure and a reconciliation, in the aggregate, of the NOI for the segments presented below to our net income (loss) attributable to common stockholders.

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Segment Results — Medical Office Buildings
The following table presents the components of NOI and the period to period change within our MOB segment for the years ended December 31, 2021 and 2020:
Segment Same Store(1)
Acquisitions(2)
Dispositions(3)
Segment Total(4)
 Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$20212020$20212020$20212020$
Revenue from tenants$110,609 $112,987 $(2,378)$8,325 $2,057 $6,268 $3,933 $4,779 $(846)$122,867 $119,823 $3,044 
Less: Property operating and maintenance30,131 30,173 (42)1,819 360 1,459 2,530 2,278 252 34,480 32,811 1,669 
NOI$80,478 $82,814 $(2,336)$6,506 $1,697 $4,809 $1,403 $2,501 $(1,098)$88,387 $87,012 $1,375 
_______________
(1)    Our MOB segment included 124 Same Store properties.
(2)    Our MOB segment included 22 Acquisition properties.
(3)    Our MOB segment included four Disposition properties.
(4)    Our MOB segment consisted of 146 properties.
NM — Not Meaningful
Revenue from tenants is primarily related to contractual rent received from tenants in our MOBs. It also includes operating expense reimbursements which generally increase with the increase in property operating and maintenance expenses in our MOB 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.
Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third party property management fees.
During the year ended December 31, 2021, the MOB segment contributed a $1.4 million increase in NOI as compared to the year ended December 31, 2020. Of our 26 Acquisitions, during the period from January 1, 2020 through December 31, 2021, 22 were MOBs which contributed a $4.8 million increase in NOI, and our Disposition properties contributed a $1.1 million decrease in NOI, while NOI from our Same Store properties contributed a $2.3 million decrease in NOI as compared to the year ended December 31, 2020. The decrease in NOI from our Same Store properties is due to one-time expense recoveries which occurred in the year ended December 31, 2020 which did not occur in the year ended December 31, 2021.
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 years ended December 31, 2021 and 2020:
Segment Same Store (1)
Acquisitions (2)
Dispositions (3)
Segment Total
 Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$20212020$20212020$20212020$
Revenue from tenants$186,359 $204,932 $(18,573)$14,667 $12,780 $1,887 $5,462 $44,076 $(38,614)$206,488 $261,788 $(55,300)
Less: Property operating and maintenance154,080 160,406 (6,326)11,941 10,418 1,523 5,312 39,912 (34,600)171,333 210,736 (39,403)
NOI$32,279 $44,526 $(12,247)$2,726 $2,362 $364 $150 $4,164 $(4,014)$35,155 $51,052 $(15,897)
__________
(1)    Our SHOP segment included 52 Same Store properties, including two land parcels.
(2)    Our SHOP segment included four Acquisitions properties.
(3) Our SHOP segment included 13 Dispositions properties.
(4) Our SHOP segment included 56 properties, including two land parcels.
NM — Not Meaningful
Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expenses relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators, and costs associated with maintaining the physical site.
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During the year ended December 31, 2021, revenue from tenants decreased by $55.3 million in our SHOP segment as compared to the year ended December 31, 2020 primarily giving effect to a $38.6 million decrease from our Disposition properties, and a decrease of $18.6 million from our Same Store properties. These decreases were partially offset by $1.9 million of additional revenue through our Acquisition properties. For the year ended December 31, 2021, an additional $0.8 million was generated through COVID-19 surcharges for PPE as compared to $1.1 million in PPE billings during the year ended December 31, 2020. We also offered $0.1 million of rent concessions related to COVID-19 in the year ended December 31, 2021 as compared to $0.4 million of rent concessions granted during the year ended December 31, 2020.
Revenues declined in our Same Store SHOPs primarily due to a decrease in occupancy as a result of COVID-19 as discussed in Management Update on the rateImpacts of the COVID-19 Pandemic. Regulatory and government-imposed restrictions and infectious disease protocols have hindered our ability to accommodate and conduct in-person tours and process and attract new move-ins at our SHOPs which has affected and could continue to affect our ability to fill vacancies.
We also generated a portion of our SHOP revenue from skilled nursing facilities (which include ancillary revenue from non-residents) at two of our Same Store SHOPs and two of our Disposition SHOPs. This revenue declined $9.8 million from $13.3 million during the year ended December 31, 2020 to $3.5 million during the year ended December 31, 2021 as a result of limiting the services we offered at our skilled nursing facilities during the COVID-19 pandemic to protect our residents and on-site staff, as well as from disposing of our two largest SNFs in Lutz and Wellington, Florida in December 2020 and May 2021, respectively. The property in Wellington, Florida generated ancillary revenues of $1.6 million and $3.9 million in the years ended December 31, 2021 and 2020, respectively. The property in Lutz, Florida generated ancillary revenue of $4.0 million in the year ended December 31, 2020. These properties’ results are presented in Disposition properties in the table above. As a result of these dispositions, we expect ancillary revenue to continue to decline in future quarters relative to prior quarters where we owned these properties. Our remaining SNFs generated ancillary revenue of $1.9 million and $5.4 million in the years ended December 31, 2021 and 2020, respectively.
During the year ended December 31, 2021, property operating and maintenance expenses decreased $39.4 million in our SHOP segment as compared to the year ended December 31, 2020, primarily due to a decrease of $34.6 million from our Dispositions and a decrease of $6.3 million in our Same Store properties. These increases were partially offset by an increase in property operating and maintenance expenses from our Acquisitions of $1.5 million.
Our property operating and maintenance expenses for our Same Store properties decreased due to $5.1 million in CARES Act funds received, $4.4 million of which related to our Same Store properties. We received $3.6 million of CARES Act funds in 2020, $0.9 million of which related to our Same Store properties. We consider the receipt of CARES Act funds as government grants which reduce property operating and maintenance expenses for the period in which they are received. In addition, we had lower operating costs as a result of lower occupancy levels as well as some lessening of COVID-related costs in the year ended December 31, 2021 as compared to the year ended December 31, 2020. There can be no assurance that the program will be extended or any further amounts received. See the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken in response.
Other Results of Operations
Impairment Charges
We incurred $41.0 million of impairment charges for the year ended December 31, 2021. The impairment charges for the year ended December 31, 2021 related to a $0.9 million impairment on our Wellington property, which was recorded to adjust the carrying value to its fair value as determined by its purchase and sale agreement, a $6.1 million impairment related to an MOB property located in Sun City, Arizona, and $34.0 million related to our LaSalle properties.
We incurred $36.4 million of impairment charges for the year ended December 31, 2020. We recorded $19.6 million of impairment charges related to the 11 Michigan SHOPs, which was recognized after an amendment to the PSA for the sale of these properties in April 2020 which reduced the number of properties under consideration as well as the contract purchase price. We recorded $16.9 million of impairment charges related to the two Florida properties in Jupiter and Wellington as a result of our marketing efforts during the COVID-19 pandemic which concluded with a PSA in August 2020, for which the contract purchase was less than the carrying values of the properties, as well as expected closing costs that were not previously anticipated, which reduced the net amount expected to be realized on the sale of properties.
See Note 3 — Real Estate Investments to our consolidated financial statements in this Annual Report on Form 10-K for additional information on impairment charges.
Operating Fees to Related Parties
Operating fees to related parties increased $0.3 million to $24.2 million for the year ended December 31, 2021 from $23.9 million for the year ended December 31, 2020.
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Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis. The fixed portion of the base management fee we pay monthlyfor asset management services is equal to $1.6 million per month, while the variable portion of the base management fee is equal, per month, to one twelfth per month of 1.25% of the cumulative net proceeds of any equity the we raise. Asset management fees increased $0.7 million to $20.7 million for the year ended December 31, 2021, due to the increase in the variable portion of the base management fee related to the issuance and sale of Series B Preferred Stock in October 2021.
Property management fees decreased $0.4 million to $3.7 million, inclusive of $0.3 million of leasing commissions paid, during the year ended December 31, 2021 from $4.2 million during the year ended December 31, 2020. Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.
SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements found in this Annual Report on Form 10-K which provides detail on our asset and property management fees.
Acquisition and Transaction Related Expenses
Acquisition and transaction related expenses were $2.7 million for the year ended December 31, 2021 and $0.2 million for the year ended December 31, 2020. The increase is mainly due to $1.2 million of costs incurred from our terminated Preferred Stock Equity Line, $0.8 million from litigation costs related to our Michigan dispositions which occurred in the first quarter of 2021, $0.2 million from a legal settlement related to our Jupiter, Florida disposition which occurred in the second quarter of 2021, and $0.3 million of increased costs related to dead deal and other miscellaneous costs incurred in the year ended December 31, 2021 as compared to the year ended December 31, 2020. The expenses in both periods primarily related to indirect costs associated with potential acquisitions.
General and Administrative Expenses
General and administrative expenses decreased $4.7 million to $16.8 million for the year ended December 31, 2021 compared to $21.6 million for the year ended December 31, 2020. For the year ended December 31, 2021 and 2020, incurred expense reimbursements and distributions on partnership units of the OP designated as Class B Units to related parties were $8.4 million and $11.1 million, respectively. Class B Units will not receive cash distributions, and no further expense will be incurred, for so long as we pay distributions to our common stockholders in stock instead of cash. The decrease in expense reimbursements to related parties was primarily due to $2.2 million of costs incurred in the year ended December 31, 2020 related to severance payments to our former chief executive officer and related legal costs which did not occur in the year ended December 31, 2021. Both the years ended December 31, 2021 and 2020 include reductions of expenses related to 2020 and 2019 employee bonuses, respectively, of $1.0 million and $1.2 million of professional fee credits from the Advisor. For additional details on the 2020 and 2019 bonus awards (see Note 9 – Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K).
In addition to lower expense reimbursements, the decrease was primarily due the decrease in distributions on Class B Units of $0.2 million, lower legal expenses of $0.9 million, lower auditing expenses of $0.4 million, lower printing expenses of $0.6 million, and lower transfer agent expenses of $0.2 million.
The aforementioned professional reimbursement fees to the Advisor are subject to a cap which is equal to the greater of a fixed or variable component. We did not meet the cap for the years ended December 2021 and 2020. The fixed component increases 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. See Note 9 – Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
Depreciation and Amortization Expenses
Depreciation and amortization expense decreased marginally to $79.9 million for the year ended December 31, 2021 from $81.1 million for the year ended December 31, 2020 as decreases from property dispositions were largely offset by increases from acquisitions.
Gain on Sale of Real Estate Investments
During the year ended December 31, 2021, we disposed of eight properties. The properties were sold for an aggregate contract price of $133.6 million, which resulted in an aggregate gain on sale of $3.6 million. See Note 3 — Real Estate Investments, Net to our consolidated financial statements in this Annual Report on Form 10-K for additional information.
Interest Expense
Interest expense decreased by $3.6 million to $47.9 million for the year ended December 31, 2021 from $51.5 million for the year ended December 31, 2020. The decrease in interest expense resulted from lower interest rates as well as lower average outstanding debt in 2021 compared to 2020. As of December 31, 2021 our outstanding debt obligations were $1.1 billion at a weighted average interest rate of 3.44% per year. As of December 31, 2020, we had total borrowings of $1.2 billion, at a weighted average interest rate of 3.58% per year.
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Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings among other factors.
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 $61,000 for the year ended December 31, 2021. Interest and other income was approximately $44,000 for the year ended December 31, 2020.
Loss on Non-Designated Derivatives
Loss on non-designated derivative instruments for the years ended December 31, 2021 and 2020 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates. Loss on derivative instruments for the years ended December 31, 2021 and 2020 were $37,000 and $0.1 million, respectively.
Income Tax Benefit (Expense)
We recorded income tax expense of $0.2 million and $4.1 million for the years ended December 31, 2021 and 2020, respectively, related to deferred tax assets generated by temporary differences and current period net operating income associated with our TRS. During the year ended December 31, 2020, we recorded an initial $4.6 million valuation allowance against our net deferred tax assets. During the year ended December 31, 2021, we continue to maintain a full valuation allowance against our net deferred tax assets. Income taxes generally relate to our SHOPs, which are leased by our TRS.
Because of our TRS recent operating history of losses and the on-going impacts of the COVID-19 pandemic 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 in the year ended December 31, 2020 and we have continued to maintain this valuation allowance through December 31, 2021. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive income (loss). As of December 31, 2021, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $13.3 million at December 31, 2021 (of which $7.6 million were incurred prior to January 1, 2018). For losses incurred prior to January 1, 2018, if unused, these will begin to expire in 2035. For net operating losses incurred subsequent to December 31, 2017, there is no expiration date.
Net Income/Loss Attributable to Non-Controlling Interests
Net loss attributable to non-controlling interests was approximately $0.3 million and net income attributable non-controlling interests was $0.3 million for the years ended December 31, 2021 and 2020, respectively. These amounts represent the portion of our net loss that is related to the OP Units and non-controlling interest holders in our subsidiaries that own certain properties.
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Cash Flows from Operating Activities
During the year ended December 31, 2021, net cash provided by operating activities was $38.9 million. The level of cash flows provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of $38.8 million (net loss of $85.4 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges). In addition, cash provided by operating activities was impacted by an increase in accounts payable and accrued expenses of $1.3 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees, a net decrease in prepaid expenses and other assets of $2.1 million, and by an increase in deferred rent of $1.7 million. These cash inflows were partially offset by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.8 million.
During the year ended December 31, 2020, net cash provided by operating activities was $41.8 million. The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of $50.4 million (net loss of $75.5 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges). These inflows were partially offset by a decrease in accounts payable and accrued expenses of $4.6 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees, a net increase in prepaid expenses and other assets of $0.1 million, a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $2.4 million and by a decrease in deferred rent of $1.6 million.
Cash Flows from Investing Activities
Net cash used in investing activities during the year ended December 31, 2021 was $47.9 million. The cash used in investing activities included $159.3 million for the acquisition of 17 properties and $19.1 million in capital expenditures. These cash outflows were partially offset by proceeds from the sale of real estate of $130.4 million.
Net cash used in investing activities during the year ended December 31, 2020 was $82.5 million. The cash used in investing activities included $95.0 million for the acquisition of nine properties and $21.9 million in capital expenditures. These cash outflows were partially offset by proceeds from the sale of real estate of $34.4 million.
Cash Flows from Financing Activities
Net cash provided by financing activities of $4.1 million during the year ended December 31, 2021 related to net proceeds from the issuance of Series A preferred stock of $56.3 million, net proceeds from the issuance of Series B preferred stock of $86.9 million and proceeds from a mortgage note payable of $42.8 million. These cash inflows were partially offset by net repayments under our Revolving Credit Facility of $173.8 million, payment for deferred financing costs of $1.5 million and payments of preferred stock dividends of $5.1 million.
Net cash provided by financing activities of $19.4 million during the year ended December 31, 2020 included proceeds of $95.0 million from our Revolving Credit Facility. These cash inflows were partially offset by distributions to stockholders effectiveof $31.4 million, common stock repurchases of $10.5 million, payments for deferred financing costs of $2.2 million, the buyout of a non-controlling interest of $0.6 million and dividends paid to preferred stockholders $2.4 million.
Liquidity and Capital Resources
Our principal demands for cash are for 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 Series B Preferred Stock. We closely monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months. Our future liquidity requirements, and available liquidity, however, depend on many factors, such as the on-going impact of COVID-19 on our tenants and operators.
We expect to fund our future short-term operating liquidity requirements, including dividends to holders of Series A Preferred Stock and holders of Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our property operations and draws on the Revolving Credit Facility, which may include amounts reborrowed following the repayments we were or are required to make thereunder.
As of December 31, 2021 and 2020, we had $59.7 million and $72.4 million of cash and cash equivalents, respectively. Our ability to use this cash on hand is restricted. Under our Credit Facility, we are required to maintain a combination of cash, cash equivalents and availability for future borrowings under our Revolving Credit Facility totaling at least $50.0 million. As of
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December 31, 2021, $236.6 million was available for future borrowings under our Revolving Credit Facility. Certain other restrictions and conditions described below, including those on paying cash dividends, will no longer apply starting in the “Commencement Quarter” which is a quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and the Covenant Relief Period has terminated. The fiscal quarter ended June 30, 2021 was the first quarter that could have been the Commencement Quarter. We satisfied the conditions during the quarter ended December 31, 2021 in order to elect the quarter ending March 31, 2022 as the Commencement Quarter, but chose not to do so. There can be no assurance as to if, or when, we will elect to do so, including to the extent we may be unable to satisfy these conditions in future periods. We may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Commencement Quarter. Moreover, beginning in the Commencement Quarter, we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock and Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.
Our Credit Facility also restricts our uses of liquidity. Until the first day of the Commencement Quarter, we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to repay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met. The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and availability has been, and may continue to be, adversely affected by the decreases in cash rent collected from our tenants and income from our operators that have resulted from the effects of the COVID-19 pandemic and may persist for some time.
During the year ended December 31, 2021, we generated liquidity through the sale of equity securities and from various financings as described below.
Preferred Stock Equity Line with B. Riley Principal Capital, LLC
On September 15, 2020, we entered into a preferred stock purchase agreement and registration rights agreement with B. Riley Principal Capital, LLC (“B. Riley”), pursuant to which we had the right from time to time to sell up to an aggregate of $15 million of shares of our Series A Preferred Stock to B. Riley until December 31, 2023, on the terms and subject to the conditions set forth in the purchase agreement (“Preferred Stock Equity Line”). We sold 15,000 shares of Series A Preferred Stock under the Preferred Stock Equity Line during the year ended December 31, 2021, resulting in gross proceeds of $0.4 million and net proceeds of $0.3 million after fees and commissions.
In total, we incurred $1.2 million in costs related to establishing the Preferred Stock Equity Line which were all initially recorded in prepaid expenses and other assets on our consolidated balance sheet. Upon receiving proceeds under the Preferred Stock Equity Line in the third quarter of 2021, the Company reclassified $30,000 of these prepaid costs to additional paid in capital in our consolidated statement of changes in equity as a reduction of the gross proceeds received under the Preferred Stock Equity Line.
In the fourth quarter of 2021, we determined that it was not probable that additional proceeds would be received from the Preferred Stock Equity Line and later terminated the Preferred Stock Equity Line. As a result, we expensed the remaining balance of prepaid costs within acquisition and transaction related costs on the consolidated statement of operations and comprehensive income during the year ended December 31, 2021.
We did not sell any Series A Preferred Stock under the Preferred Stock Equity Line during the year ended December 31, 2020.
Series A Preferred Stock Add-On Offering
On May 11, 2021, we completed an underwritten public offering of 2,352,144 shares (which included 152,144 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of our Series A Preferred Stock for net proceeds of $56.0 million after deducting the underwriters’ discount, structuring fees and other offering costs aggregating to $2.9 million. Pursuant to the terms of the Credit Facility, all proceeds were used to repay amounts outstanding under the Credit Facility. Subject to the terms and conditions set forth in the Credit Facility, we may then draw on the Credit Facility to borrow any amounts so repaid.
Series B Preferred Stock Offering
On October 6, 2021, we completed the initial issuance and sale of 3,630,000 shares (which includes 430,000 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of our 7.125% Series B Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share. The offering generated gross proceeds of $90.8 million and net proceeds of $86.8 million, after deducting underwriting discounts, structuring fees and other offering costs. Pursuant to the terms of the Credit Facility, all proceeds were used to repay amounts outstanding under the
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Credit Facility. Subject to the terms and conditions set forth in the Credit Facility, we may then draw on the Credit Facility to borrow any amounts so repaid.
Financings
As of December 31, 2021, our total debt leverage ratio (net debt divided by gross asset value) was approximately 40.1%. Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($59.7 million). Gross asset value totaled $2.6 billion, which represents total real estate investments, at cost ($2.6 billion), net of gross market lease intangible liabilities ($23.5 million). Impairment charges are already reflected within gross asset value.
As of December 31, 2021, we had total gross borrowings of $1.1 billion, at a weighted average interest rate of 3.44%. As of December 31, 2020, we had total gross borrowings of $1.2 billion at a weighted average interest rate of 3.58%. As of December 31, 2021, the carrying value of our real estate investments, at cost was $2.6 billion, with $0.9 billion of this amount pledged as collateral for mortgage notes payable, $0.6 billion of this amount pledged to secure advances under the Fannie Mae Master Credit Facilities and $1.0 billion of this amount comprising the borrowing base of the Credit Facility. These real estate assets are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable unless the existing indebtedness associated with the property is satisfied or the property is removed from the borrowing base of the Credit Facility, which would impact availability thereunder.
We expect to utilize proceeds from our Credit Facility to fund future property acquisitions, as well as, subject to the terms of our Credit Facility, other sources of funds that may be available to us. These actions may require us to add some or all of our unencumbered properties as security for that debt or add them to the borrowing base under our Credit Facility. Unencumbered real estate investments, at cost as of December 31, 2021 was $110.4 million. There can be no assurance as to the amount of liquidity we would be able to generate from adding any of the unencumbered assets we own to the borrowing base of our Credit Facility. Pursuant to the Credit Facility, any resulting net proceeds from these dispositions prior to the Commencement Quarter must be used to prepay amounts outstanding under the Revolving Credit Facility.
Mortgage Notes Payable
As of December 31, 2021, we had $591.8 million in gross mortgage notes payable outstanding. Future scheduled principal payments on our mortgage notes payable for 2022 are $1.3 million.
Credit Facility
Our Credit Facility consists of two components, the Revolving Credit Facility and our Term Loan. The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to one one-year extension at our option. Our Term Loan is interest-only and matures on March 13, 2024. Loans under our Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs. Any amounts repaid under our Term Loan may not be re-borrowed.
We drew $125.0 million under our Credit Facility during the year ended December 31, 2021, primarily to fund acquisitions during the year. We repaid $298.8 million of amounts outstanding under our Revolving Credit Facility during the year ended December 31, 2021 derived from $88.0 million of net proceeds of our dispositions of the Wellington, Florida and Jupiter, Florida properties, all $56.7 million of net cash proceeds from our May 2021 Series A Preferred Stock offering, $87.6 million of net cash proceeds from our October Series B Preferred Stock Offering, $37.0 million of proceeds from our BMO CMBS Loan and $29.4 million from cash on hand.
The total commitments under the Credit Facility are $630.0 million including $480.0 million under the Revolving Credit Facility. The Credit Facility includes an uncommitted “accordion feature” that may be used to increase the commitments under either component of the Credit Facility by up to an additional $370.0 million to a total of $1.0 billion. As of December 31, 2021, $150.0 million was outstanding under the Term Loan, and no amounts were outstanding under the Revolving Credit Facility. The unused borrowing availability under the Credit Facility was $236.6 million. The amount available for future borrowings under the Revolving Credit Facility is based on either the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, or satisfying a minimum debt service coverage ratio with respect to the borrowing base. Both of these amounts are calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and, therefore, availability under our Revolving Credit Facility has been adversely affected by the decreases in cash rent collected from our tenants and income from our operators due to the effects of the COVID-19 pandemic, and may continue to be adversely affected. See also the discussion above regarding the need to maintain certain levels of liquidity until the Commencement Quarter.
The equity interests and related rights in our wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility are pledged for the benefit of the lenders thereunder. The Credit Facility also contains a subfacility for letters of credit of up to $25.0 million. The applicable margin used to determine the interest rate under both the Term Loan and Revolving Credit Facility components of the Credit Facility varies based on our leverage. As of December 31, 2021, the Term Loan had an effective interest rate per annum equal to 4.11%. The Credit Facility prohibits us from exceeding a maximum ratio of consolidated total indebtedness to consolidated total asset value, and requires us to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges (the “Fixed Charge
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Coverage Ratio”) on a quarterly basis and a minimum consolidated tangible net worth. We entered into an amendment to our Credit Facility on November 12, 2021. We would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended September 30, 2021. Pursuant to the terms of a third amendment entered into on November 12, 2021 by us, the agent and the requisite lenders under the Credit Facility, the lenders waived any defaults or event of defaults under the covenant requiring us to maintain a Fixed Charge Coverage Ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and any further defaults or Events of Default (as defined in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant. In addition, as described above, the Fixed Charge Coverage Ratio we are required to maintain was reduced from 1.60 to 1.00 to 1.50 to 1.00 until the earlier of December 31, 2022, and such earlier date as we elect to terminate this relief. There can be no assurance our lenders will consent to any amendments or waivers that may become necessary to comply with the terms of the Credit Facility in the future. As of December 31, 2021, we were in compliance with the financial covenants under the Credit Facility. Based upon our current expectations, we believe we will be able to comply with these covenants during the next 12 months. Please see “Item 1A. Risk Factors. Risks Related to our Indebtedness.”
Fannie Mae Master Credit Facilities
As of December 31, 2021, $355.0 million was outstanding under the Fannie Mae Master Credit Facilities. We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. We do not expect to draw any further amounts on the Fannie Mae Master Credit Facilities. Borrowings under the Fannie Mae Master Credit facilities bear annual interest at a rate that varies on a monthly basis and is equal to the sum of the current LIBOR for one month U.S. dollar-denominated deposits and 2.62%, with a combined floor of 2.62%. The Fannie Mae Master Credit Facilities mature on November 1, 2026. Future scheduled principal payments on our Fannie Mae Master Credit Facilities for 2022 are $2.8 million.
Capital Expenditures
During the year ended December 31, 2021, our capital expenditures were $19.1 million, of which approximately $6.2 million related our MOB segment and $12.9 million related to our SHOP segment. We anticipate this rate of capital expenditures will be similar for the MOB and SHOP segments throughout 2022, however, the recent economic uncertainty created by the COVID-19 global pandemic will continue to impact our decisions on the amount and timing of future capital expenditures. Our capital expenditures in 2021 were funded using cash on hand, and we also expect to fund future capital expenditures using cash on hand.
Acquisitions — Year Ended December 31, 2021
During the year ended December 31, 2021, we completed the acquisitions of five multi-tenant MOBs and 12 single tenant MOBs for an aggregate contract purchase price of $160.2 million. The acquisition of one multi-tenant MOB and two single-tenant MOBs for a contract purchase price of $12.8 million, was completed during the three months ended December 31, 2021. The properties acquired during the year were funded with proceeds cash on hand and borrowings from our Revolving Credit Facility, and in one case, in part by the issuance of our Series A Preferred OP Units (see Note 8 — Stockholders’ Equity andNote 13 — Non-Controlling Interests to our consolidated financial statements included in this Annual Report on Form 10-K).
Acquisitions — Subsequent to December 31, 2021
We did not acquire any properties subsequent to December 31, 2021. We have entered into one non-binding letter of intent to purchase one MOB property for a contract purchase price of $8.2 million. There can be no assurance we will complete this acquisition on its contemplated terms, or at all.
Dispositions — Year Ended December 31, 2021
During the year ended December 31, 2021, we sold eight properties (three MOBs and five SHOPs) for an aggregate contract price of $133.6 million, which resulted in an aggregate gain on sale of $3.6 million. Two of these properties were sold in the fourth quarter of 2021 and had an aggregate contract sales price of $37.8 million, which resulted in an aggregate gain on sale of $1.3 million. Of the properties disposed in the year ended December 31, 2021, one was encumbered under the Capital One MOB loan, one was unencumbered, and six were part of the borrowing base of our Credit Facility. Pursuant to the terms of our amended Credit Facility, all proceeds from these dispositions were used to repay amounts outstanding under the Credit Facility.
Dispositions — Subsequent to December 31, 2021
Subsequent to December 31, 2021, we did not dispose of any properties. We have entered into a PSA to dispose of the four LaSalle properties located in Texas for an aggregate contract sales price of $12.4 million. The PSA is subject to conditions, and there can be no assurance this, or any, disposition will be completed on the contemplated terms, or at all. Pursuant to the terms of our Credit Facility, the net cash proceeds from any completed dispositions must be used to prepay amounts outstanding under the Revolving Credit Facility and will therefore not be available to us for any other purpose. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met.
Share Repurchase Program
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Under the Credit Facility, we are restricted from repurchasing shares until the end of the Commencement Quarter. Thus, the Board suspended repurchases under the SRP effective August 14, 2020. No further repurchase requests under the SRP may be made unless and until the SRP is reactivated. There can be no assurance, however, as to whether our SRP will be reactivated or on what terms. Beginning in the Commencement Quarter, we will be permitted to repurchase up to $50.0 million of shares of our common stock (including amounts previously repurchased during the term of the Revolving Credit Facility) if, after giving effect to the repurchases, we maintain cash and cash equivalents of at least $30.0 million and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 55.0%.
No assurances can be made as to when or if our SRP will be reactivated.
Non-GAAP Financial Measures
This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”), Modified Funds from Operations (“MFFO”) and NOI. While NOI is a property-level measure, MFFO is based on our total performance as a company and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined here, includes straight-line rent which is excluded from MFFO. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net income, are provided below:
Funds from Operations and Modified Funds from Operations
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
Because of these factors, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has published a standardized measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s definition.
We believe that the use of FFO provides a more complete understanding of our operating performance to investors and to management, and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
Because of these factors, the Institute of Portfolio Alternatives (“IPA”), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.
We calculate MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the “Practice Guideline”) issued by the IPA in
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November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition fees and expenses, amortization of above and below market and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. We also exclude other non-operating items in calculating MFFO, such as transaction-related fees and expenses and capitalized interest. In addition, because we currently believe that concessions granted to our tenants as a result of the COVID-19 pandemic are collectable (see Accounting Treatment of Rent Deferrals below), we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these deferrals, which is not considered by the Practice Guideline.
We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance once our portfolio is stabilized. Our Modified FFO (as defined in our Credit Facility) is similar but not identical to MFFO as discussed in this Annual Report on Form 10-K. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.
Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to pay dividends and other distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.
Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, updates to the White Paper or the Practice Guideline may be published or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.
Accounting Treatment of Rent Deferrals
All of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information). As a result of relief granted by the FASB and SEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO has not been, and we do not expect it to be, significantly impacted by these types of deferrals. In addition, because we currently believe that these deferred amounts are collectable, we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these deferrals. For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 — Significant Accounting Polices to our consolidated financial statements included in this Annual Report on Form 10-K.
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The table below reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of FFO and MFFO for the periods indicated. In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests.
Year Ended December 31,
(In thousands)20212020
Net loss attributable to common stockholders (in accordance with GAAP)$(92,942)$(78,781)
Depreciation and amortization (1)
78,115 79,643 
Impairment charges40,951 36,446 
Gain on sale of real estate investments(3,648)(5,230)
Adjustments for non-controlling interests (2)
(529)(526)
FFO (as defined by NAREIT) attributable to common stockholders21,947 31,552 
Acquisition and transaction related2,714 173 
(Accretion) amortization of market lease and other lease intangibles, net(198)(80)
Straight-line rent adjustments(780)(2,405)
Straight-line rent (rent deferral agreements) (3)
(280)280 
Amortization of mortgage premiums and discounts, net55 60 
(Gain) loss on non-designated derivatives(37)102 
Deferred tax asset valuation allowance (4)
(482)4,641 
Adjustments for non-controlling interests (2)
(9)
MFFO attributable to common stockholders$22,940 $34,314 
________
(1) Net of non-real estate depreciation and amortization.
(2) Represents the portion of the adjustments allocable to non-controlling interests.
(3) Represents the amount of deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on our consolidated balance sheet but are considered to be earned revenue attributed to the current period for purposes of MFFO as they are expected to be collected.
(4) This is a non-cash item and is added back as it is not considered a part of operating performance.
Net Operating Income
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to revenue from tenants less property operating and maintenance expenses. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss).
We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. We use NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).
NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay distributions.
The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the year ended December 31, 2021:
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(In thousands)Same StoreAcquisitionsDispositionsNon-Property SpecificTotal
Net (loss) income attributable to common stockholders (in accordance with GAAP)$(133)$2,527 $2,074 $(97,410)$(92,942)
Impairment charges40,073 — 878 — 40,951 
Operating fees to related parties— — — 24,206 24,206 
Acquisition and transaction related— — 2,711 2,714 
General and administrative135 — — 16,693 16,828 
Depreciation and amortization70,972 6,705 2,249 — 79,926 
Interest expense1,726 — — 46,174 47,900 
Interest and other income(19)— — (42)(61)
Loss on non-designated derivative instruments— (37)(37)
Loss on sale of real estate investments— — (3,648)— (3,648)
Income tax expense— — — 203 203 
Net income attributable to non-controlling interests— — — (260)(260)
Allocation for preferred stock— — — 7,762 7,762 
NOI$112,757 $9,232 $1,553 $— $123,542 
The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the year ended December 31, 2020:
(In thousands)Same StoreAcquisitionsDispositionsNon-Property SpecificTotal
Net income (loss) attributable to common stockholders (in accordance with GAAP)$62,691 $983 $(40,010)$(102,445)$(78,781)
Impairment charges(10,135)— 46,581 — 36,446 
Operating fees to related parties— — — 23,922 23,922 
Acquisition and transaction related— — — 173 173 
General and administrative95 — — 21,477 21,572 
Depreciation and amortization72,653 3,076 5,324 — 81,053 
Interest expense2,036 — — 49,483 51,519 
Interest and other income— — — (44)(44)
Loss on non-designated derivative instruments— — — 102 102 
Gain on sale of real estate investments— — (5,230)— (5,230)
Income tax expense— — — 4,061 4,061 
Net income (loss) attributable to non-controlling interests— — — 303 303 
Allocation for preferred stock— — — 2,968 2,968 
NOI$127,340 $4,059 $6,665 $— $138,064 
Refer to Note 15 — Segment Reporting to our consolidated financial statements found in this Annual Report on Form 10-K for a reconciliation of NOI to net loss attributable to stockholders by reportable segment.
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Dividends and Other Distributions
Dividends on our Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375% per annum on the $25.00 liquidation preference per share of Series A Preferred Stock. Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.
Dividends on our Series B Preferred Stock accrue in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to Series B Preferred Stock holders, which is equivalent to 7.125% of per annum in the $25.00 liquidation preference per share of Series B Preferred Stock. Dividends on the Series B Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us. The first dividend on the Series B Preferred Stock was paid in January 2022.
From March 1, 2017,2018 until June 20, 2020, we paid distributions to our common stockholders, at a rate equivalent of $1.45to $0.85 per annum, per share of common stock. On February 20, 2018, the Board authorized a further decrease in the rate at which we pay monthly distributions to stockholders, effective as of March 1, 2018, to a rate equivalent of $0.85 per share annum, per share of common stock. Distributions arewere payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.
On June 29, 2020, the Board approved a change in our common stock distribution policy changing from daily record dates to a single record date during the applicable month.
Under our Credit Facility we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions. These exceptions include paying cash dividends on the Series A Preferred Stock and the Series B Preferred Stock or any other preferred stock we may issue and paying any cash distributions necessary to maintain our status as a REIT. We may not pay any cash distributions (including dividends on Series A Preferred Stock and Series B Preferred Stock) if a default or event of default exists or would result therefrom. The restrictions on paying cash distributions will no longer apply starting in the quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter, we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and the Covenant Relief Period has ended. There can be no assurance as to if, or when, we will be able to satisfy these conditions. We may only pay cash distributions on our common stock beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock and Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter. In addition, our ability to pay cash distributions may be limited by financial covenants in the Credit Facility, including our requirement to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges. Until four full fiscal quarters have elapsed after the commencement of Commencement Quarter, the aggregate amount of permitted distributions and Modified FFO will be determined by using only the fiscal quarters that have elapsed from and after the Commencement Quarter and annualizing those amounts.
On August 13, 2020, the Board changed our common stock distribution policy in order to preserve our liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with the Credit Facility described above. Under the new policy, distributions authorized by the Board on shares of our common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of our common stock valued at the Estimated Per-Share NAV in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter. In each of October 2020 and January 2021, we declared and issued stock dividends equal to 0.01349 shares of common stock on each share of outstanding common stock, and in April 2021, July 2021, October 2021 and January 2022, we declared and issued a stock dividend equal to 0.014655 shares of common stock on each share of outstanding common stock. The amounts of these stock dividends were based on our prior cash distribution rate of $0.85 per share per annum and the then applicable Estimated Per-Share NAV. We did not pay any cash dividends on our common stock during the year ended December 31, 2021. See “— Overview” for additional information on the impact of the stock dividends.
Subject to the restrictions in our Credit Facility, the amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Code. Distribution payments are dependent on the availability of funds. 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.
Pursuant
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The following table shows the sources for the payment of distributions to common stockholders and preferred stockholders, including distributions on restricted shares and OP Units, but excluding distributions related to Class B Units because these distributions are recorded as an expense in our Newconsolidated statement of operations and comprehensive loss, for the periods indicated:
Three Months EndedYear Ended
March 31, 2021June 30, 2021September 30, 2021December 31, 2021December 31, 2021
(In thousands)Percentage of DistributionsPercentage of DistributionsPercentage of DistributionsPercentage of DistributionsPercentage of Distributions
Distributions:
Dividends paid to holders of Series A Preferred Stock$742 $742 $1,827 $1,833 $5,144 
Distributions paid to holders of Series A OP Units— — — 46 46 
Total cash distributions [1] [3]
$742 $742 $1,827 $1,879 $5,190 
Source of distribution coverage:
Cash flows provided by operations [2]
$742 100.0 %$742 100.0 %$1,827 100.0 %$1,879 100.0 %$5,190 100.0 %
Total source of distribution coverage$742 100.0 %$742 100.0 %$1,827 100.0 %$1,879 100.0 %$5,190 100.0 %
Cash flows provided by operations (in accordance with GAAP)$13,959 $3,644 $8,401 $12,875 $38,879 
Net loss (in accordance with GAAP)$(11,442)$(14,103)$(40,465)$(19,430)$(85,440)
_______
[1]Assumes the use of available cash flows from operations before any other sources.
[2]During 2021 all dividends on common stock and common stock OP Units were issued in the form of additional shares and therefore, are not included in the table above.
[3]Our Series B Preferred Stock was first issued in October 2021, and we are required to begin paying dividends on the Series B Preferred Stock in January 2022.
For the year ended December 31, 2021, cash flows provided by operations were $38.9 million. We had not historically generated sufficient cash flow 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 distributions with cash flows provided by operations. 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 we pay distributions in stock instead of cash.
Our ability to pay dividends on our Series A Preferred Stock and Series B Preferred Stock and starting with the Commencement Quarter, other distributions and maintain compliance with the restrictions on the payment of distributions in our Credit Facility until the earlier of the first day of the first fiscal quarter in 2019 in which we electdepends on our ability to be subject to other restrictions on distributions under our New Credit Facility or January 1, 2020, we are not permitted to amend or modify our current distribution policy in any manner (including, without limitation, to change the timing, amount or frequency of payments), except to reduceincrease the amount of cash we generate from property operations which in turn depends on a variety of factors, including the distribution. Once we are permittedduration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to increasecomplete acquisitions of new properties and our distribution rate, provisions inability to improve operations at our New Credit Facility will restrict us from paying distributions in any fiscal quarter that, when added to the aggregate amount of all other distributions paid in the same fiscal quarter and the preceding three fiscal quarters (calculated on an annualized basis during the first three fiscal quarters for which the provisions are in effect), exceed 95% of our Modified FFO (as defined in our New Credit Facility and which is similar but not identical to MFFO as discussed in this Annual Report on Form 10-K) during the applicable period.existing properties. There can be no assurance that we will be able to continue paying distributions at the current rate,complete acquisitions on a timely basis or on acceptable terms and conditions, if at all. See "—Risks RelatedOur ability to Our Propertiesimprove operations at our existing properties is also subject to a variety of risks and Operations — Provisions inuncertainties, many of which are beyond our New Credit Facility currently restrict us from increasing the rate we pay distributions to our stockholders,control, and there can be no assurance we will be successful in achieving this objective.
We may still pay any cash distributions necessary to maintain its status as a REIT and may not pay any cash distributions (including dividends on Series A Preferred Stock and Series B Preferred Stock) if a default or event of default exists or would result therefrom under the Credit Facility.
Loan Obligations
The payment terms of our mortgage notes payable generally require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Credit Facility require interest only amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Fannie Mae Master Credit Facilities required interest only payments through November 2021 and principal and interest payments thereafter. Our loan agreements require us to comply with specific reporting covenants. As of December 31, 2021, we were in compliance with the financial and reporting covenants under our loan agreements.
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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. Commencing with that taxable year, we have been organized and operated in a manner so that we qualify as a REIT under the Code. We intend to continue to operate in such a manner but can provide no assurances that we will operate in a manner so as to remain qualified for taxation as a REIT. To continue to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding net capital gains, and comply with a number of other organizational and operational requirements. If we continue to qualify as a REIT, we generally will not be subject to U.S. federal corporate income tax on the portion of our REIT taxable income that we distribute to our stockholders. Even if we continue to qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as U.S. federal income and excise taxes on our undistributed income.
Inflation
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. For the year ended December 31, 2021, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 7.0%. To help mitigate the adverse impact of inflation, approximately 87% of our leases with our tenants in our MOB segment contain rent escalation provisions which average 1.8% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). Approximately 84% are fixed-rate, 3% are based on the Consumer Price Index and 13% do not contain any escalation provisions.
In addition to base rent, depending on the specific lease, MOB tenants are generally reuired 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. Increased operating costs paid by our tenants under these net leases could have an adverse impact on our tenants if increases in their operating expenses exceed increases in their revenue, which may adversely affect our tenants’ ability to pay rent owed to us or property expenses to be paid, or reimbursed to us, by our tenants. Renewals of leases or future leases for our net lease properties may not be negotiated on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs.
Leases with residents at our SHOPs typically do not have rent escalations, however, we are able to continue paying distributionsrenew leases at market rates as they mature due to their short-term nature. As inflation rates increase or persist at high levels, the cost of providing medical care at our SHOPs, particularly labor costs, will increase. If we are unable to admit new residents or renew resident leases at market rates, while bearing these increased costs from providing services to our residents, our results of operations may be affected.
Related-Party Transactions and Agreements
Please see Note 9 Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion of the various related party transactions, agreements and fees.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings, our Credit Facility (which includes a Revolving Credit Facility and a Term Loan) and the Fannie Mae Master Credit Facilities, bear interest at fixed rates and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars, and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We will not hold or issue these derivative contracts for trading or speculative purposes. As of December 31, 2021, we had entered into nine non-designated interest rate caps with a notional amount of approximately $355.2 million and nine designated interest rate swaps with a notional amount of $578.5 million. We do not have any foreign operations and thus we are generally not directly exposed to foreign currency fluctuations.
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Mortgage Notes Payable
As of December 31, 2021, all of our mortgages are either fixed-rate ($213.3 million) or variable-rate ($378.5 million), before consideration of interest rate swaps. Our mortgages had a gross aggregate carrying value of $591.8 million and a fair value of $594.3 million as of December 31, 2021.
Credit Facilities
Our Credit Facilities are variable-rate, before consideration of interest rate swaps, and are comprised of our Revolving Credit Facility, our Term Loan and our Fannie Mae Master Credit Facilities. Our Credit Facilities had a gross aggregate carrying amount of $505.0 million and a fair value of $499.5 million as of December 31, 2021.
Sensitivity Analysis - Interest Expense
Interest rate volatility associated with all of our variable-rate borrowings, which totaled $0.9 billion as of December 31, 2021, affects interest expense incurred and cash flow to the extent they are not fixed via interest rate swap. As noted above, we have nine designated interest rate swaps with a notional amount of $578.5 million, which effectively creates a fixed interest rate for a portion of our variable-rate debt. We also have six non-designated interest rate cap contracts, which are substantially out of the money and, therefore do not currently affect our near-term interest rate sensitivity. The sensitivity analysis related to the portion of our variable-rate debt that is not fixed via designated interest rate swaps assumes an immediate 100 basis point move in interest rates from their December 31, 2021 levels, with all other variables held constant. A 100 basis point increase and decrease in variable interest rates on the portion of our variable-rate debt that is not fixed via designated interest rate swaps would increase and decrease our interest expense by $3.1 million.
Sensitivity Analysis - Fair Value of Debt
Changes in market interest rates on our debt instruments impacts their fair value, even if it has no impact on interest due on them. For instance, if interest rates rise 100 basis points and the balances on our debt instruments remain constant, we expect the fair value of our obligations to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our debt assumes an immediate 100 basis point move in interest rates from their December 31, 2021 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our debt by $15.3 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our debt by $22.6 million. A 100 basis point increase in market interest rates would result in an increase in the fair value of our nine designated interest rate swaps by $21.8 million. A 100 basis point decrease in market interest rates would result in a decrease in the fair value of our nine designated interest rate swaps by $23.0 million.
These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and assuming no other changes in our capital structure. The information presented above includes only those exposures that existed as of December 31, 2021 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
Item 8. Financial Statements and Supplementary Data.
The information required by this Item 8 is hereby incorporated by reference to our Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.
Our Chief Executive Officer and Chief Financial Officer, carried out an evaluation, together with other members of our management, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief
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Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of December 31, 2021 at all"a reasonable level of assurance.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for further information.establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on its assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was effective based on those criteria.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. The effectiveness of our internal control over financial reporting has not been audited by our independent registered public accounting firm because we are a “non-accelerated filer” as defined under SEC rules.
Changes in Internal Control Over Financial Reporting
During the three months ended December 31, 2021, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not Applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
We have adopted a Code of Business Conduct and Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer and principal financial officer. A copy of our code of ethics may be obtained, free of charge, by sending a written request to our executive office: 650 Fifth Avenue - 30th Floor, New York, NY 10019, Attention: Chief Financial Officer. Our Code of Business Conduct and Ethics is also publicly available on our website at www.healthcaretrustinc.com. If we make any substantive amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics to our chief executive officer, chief financial officer, chief accounting officer or controller or persons performing similar functions, we will disclose the nature of the amendment or waiver on that website or in a report on Form 8-K.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 2022 annual meeting of stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 2022 annual meeting of stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Securities Authorized for Issuance Under Equity Based Compensation Plans
Restricted Share PlanResults of Operations
Same Store Properties
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Information based on Same Store, Acquisitions and Dispositions (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered. As of December 31, 2021, we owned 202 properties. There were 176 properties (our “Same Store” properties) owned for the entire years ended December 31, 2021 and 2020, including two vacant land parcels. Since January 1, 2020 and through December 31, 2021, we acquired 26 properties (our “Acquisitions”) and disposed of 17 properties (our “Dispositions”).
The following table presents a roll-forward of our properties owned from January 1, 2020 to December 31, 2021:

MOBSHOPTotal
Number of properties, December 31, 2019132 61 193 
Acquisition activity during the year ended December 31, 2020
Disposition activity during the year ended December 31, 2020(1)(8)(9)
Transition activity during the year ended December 31, 2020(4)— 
Number of properties, December 31, 2020132 61 193 
Acquisition activity during the year ended December 31, 20211717
Disposition activity during the year ended December 31, 2021(3)(5)(8)
Number of properties, December 31, 2021146 56 202 
Number of Same Store Properties (1)
124 52 176 
_______________
(1) Includes the acquisition of a land parcel adjacent to an existing property which is not considered an Acquisition.
In addition to the comparative period-over-period discussions below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s responses.
Below is a discussion of our results of operations for the years ended December 31, 2021 and2020. Please see the “Results of Operations” section located in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for a comparison of our results of operations for the year ended December 31, 2020 and 2019.
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Comparison of the Years Ended December 31, 2021 and 2020
Net loss attributable to common stockholders was $92.9 million and $78.8 million for the years ended December 31, 2021 and 2020, respectively. The following table shows our results of operations for the years ended December 31, 2021 and 2020 and the year to year change by line item of the consolidated statements of operations:
 Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$
Revenue from tenants$329,355 $381,612 $(52,257)
Operating expenses:  
Property operating and maintenance205,813 243,548 (37,735)
Impairment charges40,951 36,446 4,505 
Operating fees to related parties24,206 23,922 284 
Acquisition and transaction related2,714 173 2,541 
General and administrative16,828 21,572 (4,744)
Depreciation and amortization79,926 81,053 (1,127)
Total expenses370,438 406,714 (36,276)
Operating loss before gain on sale of real estate investments(41,083)(25,102)(15,981)
Gain on sale of real estate investments3,648 5,230 (1,582)
Operating loss(37,435)(19,872)(17,563)
Other income (expense):
Interest expense(47,900)(51,519)3,619 
Interest and other income61 44 17 
Loss on non-designated derivatives37 (102)139 
Total other expenses(47,802)(51,577)3,775 
Loss before income taxes(85,237)(71,449)(13,788)
Income tax expense(203)(4,061)3,858 
Net loss(85,440)(75,510)(9,930)
Net (income) loss attributable to non-controlling interests260 (303)563 
Allocation for preferred stock(7,762)(2,968)(4,794)
Net loss attributable to common stockholders$(92,942)$(78,781)$(14,161)
__________
NM — Not Meaningful
Net Operating Income
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to revenue from tenants less property operating and maintenance expenses. NOI excludes all other financial statement amounts included in net income (loss) attributable to common stockholders. We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. See “Non-GAAP Financial Measures” below for additional disclosure and a reconciliation, in the aggregate, of the NOI for the segments presented below to our net income (loss) attributable to common stockholders.

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Segment Results — Medical Office Buildings
The following table presents the components of NOI and the period to period change within our MOB segment for the years ended December 31, 2021 and 2020:
Segment Same Store(1)
Acquisitions(2)
Dispositions(3)
Segment Total(4)
 Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$20212020$20212020$20212020$
Revenue from tenants$110,609 $112,987 $(2,378)$8,325 $2,057 $6,268 $3,933 $4,779 $(846)$122,867 $119,823 $3,044 
Less: Property operating and maintenance30,131 30,173 (42)1,819 360 1,459 2,530 2,278 252 34,480 32,811 1,669 
NOI$80,478 $82,814 $(2,336)$6,506 $1,697 $4,809 $1,403 $2,501 $(1,098)$88,387 $87,012 $1,375 
_______________
(1)    Our MOB segment included 124 Same Store properties.
(2)    Our MOB segment included 22 Acquisition properties.
(3)    Our MOB segment included four Disposition properties.
(4)    Our MOB segment consisted of 146 properties.
NM — Not Meaningful
Revenue from tenants is primarily related to contractual rent received from tenants in our MOBs. It also includes operating expense reimbursements which generally increase with the increase in property operating and maintenance expenses in our MOB 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.
Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third party property management fees.
During the year ended December 31, 2021, the MOB segment contributed a $1.4 million increase in NOI as compared to the year ended December 31, 2020. Of our 26 Acquisitions, during the period from January 1, 2020 through December 31, 2021, 22 were MOBs which contributed a $4.8 million increase in NOI, and our Disposition properties contributed a $1.1 million decrease in NOI, while NOI from our Same Store properties contributed a $2.3 million decrease in NOI as compared to the year ended December 31, 2020. The decrease in NOI from our Same Store properties is due to one-time expense recoveries which occurred in the year ended December 31, 2020 which did not occur in the year ended December 31, 2021.
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 years ended December 31, 2021 and 2020:
Segment Same Store (1)
Acquisitions (2)
Dispositions (3)
Segment Total
 Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$20212020$20212020$20212020$
Revenue from tenants$186,359 $204,932 $(18,573)$14,667 $12,780 $1,887 $5,462 $44,076 $(38,614)$206,488 $261,788 $(55,300)
Less: Property operating and maintenance154,080 160,406 (6,326)11,941 10,418 1,523 5,312 39,912 (34,600)171,333 210,736 (39,403)
NOI$32,279 $44,526 $(12,247)$2,726 $2,362 $364 $150 $4,164 $(4,014)$35,155 $51,052 $(15,897)
__________
(1)    Our SHOP segment included 52 Same Store properties, including two land parcels.
(2)    Our SHOP segment included four Acquisitions properties.
(3) Our SHOP segment included 13 Dispositions properties.
(4) Our SHOP segment included 56 properties, including two land parcels.
NM — Not Meaningful
Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expenses relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators, and costs associated with maintaining the physical site.
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During the year ended December 31, 2021, revenue from tenants decreased by $55.3 million in our SHOP segment as compared to the year ended December 31, 2020 primarily giving effect to a $38.6 million decrease from our Disposition properties, and a decrease of $18.6 million from our Same Store properties. These decreases were partially offset by $1.9 million of additional revenue through our Acquisition properties. For the year ended December 31, 2021, an additional $0.8 million was generated through COVID-19 surcharges for PPE as compared to $1.1 million in PPE billings during the year ended December 31, 2020. We also offered $0.1 million of rent concessions related to COVID-19 in the year ended December 31, 2021 as compared to $0.4 million of rent concessions granted during the year ended December 31, 2020.
Revenues declined in our Same Store SHOPs primarily due to a decrease in occupancy as a result of COVID-19 as discussed in Management Update on the Impacts of the COVID-19 Pandemic. Regulatory and government-imposed restrictions and infectious disease protocols have hindered our ability to accommodate and conduct in-person tours and process and attract new move-ins at our SHOPs which has affected and could continue to affect our ability to fill vacancies.
We also generated a portion of our SHOP revenue from skilled nursing facilities (which include ancillary revenue from non-residents) at two of our Same Store SHOPs and two of our Disposition SHOPs. This revenue declined $9.8 million from $13.3 million during the year ended December 31, 2020 to $3.5 million during the year ended December 31, 2021 as a result of limiting the services we offered at our skilled nursing facilities during the COVID-19 pandemic to protect our residents and on-site staff, as well as from disposing of our two largest SNFs in Lutz and Wellington, Florida in December 2020 and May 2021, respectively. The property in Wellington, Florida generated ancillary revenues of $1.6 million and $3.9 million in the years ended December 31, 2021 and 2020, respectively. The property in Lutz, Florida generated ancillary revenue of $4.0 million in the year ended December 31, 2020. These properties’ results are presented in Disposition properties in the table above. As a result of these dispositions, we expect ancillary revenue to continue to decline in future quarters relative to prior quarters where we owned these properties. Our remaining SNFs generated ancillary revenue of $1.9 million and $5.4 million in the years ended December 31, 2021 and 2020, respectively.
During the year ended December 31, 2021, property operating and maintenance expenses decreased $39.4 million in our SHOP segment as compared to the year ended December 31, 2020, primarily due to a decrease of $34.6 million from our Dispositions and a decrease of $6.3 million in our Same Store properties. These increases were partially offset by an employeeincrease in property operating and director incentive restricted share plan (as amendedmaintenance expenses from timeour Acquisitions of $1.5 million.
Our property operating and maintenance expenses for our Same Store properties decreased due to time,$5.1 million in CARES Act funds received, $4.4 million of which related to our Same Store properties. We received $3.6 million of CARES Act funds in 2020, $0.9 million of which related to our Same Store properties. We consider the "RSP"),receipt of CARES Act funds as government grants which reduce property operating and maintenance expenses for the period in which they are received. In addition, we had lower operating costs as a result of lower occupancy levels as well as some lessening of COVID-related costs in the year ended December 31, 2021 as compared to the year ended December 31, 2020. There can be no assurance that the program will be extended or any further amounts received. See the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken in response.
Other Results of Operations
Impairment Charges
We incurred $41.0 million of impairment charges for the year ended December 31, 2021. The impairment charges for the year ended December 31, 2021 related to a $0.9 million impairment on our Wellington property, which was recorded to adjust the carrying value to its fair value as determined by its purchase and sale agreement, a $6.1 million impairment related to an MOB property located in Sun City, Arizona, and $34.0 million related to our LaSalle properties.
We incurred $36.4 million of impairment charges for the year ended December 31, 2020. We recorded $19.6 million of impairment charges related to the 11 Michigan SHOPs, which was recognized after an amendment to the PSA for the sale of these properties in April 2020 which reduced the number of properties under consideration as well as the contract purchase price. We recorded $16.9 million of impairment charges related to the two Florida properties in Jupiter and Wellington as a result of our marketing efforts during the COVID-19 pandemic which concluded with a PSA in August 2020, for which the contract purchase was less than the carrying values of the properties, as well as expected closing costs that were not previously anticipated, which reduced the net amount expected to be realized on the sale of properties.
See Note 3 — Real Estate Investments to our consolidated financial statements in this Annual Report on Form 10-K for additional information on impairment charges.
Operating Fees to Related Parties
Operating fees to related parties increased $0.3 million to $24.2 million for the year ended December 31, 2021 from $23.9 million for the year ended December 31, 2020.
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Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis. The fixed portion of the base management fee we pay for asset management services is equal to $1.6 million per month, while the variable portion of the base management fee is equal, per month, to one twelfth per month of 1.25% of the cumulative net proceeds of any equity the we raise. Asset management fees increased $0.7 million to $20.7 million for the year ended December 31, 2021, due to the increase in the variable portion of the base management fee related to the issuance and sale of Series B Preferred Stock in October 2021.
Property management fees decreased $0.4 million to $3.7 million, inclusive of $0.3 million of leasing commissions paid, during the year ended December 31, 2021 from $4.2 million during the year ended December 31, 2020. Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.
SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements found in this Annual Report on Form 10-K which provides us withdetail on our asset and property management fees.
Acquisition and Transaction Related Expenses
Acquisition and transaction related expenses were $2.7 million for the abilityyear ended December 31, 2021 and $0.2 million for the year ended December 31, 2020. The increase is mainly due to grant awards$1.2 million of restricted shares of common stock ("restricted shares")costs incurred from our terminated Preferred Stock Equity Line, $0.8 million from litigation costs related to our directors, officersMichigan dispositions which occurred in the first quarter of 2021, $0.2 million from a legal settlement related to our Jupiter, Florida disposition which occurred in the second quarter of 2021, and employees (if we ever have employees), employees$0.3 million of increased costs related to dead deal and other miscellaneous costs incurred in the year ended December 31, 2021 as compared to the year ended December 31, 2020. The expenses in both periods primarily related to indirect costs associated with potential acquisitions.
General and Administrative Expenses
General and administrative expenses decreased $4.7 million to $16.8 million for the year ended December 31, 2021 compared to $21.6 million for the year ended December 31, 2020. For the year ended December 31, 2021 and 2020, incurred expense reimbursements and distributions on partnership units of the AdvisorOP designated as Class B Units to related parties were $8.4 million and its affiliates, employees$11.1 million, respectively. Class B Units will not receive cash distributions, and no further expense will be incurred, for so long as we pay distributions to our common stockholders in stock instead of entities that provide servicescash. The decrease in expense reimbursements to us, directorsrelated parties was primarily due to $2.2 million of costs incurred in the Advisor oryear ended December 31, 2020 related to severance payments to our former chief executive officer and related legal costs which did not occur in the year ended December 31, 2021. Both the years ended December 31, 2021 and 2020 include reductions of entities that provide servicesexpenses related to us, certain consultants to us2020 and 2019 employee bonuses, respectively, of $1.0 million and $1.2 million of professional fee credits from the Advisor and its affiliates or to entities that provide services to us.Advisor. For additional information, see details on the 2020 and 2019 bonus awards (see Note 119 — Share-Based Compensation – Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K.10-K).
In addition to lower expense reimbursements, the decrease was primarily due the decrease in distributions on Class B Units of $0.2 million, lower legal expenses of $0.9 million, lower auditing expenses of $0.4 million, lower printing expenses of $0.6 million, and lower transfer agent expenses of $0.2 million.
The following table sets forth information regarding securities authorized for issuance under the RSP as of December 31, 2018:
Plan CategoryNumber of  Securities to be Issued Upon Exercise of  Outstanding Options, Warrants and RightsWeighted-Average Exercise Price of Outstanding Options, Warrants and RightsNumber of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column) (a)
(a)(b)(c)
Equity Compensation Plans approved by security holders

2,996,677
(1)
Equity Compensation Plans not approved by security holders


Total

2,996,677
(1)
(1) The total number of shares of common stock that may be subject to awards granted under the RSP may not exceed 5.0% of our outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 3.4 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events). As of December 31, 2018, we had 91,963,532 shares of common stock issued and outstanding and 394,000 shares of common stock that were subject to awards granted under the RSP. For additional information on the RSP, please see Note 11 — Share-Based Compensation to our consolidated financial statements included in this Annual Report on Form 10-K.
Sales of Unregistered Securities
We did not sell any equity securities that were not registered under the Securities Act during the year ended December 31, 2018, except with respect to which information has been included in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In order to provide stockholders with interim liquidity, the Board has adopted the SRP, which enables our stockholders to sell their shares back to us after they have been held for at least one year, subject to significant conditions and limitations. Our Advisor, directors and affiliates are prohibited from receiving a fee on any share repurchases. For additional information on the SRP, see Note 8 — Common Stock to our consolidated financial statements included in this Annual Report on Form 10-K.
On January 29, 2019, we announced that our Board approved an amendment to our SRP, which became effective on January 30, 2019, changing the date on which any repurchases are to be made in respect of requests made during the period commencing March 13, 2018 up to and including December 31, 2018 to no later than March 31, 2019, rather than on or before the 31st day following December 31, 2018. Accordingly, no repurchases were made pursuantaforementioned professional reimbursement fees to the SRP during the three months ended December 31, 2018.

The following table summarizes our SRP activity for the periods presented. The cost of the repurchased shares did not exceed DRIP proceeds during the periods presented. We funded share repurchases from proceeds received from common stock issued under the DRIP.
  Number of Shares Repurchased Average Price per Share
     
Period from October 15, 2012 (date of inception) to December 31, 2012 
 $
Year ended December 31, 2013 1,600
 25.00
Year ended December 31, 2014 72,431
 24.41
Year ended December 31, 2015 894,339
 23.66
Year ended December 31, 2016 6,660
 24.36
Year ended December 31, 2017 1,554,768
 21.61
Year ended December 31, 2018 (1)
 758,458
 18.73
Cumulative repurchases as of December 31, 2018 3,288,256
 21.56
_______________
(1) Includes (i) 373,967 shares repurchased during January 2018 with respect to requests received following the death or qualifying disability of stockholders during the six months ended December 31, 2017 for approximately $8.0 million at a weighted average price per share of $21.45, and (ii) 155,904 shares that were repurchased for $3.2 million at an average price per share of $20.25 on July 31, 2018, representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. No repurchase requests received during the SRP suspension were accepted.
Item 6. Selected Financial Data.
The following selected financial data as of and for the years December 31, 2018, 2017, 2016, 2015 and 2014 should be read in conjunction with the accompanying consolidated financial statements and related notes thereto and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" below:
Balance sheet data (In thousands)
 December 31,
  2018 2017 2016 2015 2014
Total real estate investments, at cost $2,553,079
 $2,486,052
 $2,355,262
 $2,341,271
 $1,662,697
Total assets 2,377,446
 2,371,861
 2,193,705
 2,269,842
 1,856,482
Mortgage notes payable, net 462,839
 406,630
 142,754
 157,305
 64,558
Credit facilities 602,622
 534,869
 481,500
 430,000
 
Total liabilities 1,136,512
 1,015,802
 689,379
 668,025
 124,305
Total equity 1,240,934
 1,356,059
 1,504,326
 1,601,817
 1,732,177

Operating data (In thousands, except for share and per share data)
 Year Ended December 31,
 2018 2017 2016 2015 2014
Total revenues $362,406
 $311,173
 $302,566
 $247,490
 $58,439
Total operating expenses (365,512) (323,827) (307,203) (283,100) (92,770)
(Loss) gain on dispositions of real estate investments (70) 438
 1,330
 
 
Operating loss (3,176) (12,216) (3,307) (35,610) (34,331)
Total other expenses (49,605) (29,849) (19,747) (9,328) (2,816)
Loss before income taxes (52,781) (42,065) (23,054) (44,938) (37,147)
Income tax (expense) benefit (197) (647) 2,084
 2,978
 (565)
Net loss (52,978) (42,712) (20,970) (41,960) (37,712)
Net loss attributed to non-controlling interests 216
 164
 96
 219
 34
Net loss attributed to stockholders $(52,762) $(42,548) $(20,874) $(41,741) $(37,678)
Other data:          
Cash flows provided by (used in) operations $54,151
 $63,967
 $78,725
 $68,680
 $(4,687)
Cash flows used in investing activities (115,063) (194,409) (19,092) (556,834) (1,531,134)
Cash flows provided by (used in) financing activities 49,682
 199,843
 (55,567) 332,880
 1,608,383
Per share data:          
Basic and diluted weighted-average shares outstanding 91,118,929
 89,802,174
 87,878,907
 85,331,966
 51,234,729
Basic and diluted net loss per share $(0.58) $(0.47) $(0.24) $(0.49) $(0.74)
Distributions declared per share $0.95
 $1.51
 $1.70
 $1.70
 $1.70
Item 7. 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. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. Please see "Forward-Looking Statements" elsewhere in this Annual Report on Form 10-K for a description of these risks and uncertainties.
Overview
We invest in healthcare real estate, focusing on seniors housing and MOBs, located in the United States for investment purposes. As of December 31, 2018, we owned 191 properties located in 31 states and comprised of 9.1 million rentable square feet.
We were incorporated on October 15, 2012 as a Maryland corporation that elected to be taxed as a REIT beginning with our taxable year ended December 31, 2013. Substantially all of our business is conducted through the OP.
On March 29, 2018, our Board approved an Estimated Per-Share NAV equal to $20.25 as of December 31, 2017.  Our previous Estimated Per-Share NAV was equal to $21.45 as of December 31, 2016. 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.
We have no employees. The Advisor has been retained by us to manage our affairs on a day-to-day basis. We have retained the Property Manage) to serve as our property manager. The Advisor and Property Manager are under common control with AR Global, and these related parties receive compensation, fees and expense reimbursements for services related to managing our business and investments. The Special Limited Partner, which is also under common control with AR Global, also has an interest in us through ownership of interests in the OP.
On December 22, 2017, we completed the Asset Purchase, purchasing all of the membership interests in indirect subsidiaries of HT III that own the 19 properties which comprised substantially all of HT III’s assets, pursuant to the Purchase Agreement, dated as of June 16, 2017. HT III was sponsored and advised by an affiliate of our Advisor.
Significant Accounting Estimates and Critical Accounting Policies
Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degreecap which is equal to the greater of uncertainty. These significant accounting estimatesa fixed or variable component. We did not meet the cap for the years ended December 2021 and critical accounting policies include:

Revenue Recognition
Our rental income is primarily related2020. The fixed component increases by an annual cost of living adjustment equal to rent received from tenants in our MOBsthe greater of (x) 3.0% and triple-net leased healthcare facilities. Rent from tenants in our MOB and triple-net leased healthcare facilities operating segments is recorded in accordance with(y) 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, GAAP require us to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When we acquire a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease is executed. We defer the revenue related to lease payments received from tenants in advance of their due dates.
Cost recoveries from tenants are included in operating expense reimbursementCPI, as defined in the period the related costs are incurred, as applicable.
Resident services and fee income primarily relates to rent from residents in our SHOPs held using a structure permitted by RIDEA and to fees for ancillary services performed for residents in our SHOPs. Rental income from residents of our SHOP segment is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. Fees for ancillary services are recorded in the period in which the services are performed.
We defer the revenue related to lease payments received from tenants and residents in advance of their due dates.
We continually review receivables related to rent and unbilled rent receivables and determine 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. In the event that the collectability of a receivable is in doubt, we record an increase in the allowance for uncollectible accounts on the consolidated balance sheets or record a direct write-off of the receivable in the consolidated statements of operations and comprehensive loss.
Real Estate Investments
Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.
We evaluate the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.
In business combinations, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets may include the value of in-place leases and above- and below-market leases. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests are recorded at their estimated fair values.
We generally determine the value of construction in progress based upon the replacement cost. During the construction period, we capitalize interest, insurance and real estate taxes until the development has reached substantial completion.
The fair value of the tangible assets of an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value of above- or below-market leases is recorded based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and our estimate of the fair market lease rateAdvisory Agreement Amendment for the corresponding in-place lease, measured over the remaining term of the lease including any below-market fixed rate renewal options for below-market leases.
In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including real estate valuations prepared by independent valuation firms. We also consider informationprior year ended December 31st. See Note 9 – Related Party Transactions and other factors including market conditions, the industry that the tenant operates in, characteristics of the real estate, i.e. location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business.
In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates.
In allocating the fair value to non-controlling interests, amounts are recorded based on the fair value of units issued at the date of acquisition, as determined by the terms of the applicable agreement.

Real estate investments that are intended to be sold are designated as "held for sale" on the consolidated balance sheets at the lesser of the carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale. Real estate investments are no longer depreciated when they are classified as held for sale. If the disposal, or intended disposal, of certain real estate investments represents a strategic shift that has had or will have a major effect on our operations and financial results, the operations of such real estate investments would be presented as discontinued operations in the consolidated statements of operations and comprehensive loss for all applicable periods.
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, five years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Construction in progress, including capitalized interest, insurance and real estate taxes, is not depreciated until the development has reached substantial completion.
Capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market lease values are accreted as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.
Capitalized above-market ground lease values are accreted as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.
The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.
The assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining term of the respective mortgages.
Impairment of Long Lived Assets
If circumstances indicate that the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. 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 impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.
Recently Issued Accounting Pronouncements
See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting PronouncementsArrangements to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
Depreciation and Amortization Expenses
Depreciation and amortization expense decreased marginally to $79.9 million for the year ended December 31, 2021 from $81.1 million for the year ended December 31, 2020 as decreases from property dispositions were largely offset by increases from acquisitions.
Gain on Sale of Real Estate Investments
During the year ended December 31, 2021, we disposed of eight properties. The properties were sold for an aggregate contract price of $133.6 million, which resulted in an aggregate gain on sale of $3.6 million. See Note 3 — Real Estate Investments, Net to our consolidated financial statements in this Annual Report on Form 10-K for additional information.
Interest Expense
Interest expense decreased by $3.6 million to $47.9 million for the year ended December 31, 2021 from $51.5 million for the year ended December 31, 2020. The decrease in interest expense resulted from lower interest rates as well as lower average outstanding debt in 2021 compared to 2020. As of December 31, 2021 our outstanding debt obligations were $1.1 billion at a weighted average interest rate of 3.44% per year. As of December 31, 2020, we had total borrowings of $1.2 billion, at a weighted average interest rate of 3.58% per year.
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Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings among other factors.
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 $61,000 for the year ended December 31, 2021. Interest and other income was approximately $44,000 for the year ended December 31, 2020.
Loss on Non-Designated Derivatives
Loss on non-designated derivative instruments for the years ended December 31, 2021 and 2020 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates. Loss on derivative instruments for the years ended December 31, 2021 and 2020 were $37,000 and $0.1 million, respectively.
Income Tax Benefit (Expense)
We recorded income tax expense of $0.2 million and $4.1 million for the years ended December 31, 2021 and 2020, respectively, related to deferred tax assets generated by temporary differences and current period net operating income associated with our TRS. During the year ended December 31, 2020, we recorded an initial $4.6 million valuation allowance against our net deferred tax assets. During the year ended December 31, 2021, we continue to maintain a full valuation allowance against our net deferred tax assets. Income taxes generally relate to our SHOPs, which are leased by our TRS.
Because of our TRS recent operating history of losses and the on-going impacts of the COVID-19 pandemic 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 in the year ended December 31, 2020 and we have continued to maintain this valuation allowance through December 31, 2021. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive income (loss). As of December 31, 2021, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $13.3 million at December 31, 2021 (of which $7.6 million were incurred prior to January 1, 2018). For losses incurred prior to January 1, 2018, if unused, these will begin to expire in 2035. For net operating losses incurred subsequent to December 31, 2017, there is no expiration date.
Net Income/Loss Attributable to Non-Controlling Interests
Net loss attributable to non-controlling interests was approximately $0.3 million and net income attributable non-controlling interests was $0.3 million for the years ended December 31, 2021 and 2020, respectively. These amounts represent the portion of our net loss that is related to the OP Units and non-controlling interest holders in our subsidiaries that own certain properties.
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Cash Flows from Operating Activities
During the year ended December 31, 2021, net cash provided by operating activities was $38.9 million. The level of cash flows provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of $38.8 million (net loss of $85.4 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges). In addition, cash provided by operating activities was impacted by an increase in accounts payable and accrued expenses of $1.3 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees, a net decrease in prepaid expenses and other assets of $2.1 million, and by an increase in deferred rent of $1.7 million. These cash inflows were partially offset by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.8 million.
During the year ended December 31, 2020, net cash provided by operating activities was $41.8 million. The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of $50.4 million (net loss of $75.5 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges). These inflows were partially offset by a decrease in accounts payable and accrued expenses of $4.6 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees, a net increase in prepaid expenses and other assets of $0.1 million, a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $2.4 million and by a decrease in deferred rent of $1.6 million.
Cash Flows from Investing Activities
Net cash used in investing activities during the year ended December 31, 2021 was $47.9 million. The cash used in investing activities included $159.3 million for the acquisition of 17 properties and $19.1 million in capital expenditures. These cash outflows were partially offset by proceeds from the sale of real estate of $130.4 million.
Net cash used in investing activities during the year ended December 31, 2020 was $82.5 million. The cash used in investing activities included $95.0 million for the acquisition of nine properties and $21.9 million in capital expenditures. These cash outflows were partially offset by proceeds from the sale of real estate of $34.4 million.
Cash Flows from Financing Activities
Net cash provided by financing activities of $4.1 million during the year ended December 31, 2021 related to net proceeds from the issuance of Series A preferred stock of $56.3 million, net proceeds from the issuance of Series B preferred stock of $86.9 million and proceeds from a mortgage note payable of $42.8 million. These cash inflows were partially offset by net repayments under our Revolving Credit Facility of $173.8 million, payment for deferred financing costs of $1.5 million and payments of preferred stock dividends of $5.1 million.
Net cash provided by financing activities of $19.4 million during the year ended December 31, 2020 included proceeds of $95.0 million from our Revolving Credit Facility. These cash inflows were partially offset by distributions to stockholders of $31.4 million, common stock repurchases of $10.5 million, payments for deferred financing costs of $2.2 million, the buyout of a non-controlling interest of $0.6 million and dividends paid to preferred stockholders $2.4 million.
Liquidity and Capital Resources
Our principal demands for cash are for 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 Series B Preferred Stock. We closely monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months. Our future liquidity requirements, and available liquidity, however, depend on many factors, such as the on-going impact of COVID-19 on our tenants and operators.
We expect to fund our future short-term operating liquidity requirements, including dividends to holders of Series A Preferred Stock and holders of Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our property operations and draws on the Revolving Credit Facility, which may include amounts reborrowed following the repayments we were or are required to make thereunder.
As of December 31, 2021 and 2020, we had $59.7 million and $72.4 million of cash and cash equivalents, respectively. Our ability to use this cash on hand is restricted. Under our Credit Facility, we are required to maintain a combination of cash, cash equivalents and availability for future borrowings under our Revolving Credit Facility totaling at least $50.0 million. As of
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December 31, 2021, $236.6 million was available for future borrowings under our Revolving Credit Facility. Certain other restrictions and conditions described below, including those on paying cash dividends, will no longer apply starting in the “Commencement Quarter” which is a quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and the Covenant Relief Period has terminated. The fiscal quarter ended June 30, 2021 was the first quarter that could have been the Commencement Quarter. We satisfied the conditions during the quarter ended December 31, 2021 in order to elect the quarter ending March 31, 2022 as the Commencement Quarter, but chose not to do so. There can be no assurance as to if, or when, we will elect to do so, including to the extent we may be unable to satisfy these conditions in future periods. We may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Commencement Quarter. Moreover, beginning in the Commencement Quarter, we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock and Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.
Our Credit Facility also restricts our uses of liquidity. Until the first day of the Commencement Quarter, we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to repay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met. The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and availability has been, and may continue to be, adversely affected by the decreases in cash rent collected from our tenants and income from our operators that have resulted from the effects of the COVID-19 pandemic and may persist for some time.
During the year ended December 31, 2021, we generated liquidity through the sale of equity securities and from various financings as described below.
Preferred Stock Equity Line with B. Riley Principal Capital, LLC
On September 15, 2020, we entered into a preferred stock purchase agreement and registration rights agreement with B. Riley Principal Capital, LLC (“B. Riley”), pursuant to which we had the right from time to time to sell up to an aggregate of $15 million of shares of our Series A Preferred Stock to B. Riley until December 31, 2023, on the terms and subject to the conditions set forth in the purchase agreement (“Preferred Stock Equity Line”). We sold 15,000 shares of Series A Preferred Stock under the Preferred Stock Equity Line during the year ended December 31, 2021, resulting in gross proceeds of $0.4 million and net proceeds of $0.3 million after fees and commissions.
In total, we incurred $1.2 million in costs related to establishing the Preferred Stock Equity Line which were all initially recorded in prepaid expenses and other assets on our consolidated balance sheet. Upon receiving proceeds under the Preferred Stock Equity Line in the third quarter of 2021, the Company reclassified $30,000 of these prepaid costs to additional paid in capital in our consolidated statement of changes in equity as a reduction of the gross proceeds received under the Preferred Stock Equity Line.
In the fourth quarter of 2021, we determined that it was not probable that additional proceeds would be received from the Preferred Stock Equity Line and later terminated the Preferred Stock Equity Line. As a result, we expensed the remaining balance of prepaid costs within acquisition and transaction related costs on the consolidated statement of operations and comprehensive income during the year ended December 31, 2021.
We did not sell any Series A Preferred Stock under the Preferred Stock Equity Line during the year ended December 31, 2020.
Series A Preferred Stock Add-On Offering
On May 11, 2021, we completed an underwritten public offering of 2,352,144 shares (which included 152,144 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of our Series A Preferred Stock for net proceeds of $56.0 million after deducting the underwriters’ discount, structuring fees and other offering costs aggregating to $2.9 million. Pursuant to the terms of the Credit Facility, all proceeds were used to repay amounts outstanding under the Credit Facility. Subject to the terms and conditions set forth in the Credit Facility, we may then draw on the Credit Facility to borrow any amounts so repaid.
Series B Preferred Stock Offering
On October 6, 2021, we completed the initial issuance and sale of 3,630,000 shares (which includes 430,000 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of our 7.125% Series B Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share. The offering generated gross proceeds of $90.8 million and net proceeds of $86.8 million, after deducting underwriting discounts, structuring fees and other offering costs. Pursuant to the terms of the Credit Facility, all proceeds were used to repay amounts outstanding under the
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Credit Facility. Subject to the terms and conditions set forth in the Credit Facility, we may then draw on the Credit Facility to borrow any amounts so repaid.
Financings
As of December 31, 2021, our total debt leverage ratio (net debt divided by gross asset value) was approximately 40.1%. Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($59.7 million). Gross asset value totaled $2.6 billion, which represents total real estate investments, at cost ($2.6 billion), net of gross market lease intangible liabilities ($23.5 million). Impairment charges are already reflected within gross asset value.
As of December 31, 2021, we had total gross borrowings of $1.1 billion, at a weighted average interest rate of 3.44%. As of December 31, 2020, we had total gross borrowings of $1.2 billion at a weighted average interest rate of 3.58%. As of December 31, 2021, the carrying value of our real estate investments, at cost was $2.6 billion, with $0.9 billion of this amount pledged as collateral for mortgage notes payable, $0.6 billion of this amount pledged to secure advances under the Fannie Mae Master Credit Facilities and $1.0 billion of this amount comprising the borrowing base of the Credit Facility. These real estate assets are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable unless the existing indebtedness associated with the property is satisfied or the property is removed from the borrowing base of the Credit Facility, which would impact availability thereunder.
We expect to utilize proceeds from our Credit Facility to fund future property acquisitions, as well as, subject to the terms of our Credit Facility, other sources of funds that may be available to us. These actions may require us to add some or all of our unencumbered properties as security for that debt or add them to the borrowing base under our Credit Facility. Unencumbered real estate investments, at cost as of December 31, 2021 was $110.4 million. There can be no assurance as to the amount of liquidity we would be able to generate from adding any of the unencumbered assets we own to the borrowing base of our Credit Facility. Pursuant to the Credit Facility, any resulting net proceeds from these dispositions prior to the Commencement Quarter must be used to prepay amounts outstanding under the Revolving Credit Facility.
Mortgage Notes Payable
As of December 31, 2021, we had $591.8 million in gross mortgage notes payable outstanding. Future scheduled principal payments on our mortgage notes payable for 2022 are $1.3 million.
Credit Facility
Our Credit Facility consists of two components, the Revolving Credit Facility and our Term Loan. The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to one one-year extension at our option. Our Term Loan is interest-only and matures on March 13, 2024. Loans under our Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs. Any amounts repaid under our Term Loan may not be re-borrowed.
We drew $125.0 million under our Credit Facility during the year ended December 31, 2021, primarily to fund acquisitions during the year. We repaid $298.8 million of amounts outstanding under our Revolving Credit Facility during the year ended December 31, 2021 derived from $88.0 million of net proceeds of our dispositions of the Wellington, Florida and Jupiter, Florida properties, all $56.7 million of net cash proceeds from our May 2021 Series A Preferred Stock offering, $87.6 million of net cash proceeds from our October Series B Preferred Stock Offering, $37.0 million of proceeds from our BMO CMBS Loan and $29.4 million from cash on hand.
The total commitments under the Credit Facility are $630.0 million including $480.0 million under the Revolving Credit Facility. The Credit Facility includes an uncommitted “accordion feature” that may be used to increase the commitments under either component of the Credit Facility by up to an additional $370.0 million to a total of $1.0 billion. As of December 31, 2021, $150.0 million was outstanding under the Term Loan, and no amounts were outstanding under the Revolving Credit Facility. The unused borrowing availability under the Credit Facility was $236.6 million. The amount available for future borrowings under the Revolving Credit Facility is based on either the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, or satisfying a minimum debt service coverage ratio with respect to the borrowing base. Both of these amounts are calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and, therefore, availability under our Revolving Credit Facility has been adversely affected by the decreases in cash rent collected from our tenants and income from our operators due to the effects of the COVID-19 pandemic, and may continue to be adversely affected. See also the discussion above regarding the need to maintain certain levels of liquidity until the Commencement Quarter.
The equity interests and related rights in our wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility are pledged for the benefit of the lenders thereunder. The Credit Facility also contains a subfacility for letters of credit of up to $25.0 million. The applicable margin used to determine the interest rate under both the Term Loan and Revolving Credit Facility components of the Credit Facility varies based on our leverage. As of December 31, 2021, the Term Loan had an effective interest rate per annum equal to 4.11%. The Credit Facility prohibits us from exceeding a maximum ratio of consolidated total indebtedness to consolidated total asset value, and requires us to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges (the “Fixed Charge
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Coverage Ratio”) on a quarterly basis and a minimum consolidated tangible net worth. We entered into an amendment to our Credit Facility on November 12, 2021. We would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended September 30, 2021. Pursuant to the terms of a third amendment entered into on November 12, 2021 by us, the agent and the requisite lenders under the Credit Facility, the lenders waived any defaults or event of defaults under the covenant requiring us to maintain a Fixed Charge Coverage Ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and any further discussion.defaults or Events of Default (as defined in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant. In addition, as described above, the Fixed Charge Coverage Ratio we are required to maintain was reduced from 1.60 to 1.00 to 1.50 to 1.00 until the earlier of December 31, 2022, and such earlier date as we elect to terminate this relief. There can be no assurance our lenders will consent to any amendments or waivers that may become necessary to comply with the terms of the Credit Facility in the future. As of December 31, 2021, we were in compliance with the financial covenants under the Credit Facility. Based upon our current expectations, we believe we will be able to comply with these covenants during the next 12 months. Please see “Item 1A. Risk Factors. Risks Related to our Indebtedness.”

Fannie Mae Master Credit Facilities
As of December 31, 2021, $355.0 million was outstanding under the Fannie Mae Master Credit Facilities. We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. We do not expect to draw any further amounts on the Fannie Mae Master Credit Facilities. Borrowings under the Fannie Mae Master Credit facilities bear annual interest at a rate that varies on a monthly basis and is equal to the sum of the current LIBOR for one month U.S. dollar-denominated deposits and 2.62%, with a combined floor of 2.62%. The Fannie Mae Master Credit Facilities mature on November 1, 2026. Future scheduled principal payments on our Fannie Mae Master Credit Facilities for 2022 are $2.8 million.
Capital Expenditures
During the year ended December 31, 2021, our capital expenditures were $19.1 million, of which approximately $6.2 million related our MOB segment and $12.9 million related to our SHOP segment. We anticipate this rate of capital expenditures will be similar for the MOB and SHOP segments throughout 2022, however, the recent economic uncertainty created by the COVID-19 global pandemic will continue to impact our decisions on the amount and timing of future capital expenditures. Our capital expenditures in 2021 were funded using cash on hand, and we also expect to fund future capital expenditures using cash on hand.
Acquisitions — Year Ended December 31, 2021
During the year ended December 31, 2021, we completed the acquisitions of five multi-tenant MOBs and 12 single tenant MOBs for an aggregate contract purchase price of $160.2 million. The acquisition of one multi-tenant MOB and two single-tenant MOBs for a contract purchase price of $12.8 million, was completed during the three months ended December 31, 2021. The properties acquired during the year were funded with proceeds cash on hand and borrowings from our Revolving Credit Facility, and in one case, in part by the issuance of our Series A Preferred OP Units (see Note 8 — Stockholders’ Equity andNote 13 — Non-Controlling Interests to our consolidated financial statements included in this Annual Report on Form 10-K).
Acquisitions — Subsequent to December 31, 2021
We did not acquire any properties subsequent to December 31, 2021. We have entered into one non-binding letter of intent to purchase one MOB property for a contract purchase price of $8.2 million. There can be no assurance we will complete this acquisition on its contemplated terms, or at all.
Dispositions — Year Ended December 31, 2021
During the year ended December 31, 2021, we sold eight properties (three MOBs and five SHOPs) for an aggregate contract price of $133.6 million, which resulted in an aggregate gain on sale of $3.6 million. Two of these properties were sold in the fourth quarter of 2021 and had an aggregate contract sales price of $37.8 million, which resulted in an aggregate gain on sale of $1.3 million. Of the properties disposed in the year ended December 31, 2021, one was encumbered under the Capital One MOB loan, one was unencumbered, and six were part of the borrowing base of our Credit Facility. Pursuant to the terms of our amended Credit Facility, all proceeds from these dispositions were used to repay amounts outstanding under the Credit Facility.
Dispositions — Subsequent to December 31, 2021
Subsequent to December 31, 2021, we did not dispose of any properties. We have entered into a PSA to dispose of the four LaSalle properties located in Texas for an aggregate contract sales price of $12.4 million. The PSA is subject to conditions, and there can be no assurance this, or any, disposition will be completed on the contemplated terms, or at all. Pursuant to the terms of our Credit Facility, the net cash proceeds from any completed dispositions must be used to prepay amounts outstanding under the Revolving Credit Facility and will therefore not be available to us for any other purpose. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met.
Share Repurchase Program
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Under the Credit Facility, we are restricted from repurchasing shares until the end of the Commencement Quarter. Thus, the Board suspended repurchases under the SRP effective August 14, 2020. No further repurchase requests under the SRP may be made unless and until the SRP is reactivated. There can be no assurance, however, as to whether our SRP will be reactivated or on what terms. Beginning in the Commencement Quarter, we will be permitted to repurchase up to $50.0 million of shares of our common stock (including amounts previously repurchased during the term of the Revolving Credit Facility) if, after giving effect to the repurchases, we maintain cash and cash equivalents of at least $30.0 million and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 55.0%.
No assurances can be made as to when or if our SRP will be reactivated.
Non-GAAP Financial Measures
This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”), Modified Funds from Operations (“MFFO”) and NOI. While NOI is a property-level measure, MFFO is based on our total performance as a company and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined here, includes straight-line rent which is excluded from MFFO. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net income, are provided below:
Funds from Operations and Modified Funds from Operations
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
Because of these factors, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has published a standardized measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s definition.
We believe that the use of FFO provides a more complete understanding of our operating performance to investors and to management, and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
Because of these factors, the Institute of Portfolio Alternatives (“IPA”), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.
We calculate MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the “Practice Guideline”) issued by the IPA in
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November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition fees and expenses, amortization of above and below market and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. We also exclude other non-operating items in calculating MFFO, such as transaction-related fees and expenses and capitalized interest. In addition, because we currently believe that concessions granted to our tenants as a result of the COVID-19 pandemic are collectable (see Accounting Treatment of Rent Deferrals below), we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these deferrals, which is not considered by the Practice Guideline.
We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance once our portfolio is stabilized. Our Modified FFO (as defined in our Credit Facility) is similar but not identical to MFFO as discussed in this Annual Report on Form 10-K. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.
Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to pay dividends and other distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.
Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, updates to the White Paper or the Practice Guideline may be published or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.
Accounting Treatment of Rent Deferrals
All of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information). As a result of relief granted by the FASB and SEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO has not been, and we do not expect it to be, significantly impacted by these types of deferrals. In addition, because we currently believe that these deferred amounts are collectable, we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these deferrals. For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 — Significant Accounting Polices to our consolidated financial statements included in this Annual Report on Form 10-K.
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The table below reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of FFO and MFFO for the periods indicated. In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests.
Year Ended December 31,
(In thousands)20212020
Net loss attributable to common stockholders (in accordance with GAAP)$(92,942)$(78,781)
Depreciation and amortization (1)
78,115 79,643 
Impairment charges40,951 36,446 
Gain on sale of real estate investments(3,648)(5,230)
Adjustments for non-controlling interests (2)
(529)(526)
FFO (as defined by NAREIT) attributable to common stockholders21,947 31,552 
Acquisition and transaction related2,714 173 
(Accretion) amortization of market lease and other lease intangibles, net(198)(80)
Straight-line rent adjustments(780)(2,405)
Straight-line rent (rent deferral agreements) (3)
(280)280 
Amortization of mortgage premiums and discounts, net55 60 
(Gain) loss on non-designated derivatives(37)102 
Deferred tax asset valuation allowance (4)
(482)4,641 
Adjustments for non-controlling interests (2)
(9)
MFFO attributable to common stockholders$22,940 $34,314 
________
(1) Net of non-real estate depreciation and amortization.
(2) Represents the portion of the adjustments allocable to non-controlling interests.
(3) Represents the amount of deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on our consolidated balance sheet but are considered to be earned revenue attributed to the current period for purposes of MFFO as they are expected to be collected.
(4) This is a non-cash item and is added back as it is not considered a part of operating performance.
Net Operating Income
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to revenue from tenants less property operating and maintenance expenses. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss).
We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. We use NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).
NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay distributions.
The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the year ended December 31, 2021:
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(In thousands)Same StoreAcquisitionsDispositionsNon-Property SpecificTotal
Net (loss) income attributable to common stockholders (in accordance with GAAP)$(133)$2,527 $2,074 $(97,410)$(92,942)
Impairment charges40,073 — 878 — 40,951 
Operating fees to related parties— — — 24,206 24,206 
Acquisition and transaction related— — 2,711 2,714 
General and administrative135 — — 16,693 16,828 
Depreciation and amortization70,972 6,705 2,249 — 79,926 
Interest expense1,726 — — 46,174 47,900 
Interest and other income(19)— — (42)(61)
Loss on non-designated derivative instruments— (37)(37)
Loss on sale of real estate investments— — (3,648)— (3,648)
Income tax expense— — — 203 203 
Net income attributable to non-controlling interests— — — (260)(260)
Allocation for preferred stock— — — 7,762 7,762 
NOI$112,757 $9,232 $1,553 $— $123,542 
The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the year ended December 31, 2020:
(In thousands)Same StoreAcquisitionsDispositionsNon-Property SpecificTotal
Net income (loss) attributable to common stockholders (in accordance with GAAP)$62,691 $983 $(40,010)$(102,445)$(78,781)
Impairment charges(10,135)— 46,581 — 36,446 
Operating fees to related parties— — — 23,922 23,922 
Acquisition and transaction related— — — 173 173 
General and administrative95 — — 21,477 21,572 
Depreciation and amortization72,653 3,076 5,324 — 81,053 
Interest expense2,036 — — 49,483 51,519 
Interest and other income— — — (44)(44)
Loss on non-designated derivative instruments— — — 102 102 
Gain on sale of real estate investments— — (5,230)— (5,230)
Income tax expense— — — 4,061 4,061 
Net income (loss) attributable to non-controlling interests— — — 303 303 
Allocation for preferred stock— — — 2,968 2,968 
NOI$127,340 $4,059 $6,665 $— $138,064 
Refer to Note 15 — Segment Reporting to our consolidated financial statements found in this Annual Report on Form 10-K for a reconciliation of NOI to net loss attributable to stockholders by reportable segment.
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Dividends and Other Distributions
Dividends on our Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375% per annum on the $25.00 liquidation preference per share of Series A Preferred Stock. Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.
Dividends on our Series B Preferred Stock accrue in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to Series B Preferred Stock holders, which is equivalent to 7.125% of per annum in the $25.00 liquidation preference per share of Series B Preferred Stock. Dividends on the Series B Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us. The first dividend on the Series B Preferred Stock was paid in January 2022.
From March 1, 2018 until June 20, 2020, we paid distributions to our common stockholders, at a rate equivalent to $0.85 per annum, per share of common stock. Distributions were payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.
On June 29, 2020, the Board approved a change in our common stock distribution policy changing from daily record dates to a single record date during the applicable month.
Under our Credit Facility we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions. These exceptions include paying cash dividends on the Series A Preferred Stock and the Series B Preferred Stock or any other preferred stock we may issue and paying any cash distributions necessary to maintain our status as a REIT. We may not pay any cash distributions (including dividends on Series A Preferred Stock and Series B Preferred Stock) if a default or event of default exists or would result therefrom. The restrictions on paying cash distributions will no longer apply starting in the quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter, we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and the Covenant Relief Period has ended. There can be no assurance as to if, or when, we will be able to satisfy these conditions. We may only pay cash distributions on our common stock beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock and Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter. In addition, our ability to pay cash distributions may be limited by financial covenants in the Credit Facility, including our requirement to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges. Until four full fiscal quarters have elapsed after the commencement of Commencement Quarter, the aggregate amount of permitted distributions and Modified FFO will be determined by using only the fiscal quarters that have elapsed from and after the Commencement Quarter and annualizing those amounts.
On August 13, 2020, the Board changed our common stock distribution policy in order to preserve our liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with the Credit Facility described above. Under the new policy, distributions authorized by the Board on shares of our common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of our common stock valued at the Estimated Per-Share NAV in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter. In each of October 2020 and January 2021, we declared and issued stock dividends equal to 0.01349 shares of common stock on each share of outstanding common stock, and in April 2021, July 2021, October 2021 and January 2022, we declared and issued a stock dividend equal to 0.014655 shares of common stock on each share of outstanding common stock. The amounts of these stock dividends were based on our prior cash distribution rate of $0.85 per share per annum and the then applicable Estimated Per-Share NAV. We did not pay any cash dividends on our common stock during the year ended December 31, 2021. See “— Overview” for additional information on the impact of the stock dividends.
Subject to the restrictions in our Credit Facility, the amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Code. Distribution payments are dependent on the availability of funds. 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.
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The following table shows the sources for the payment of distributions to common stockholders and preferred stockholders, including distributions on restricted shares and OP Units, but excluding distributions related to Class B Units because these distributions are recorded as an expense in our consolidated statement of operations and comprehensive loss, for the periods indicated:
Three Months EndedYear Ended
March 31, 2021June 30, 2021September 30, 2021December 31, 2021December 31, 2021
(In thousands)Percentage of DistributionsPercentage of DistributionsPercentage of DistributionsPercentage of DistributionsPercentage of Distributions
Distributions:
Dividends paid to holders of Series A Preferred Stock$742 $742 $1,827 $1,833 $5,144 
Distributions paid to holders of Series A OP Units— — — 46 46 
Total cash distributions [1] [3]
$742 $742 $1,827 $1,879 $5,190 
Source of distribution coverage:
Cash flows provided by operations [2]
$742 100.0 %$742 100.0 %$1,827 100.0 %$1,879 100.0 %$5,190 100.0 %
Total source of distribution coverage$742 100.0 %$742 100.0 %$1,827 100.0 %$1,879 100.0 %$5,190 100.0 %
Cash flows provided by operations (in accordance with GAAP)$13,959 $3,644 $8,401 $12,875 $38,879 
Net loss (in accordance with GAAP)$(11,442)$(14,103)$(40,465)$(19,430)$(85,440)
_______
[1]Assumes the use of available cash flows from operations before any other sources.
[2]During 2021 all dividends on common stock and common stock OP Units were issued in the form of additional shares and therefore, are not included in the table above.
[3]Our Series B Preferred Stock was first issued in October 2021, and we are required to begin paying dividends on the Series B Preferred Stock in January 2022.
For the year ended December 31, 2021, cash flows provided by operations were $38.9 million. We had not historically generated sufficient cash flow 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 distributions with cash flows provided by operations. 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 we pay distributions in stock instead of cash.
Our ability to pay dividends on our Series A Preferred Stock and Series B Preferred Stock and starting with the Commencement Quarter, other distributions and maintain compliance with the restrictions on the payment of distributions in our Credit Facility depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties. There can be no assurance that we will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all. Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, and there can be no assurance we will be successful in achieving this objective.
We may still pay any cash distributions necessary to maintain its status as a REIT and may not pay any cash distributions (including dividends on Series A Preferred Stock and Series B Preferred Stock) if a default or event of default exists or would result therefrom under the Credit Facility.
Loan Obligations
The payment terms of our mortgage notes payable generally require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Credit Facility require interest only amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Fannie Mae Master Credit Facilities required interest only payments through November 2021 and principal and interest payments thereafter. Our loan agreements require us to comply with specific reporting covenants. As of December 31, 2021, we were in compliance with the financial and reporting covenants under our loan agreements.
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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. Commencing with that taxable year, we have been organized and operated in a manner so that we qualify as a REIT under the Code. We intend to continue to operate in such a manner but can provide no assurances that we will operate in a manner so as to remain qualified for taxation as a REIT. To continue to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding net capital gains, and comply with a number of other organizational and operational requirements. If we continue to qualify as a REIT, we generally will not be subject to U.S. federal corporate income tax on the portion of our REIT taxable income that we distribute to our stockholders. Even if we continue to qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as U.S. federal income and excise taxes on our undistributed income.
Inflation
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. For the year ended December 31, 2021, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 7.0%. To help mitigate the adverse impact of inflation, approximately 87% of our leases with our tenants in our MOB segment contain rent escalation provisions which average 1.8% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). Approximately 84% are fixed-rate, 3% are based on the Consumer Price Index and 13% do not contain any escalation provisions.
In addition to base rent, depending on the specific lease, MOB tenants are generally reuired 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. Increased operating costs paid by our tenants under these net leases could have an adverse impact on our tenants if increases in their operating expenses exceed increases in their revenue, which may adversely affect our tenants’ ability to pay rent owed to us or property expenses to be paid, or reimbursed to us, by our tenants. Renewals of leases or future leases for our net lease properties may not be negotiated on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs.
Leases with residents at our SHOPs typically do not have rent escalations, however, we are able to renew leases at market rates as they mature due to their short-term nature. As inflation rates increase or persist at high levels, the cost of providing medical care at our SHOPs, particularly labor costs, will increase. If we are unable to admit new residents or renew resident leases at market rates, while bearing these increased costs from providing services to our residents, our results of operations may be affected.
Related-Party Transactions and Agreements
Please see Note 9 Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion of the various related party transactions, agreements and fees.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings, our Credit Facility (which includes a Revolving Credit Facility and a Term Loan) and the Fannie Mae Master Credit Facilities, bear interest at fixed rates and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars, and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We will not hold or issue these derivative contracts for trading or speculative purposes. As of December 31, 2021, we had entered into nine non-designated interest rate caps with a notional amount of approximately $355.2 million and nine designated interest rate swaps with a notional amount of $578.5 million. We do not have any foreign operations and thus we are generally not directly exposed to foreign currency fluctuations.
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Mortgage Notes Payable
As of December 31, 2021, all of our mortgages are either fixed-rate ($213.3 million) or variable-rate ($378.5 million), before consideration of interest rate swaps. Our mortgages had a gross aggregate carrying value of $591.8 million and a fair value of $594.3 million as of December 31, 2021.
Credit Facilities
Our Credit Facilities are variable-rate, before consideration of interest rate swaps, and are comprised of our Revolving Credit Facility, our Term Loan and our Fannie Mae Master Credit Facilities. Our Credit Facilities had a gross aggregate carrying amount of $505.0 million and a fair value of $499.5 million as of December 31, 2021.
Sensitivity Analysis - Interest Expense
Interest rate volatility associated with all of our variable-rate borrowings, which totaled $0.9 billion as of December 31, 2021, affects interest expense incurred and cash flow to the extent they are not fixed via interest rate swap. As noted above, we have nine designated interest rate swaps with a notional amount of $578.5 million, which effectively creates a fixed interest rate for a portion of our variable-rate debt. We also have six non-designated interest rate cap contracts, which are substantially out of the money and, therefore do not currently affect our near-term interest rate sensitivity. The sensitivity analysis related to the portion of our variable-rate debt that is not fixed via designated interest rate swaps assumes an immediate 100 basis point move in interest rates from their December 31, 2021 levels, with all other variables held constant. A 100 basis point increase and decrease in variable interest rates on the portion of our variable-rate debt that is not fixed via designated interest rate swaps would increase and decrease our interest expense by $3.1 million.
Sensitivity Analysis - Fair Value of Debt
Changes in market interest rates on our debt instruments impacts their fair value, even if it has no impact on interest due on them. For instance, if interest rates rise 100 basis points and the balances on our debt instruments remain constant, we expect the fair value of our obligations to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our debt assumes an immediate 100 basis point move in interest rates from their December 31, 2021 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our debt by $15.3 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our debt by $22.6 million. A 100 basis point increase in market interest rates would result in an increase in the fair value of our nine designated interest rate swaps by $21.8 million. A 100 basis point decrease in market interest rates would result in a decrease in the fair value of our nine designated interest rate swaps by $23.0 million.
These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and assuming no other changes in our capital structure. The information presented above includes only those exposures that existed as of December 31, 2021 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
Item 8. Financial Statements and Supplementary Data.
The information required by this Item 8 is hereby incorporated by reference to our Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.
Our Chief Executive Officer and Chief Financial Officer, carried out an evaluation, together with other members of our management, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief
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Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of December 31, 2021 at a reasonable level of assurance.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on its assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was effective based on those criteria.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. The effectiveness of our internal control over financial reporting has not been audited by our independent registered public accounting firm because we are a “non-accelerated filer” as defined under SEC rules.
Changes in Internal Control Over Financial Reporting
During the three months ended December 31, 2021, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not Applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
We have adopted a Code of Business Conduct and Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer and principal financial officer. A copy of our code of ethics may be obtained, free of charge, by sending a written request to our executive office: 650 Fifth Avenue - 30th Floor, New York, NY 10019, Attention: Chief Financial Officer. Our Code of Business Conduct and Ethics is also publicly available on our website at www.healthcaretrustinc.com. If we make any substantive amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics to our chief executive officer, chief financial officer, chief accounting officer or controller or persons performing similar functions, we will disclose the nature of the amendment or waiver on that website or in a report on Form 8-K.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 2022 annual meeting of stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 2022 annual meeting of stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.

79


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Securities Authorized for Issuance Under Equity Compensation Plans
Results of Operations
As of December 31, 2018, we operated in three reportable business segments for management and internal financial reporting purposes: MOBs, triple-net leased healthcare facilities, and SHOPs. In our MOB operating segment, we own, manage and lease, through the Property Manager or third party property managers, 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. In our triple-net leased healthcare facilities operating segment, we own, manage and lease seniors housing properties, hospitals, post-acute care and skilled nursing facilities throughout the United States under long-term triple-net leases, which tenants are generally directly responsible for all operating costs of the respective properties. In our SHOP segment, we invest in seniors housing properties under a structure permitted by RIDEA. Under RIDEA, a REIT may lease qualified healthcare properties on an arm's length basis to a TRS if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor. As of December 31, 2018, we had 17 eligible independent contractors operating 58 SHOPs. All of our properties across all three business segments are located throughout the United States.
2017-2018 Same Store Properties
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Information based on Same Store, Acquisitions and Dispositions (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered. As of December 31, 2018,2021, we owned 191202 properties. There were 154176 properties (our "2017-2018 Same Store"“Same Store” properties) owned for the entire yearyears ended December 31, 20182021 and 2017,2020, including two vacant land parcels and one property under development. During the period fromparcels. Since January 1, 2017 to the year ended2020 and through December 31, 2018,2021, we acquired 3726 properties (our "2017-2018 Acquisitions"“Acquisitions”) and disposed of nine17 properties (our "2017-2018 Dispositions"“Dispositions”). As described in more detail under "Comparison of the Year Ended December 31, 2018 and 2017 Transition Properties" below, our 2017-2018 Same Store properties include 18 properties that were transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the period from January 1, 2017 through December 31, 2018 (collectively the "Transition Properties"). We adjusted our 2017-2018 Same Store for those segments to include the Transition Properties as part of our 2017-2018 Same Store in our SHOP segment and excluded them entirely from the 2017-2018 Same Store in our triple-net leased healthcare facilities segment (each segment as so adjusted, the "Segment Same Store").
The following table presents a roll-forward of our properties owned from January 1, 20172020 to December 31, 2018:2021:
Number of Properties
Number of properties, January 1, 2017163
Acquisition activity during the year ended December 31, 201723
Disposition activity during the year ended December 31, 2017(1)
Number of properties, December 31, 2017185
Acquisition activity during the year ended December 31, 201814
Disposition activity during the year ended December 31, 2018(8)
Number of properties, December 31, 2018191
Number of 2017-2018 Same Store Properties (1)
154
_______________
MOBSHOPTotal
Number of properties, December 31, 2019132 61 193 
Acquisition activity during the year ended December 31, 2020
Disposition activity during the year ended December 31, 2020(1)(8)(9)
Transition activity during the year ended December 31, 2020(4)— 
Number of properties, December 31, 2020132 61 193 
Acquisition activity during the year ended December 31, 20211717
Disposition activity during the year ended December 31, 2021(3)(5)(8)
Number of properties, December 31, 2021146 56 202 
Number of Same Store Properties (1)
124 52 176 
_______________
(1) Includes the 2018 acquisition of a land parcel adjacent to an existing property which is not considered an Acquisition.


In addition to the comparative period-over-period discussions below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s responses.

Below is a discussion of our results of operations for the years ended December 31, 2021 and2020. Please see the “Results of Operations” section located in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for a comparison of our results of operations for the year ended December 31, 2020 and 2019.
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Comparison of the YearYears Ended December 31, 20182021 and 20172020
Net loss attributable to common stockholders was $52.8$92.9 million and $42.5$78.8 million for the years ended December 31, 20182021 and 2017,2020, respectively. The following table shows our results of operations for the years ended December 31, 20182021 and 20172020 and the year to year change by line item of the consolidated statements of operations:
 Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$
Revenue from tenants$329,355 $381,612 $(52,257)
Operating expenses:  
Property operating and maintenance205,813 243,548 (37,735)
Impairment charges40,951 36,446 4,505 
Operating fees to related parties24,206 23,922 284 
Acquisition and transaction related2,714 173 2,541 
General and administrative16,828 21,572 (4,744)
Depreciation and amortization79,926 81,053 (1,127)
Total expenses370,438 406,714 (36,276)
Operating loss before gain on sale of real estate investments(41,083)(25,102)(15,981)
Gain on sale of real estate investments3,648 5,230 (1,582)
Operating loss(37,435)(19,872)(17,563)
Other income (expense):
Interest expense(47,900)(51,519)3,619 
Interest and other income61 44 17 
Loss on non-designated derivatives37 (102)139 
Total other expenses(47,802)(51,577)3,775 
Loss before income taxes(85,237)(71,449)(13,788)
Income tax expense(203)(4,061)3,858 
Net loss(85,440)(75,510)(9,930)
Net (income) loss attributable to non-controlling interests260 (303)563 
Allocation for preferred stock(7,762)(2,968)(4,794)
Net loss attributable to common stockholders$(92,942)$(78,781)$(14,161)
  Year Ended December 31, Increase (Decrease)
(Dollar amounts in thousands) 2018 2017 $ %
Revenues:        
Rental income $102,708
 $95,152
 $7,556
 7.9 %
Operating expense reimbursements 20,858
 16,605
 4,253
 25.6 %
Resident services and fee income 238,840
 199,416
 39,424
 19.8 %
Total revenues 362,406
 311,173
 51,233
 16.5 %
         
Operating expenses:        
Property operating and maintenance 220,997
 186,277
 34,720
 18.6 %
Impairment charges 20,655
 18,993
 1,662
 8.8 %
Operating fees to related parties 23,071
 22,257
 814
 3.7 %
Acquisition and transaction related 302
 2,986
 (2,684) (89.9)%
General and administrative 17,275
 15,673
 1,602
 10.2 %
Depreciation and amortization 83,212
 77,641
 5,571
 7.2 %
Total expenses 365,512
 323,827
 41,685
 12.9 %
Operating loss before (loss) gain on sale of real estate investments (3,106) (12,654) 9,548
 75.5 %
(Loss) gain on sale of real estate investments (70) 438
 (508) NM
Operating loss (3,176) (12,216) 9,040
 74.0 %
Other income (expense):        
Interest expense (49,471) (30,264) (19,207) (63.5)%
Interest and other income 23
 306
 (283) (92.5)%
Loss on non-designated derivatives (157) (198) 41
 20.7 %
Gain on asset acquisition 
 307
 (307) (100.0)%
Total other expenses (49,605) (29,849) (19,756) (66.2)%
Loss before income taxes (52,781) (42,065) (10,716) (25.5)%
Income tax benefit (197) (647) 450
 NM
Net loss (52,978) (42,712) (10,266) (24.0)%
Net income attributable to non-controlling interests 216
 164
 52
 31.7 %
Net loss attributable to stockholders $(52,762) $(42,548) $(10,214) (24.0)%
_________________________
NM — Not Meaningful



Transition Properties
As described in more detail below, our 2017-2018 Same Store includes 18 Transition Properties, which are properties that were transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the period from January 1, 2017 through December 31, 2018.
On June 8, 2017, our TRS acquired 12 operating entities that leased 12 healthcare facilities included in our triple-net leased healthcare facilities segment due to declining performance under the triple-net leased structure. Concurrently with the acquisition of the 12 operating entities, we transitioned the management of the healthcare facilities to a third-party management company that manages other healthcare facilities in our SHOP segment. As a part of the transition, our subsidiary property companies executed leases with the acquired operating entities and the acquired operating entities executed management agreements with the management company under the RIDEA structure. As a part of the transition of operations, we now control the operating entities that hold the operating licenses for these healthcare facilities. The results of operations of these properties below are included in Segment Same Store with respect to the SHOP segment.
On January 1, 2018, we transitioned six properties in our triple-net leased healthcare facilities segment to operating properties under a structure permitted by the RIDEA structure due to declining performance under the triple-net leased structure. The prior tenants of the six properties transferred the operations of the properties to our newly-formed subsidiaries and third-party managers engaged by those subsidiaries pursuant to market operations transfer agreements. Our subsidiaries simultaneously entered into new management agreements with the third-party managers, who will operate and manage the facilities on behalf of our subsidiaries. The results of operations of these properties below are included in Segment Same Store with respect to the SHOP segment.
We may in the future, through similar transactions, transition other triple-net leased facilities, which may or may not be experiencing declining performance, to third-party managed facilities under a structure permitted by RIDEA, in connection with which they would also transition from our triple-net leased healthcare facilities segment to our SHOP segment. As described in more detail below, tenants at certain properties in our triple-net leased healthcare facilities segment have been in default under their leases to us, and our results of operations have been adversely impacted by our inability to collect rent from these tenants. During the year ended December 31, 2018, as shown in more detail in the table below, the Transition Properties contributed $5.2 million of NOI, an increase of $4.5 million from $0.8 million for the year ended December 31, 2017, primarily as a result of the fact that we were unable to collect rent from the tenants at several of the Transition Properties prior to the transition but commenced collecting rent in connection with the replacement of the non-paying tenants in connection with the transition. The results of operations of these properties are included in Segment Same Store with respect to the SHOP segment. The bad debt expense relating to these properties is included in property operating and maintenance expense on the consolidated statement of operations. We may enter into settlement agreements, appoint court order receivers or otherwise replace the tenants that are not paying rent in a manner that will allow us to transition the properties to our SHOP segment. By doing so, we will gain more control over the operations of the applicable properties, and we believe this will allow us to improve performance and the cash flows generated by the properties. There can be no assurance, however, that we will be able to replace these tenants on a timely basis, or at all, and our results of operations may therefore continue to be adversely impacted by bad debt expenses related to our inability to collect rent from defaulting tenants.
For purposes of the discussion and analysis of the segment results of operations during the year ended December 31, 2018 as compared to the year ended December 31, 2017, the results of operations for the Transition Properties are included as part of our SHOP segment and excluded entirely from our triple-net leased healthcare facilities segment. In our Quarterly Report on Form 10-Q for the three months ended June 30, 2017, the period when the first of the Transition Properties transitioned, and all subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q prior to this Annual Report on Form 10-K, we included the Transition Properties as deemed dispositions in our discussion and analysis of our triple-net leased healthcare facilities segment (rather than excluding them entirely) and included the Transition Properties as deemed acquisitions in our discussion and analysis of our SHOP segment (rather than including them as part of the same store set of properties for that segment). Although we have not adjusted the discussion and analysis of the results of operations of our triple-net leased healthcare facilities segment to our SHOP segment during the year ended December 31, 2017 as compared to the year ended December 31, 2016, we intend to consider the Transition Properties as part of the same store properties in our SHOP segment in all future filings with the SEC.


The following table presents by segment 2017-2018 Same Store properties' NOI before and after adjusting for the Transition Properties as described above, to arrive at 'Segment Same Store' results. Our MOB segment was not affected by the Transition Properties.
  Year Ended December 31, 2018 Year Ended December 31, 2017 Increase (Decrease)
(Dollar amounts in thousands) 2017-2018 Same Store PropertiesTransition PropertiesSegment Same Store 2017-2018 Same Store PropertiesTransition PropertiesSegment Same Store 2017-2018 Same Store PropertiesTransition PropertiesSegment Same Store
NNN Segment            
Revenues:            
Rental income $19,781
$(2)$19,779
 $23,836
$(6,728)$17,108
 $(4,055)$6,726
$2,671
Operating expense reimbursement 957

957
 1,007
1
1,008
 (50)(1)(51)
Resident services and fee income 46,139
(46,139)
 13,730
(13,730)
 32,409
(32,409)
Total revenues 66,877
(46,141)20,736
 38,573
(20,457)18,116
 28,304
(25,684)2,620
Property operating and maintenance 52,799
(40,925)11,874
 31,776
(19,697)12,079
 21,023
(21,228)(205)
NOI $14,078
$(5,216)$8,862
 $6,797
$(760)$6,037
 $7,281
$(4,456)$2,825
             
SHOP Segment            
Revenues:            
Rental income $12
$2
$14
 $1
$6,728
$6,729
 $11
$(6,726)$(6,715)
Operating expense reimbursement 


 
(1)(1) 
1
1
Resident services and fee income 184,054
46,139
230,193
 184,453
13,730
198,183
 (399)32,409
32,010
Total revenues 184,066
46,141
230,207
 184,454
20,457
204,911
 (388)25,684
25,296
Property operating and maintenance 129,702
40,925
170,627
 128,833
19,697
148,530
 869
21,228
22,097
NOI $54,364
$5,216
$59,580
 $55,621
$760
$56,381
 $(1,257)$4,456
$3,199
Net Operating Income
Net operating income ("NOI")NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to rental income and operating expense reimbursementsrevenue from tenants less property operating expense.and maintenance expenses. NOI excludes all other financial statement amounts included in net income (loss) attributable to common stockholders. We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. See “Non-GAAP Financial Measures” included elsewhere in this Annual Report on Form 10-K below for additional disclosure and a reconciliation, in the aggregate, of the NOI for the segments presented below to our net lossincome (loss) attributable to common stockholders.

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Segment Results — Medical Office Buildings
The following table presents the revenue and property operating and maintenance expensecomponents of NOI and the period to period change within our MOB segment for the years ended December 31, 20182021 and 2017:2020:
  
2017-2018 Same Store(1)
 
Acquisitions(2)
 
Dispositions(3)
 
Segment Total(4)
  Year Ended December 31,Increase (Decrease) Year Ended December 31,Increase (Decrease) Year Ended December 31,Increase (Decrease) Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands) 20182017$% 20182017$% 20182017$% 20182017$%
Revenues:                    
Rental income $65,439
$65,738
$(299) % $13,771
$1,616
$12,155
NM $
$36
$(36)(100)% $79,210
$67,390
$11,820
18%
Operating expense re-imbursement 16,019
15,183
836
6 % 3,874
274
3,600
NM 
2
(2) % 19,893
15,459
4,434
29%
Total revenues 81,458
80,921
537
1 % 17,645
1,890
15,755
NM 
38
(38)(100)% 99,103
82,849
$16,254
20%
Property operating and maintenance 25,204
23,772
1,432
6 % 5,091
325
4,766
NM 
38
(38)(100)% 30,295
24,135
6,160
26%
NOI $56,254
$57,149
$(895)(2)% $12,554
$1,565
$10,989
NM $
$
$
 % $68,808
$58,714
$10,094
17%
Segment Same Store(1)
Acquisitions(2)
Dispositions(3)
Segment Total(4)
 Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$20212020$20212020$20212020$
Revenue from tenants$110,609 $112,987 $(2,378)$8,325 $2,057 $6,268 $3,933 $4,779 $(846)$122,867 $119,823 $3,044 
Less: Property operating and maintenance30,131 30,173 (42)1,819 360 1,459 2,530 2,278 252 34,480 32,811 1,669 
NOI$80,478 $82,814 $(2,336)$6,506 $1,697 $4,809 $1,403 $2,501 $(1,098)$88,387 $87,012 $1,375 
_______________
(1)
(1)    Our MOB segment included 124 Same Store properties.
(2)    Our MOB segment included 22 Acquisition properties.
(3)    Our MOB segment included four Disposition properties.
(4)    Our MOB segment consisted of 146 properties.
Our MOB segment included 79 2017-2018 Same Store properties. Our MOB segment is not affected by the Transition Properties.
(2)
Our MOB segment included 32 2017-2018 Acquisitions.
(3)
Our MOB segment included one 2017-2018 Disposition.
(4)
Our MOB segment included 111 properties as of December, 2018.
NM — Not Meaningful


Rental incomeRevenue from tenants is primarily related to contractual rent received from tenants in our MOBs (which may be subject to annual contractual escalations) in accordance with the applicable lease terms. Rental income is related to contractual rent received from tenants that does not vary based on the underlying operating performance of the properties.
Operating expense reimbursements in our MOB segment generally include reimbursement for property operating expenses that we pay on behalf of tenants in this segment. However, pursuant to many of our lease agreements in this segment, tenants are generally directly responsible for all operating costs of the respective properties in addition to base rent. Generally,MOBs. It also includes operating expense reimbursements which generally increase in proportion with the increase in property operating and maintenance expenses in our MOB segment. PursuantIn addition to many of ourbase rent, dependent on the specific lease, agreements in our MOBs, 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 additionproperty operating and maintenance expenses to the extent they exceed the properties’expenses for the base rent. year of the respective leases.
Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, bad debt expense and unaffiliated third party property management fees.
During the year ended December 31, 2018, MOB 2017-2018 Acquisitions, which totaled 32 properties, contributed $12.6 million of NOI, which represented the increase in2021, the MOB segment NOI, as compared to the prior year comparable period.
During the year ended December 31, 2018, our 2017-2018 Same Store property operating and maintenance expenses increasedcontributed a $1.4 million due to increased property tax expectations and higher building operating and maintenance costs. Property operating expense reimbursements increased $0.8 million due to the increased property operating and maintenance expenses that are reimbursable by our tenants. The reimbursement rate of property operating and maintenance expenses in our 2017-2018 Same Store properties decreased 0.3% from 63.9% during the year ended December 31, 2017, to 63.6% during the year ended December 31, 2018, due to a slight increase in expenses which are not reimbursable under our leases.
Segment Results — Triple Net Leased Healthcare Facilities
The following table presents the revenue and property operating and maintenance expense and the period to period change within our triple net leased healthcare facilities segment for the years ended December 31, 2018 and 2017:
  
Segment Same Store (1)
 
Acquisitions (2)
 
Dispositions (3)
 Segment Total
  Year Ended December 31,Increase (Decrease) Year Ended December 31,Increase (Decrease) Year Ended December 31,Increase (Decrease) Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands) 20182017$% 20182017$% 20182017$% 20182017$%
Revenues:                    
Rental income $19,779
$17,107
$2,672
16 % $416
$
$416
100% $3,289
$3,915
$(626)(16)% $23,484
$21,022
$2,462
12 %
Operating expense reimbursements 957
1,008
(51)(5)% 


% 8
139
(131)NM
 965
1,147
(182)(16)%
Total revenues 20,736
18,115
2,621
14 % 416

416
100% 3,297
4,054
(757)(19)% 24,449
22,169
2,280
10 %
Property operating and maintenance 11,874
12,078
(204)(2)% 


% 1,903
711
1,192
168 % 13,777
12,789
988
8 %
NOI $8,862
$6,037
$2,825
47 % $416
$
$416
100% $1,394
$3,343
$(1,949)(58)% $10,672
$9,380
$1,292
14 %
_______________
(1)
Our Segment Same Store for our triple net leased healthcare facilities segment included 18 2017-2018 Same Store properties and excludes the 18 Transition Properties (see "—Transition Properties" above for more information).
(2)
Our triple net leased healthcare facilities segment included two 2017-2018 Acquisitions.
(3)
Our triple net leased healthcare facilities segment included eight 2017-2018 Dispositions.
(4)
Our triple net leased healthcare facilities segment included 20 properties as of December 31, 2018.
NM - Not Meaningful
Revenues for our triple-net leased healthcare facilities generally consist of fixed rental amounts (which may be subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms. Rental income is related to contractual rent received from tenants that does not vary based on the underlying operating performance of the properties. During the year ended December 31, 2018, rental income in our triple-net leased healthcare facilities segment increased $2.5 millionNOI as compared to the year ended December 31, 2017. This2020. Of our 26 Acquisitions, during the period from January 1, 2020 through December 31, 2021, 22 were MOBs which contributed a $4.8 million increase was primarily due to an increase of $2.7in NOI, and our Disposition properties contributed a $1.1 million decrease in SegmentNOI, while NOI from our Same Store property revenues, which was driven byproperties contributed a $3.0$2.3 million increase relateddecrease in NOI as compared to new tenants in seven skilled nursing facilities located in Illinois. This was partially offset by a decrease of $0.6 million in Disposition property revenues, which was a result of the eight 2017-2018 Dispositions of skilled nursing facility properties in Missouri (the "Missouri SNF Properties").
Operating expense reimbursements in our triple-net leased healthcare facilities segment generally include reimbursement for property operating expenses that we pay on behalf of tenants in this segment. However, pursuant to many of our lease agreements in this segment, tenants are generally directly responsible for all operating costs of the respective properties in addition to base rent. Property operating and maintenance expense should typically include minimal activity in our triple-net leased healthcare facilities segment except for real estate taxes, insurance, and bad debt expense. Real estate taxes are typically paid directly by the tenants; however, they may be paid by us and reimbursed by the tenants.

Property operating and maintenance expenses of $13.8 million during the year ended December 31, 2018 primarily relates2020. The decrease in NOI from our Same Store properties is due to $11.0 million of bad debtone-time expense recorded on four propertiesrecoveries which occurred in Texas, and one property in Florida, which is described below in more detail, and real estate taxes that were not reimbursed by tenants. Property operating and maintenance expense during the year ended December 31, 2017 primarily related to real estate taxes that were2020 which did not reimbursed and bad debt expenseoccur in our triple-net leased facilities located in Texas, Illinois and Wisconsin.
The LaSalle Tenant
We are currently exploring options to replace the LaSalle Tenant in Texas. In January 2018, we agreed to forbear from exercising legal remedies, including staying a lawsuit against the LaSalle Tenant, as long as the LaSalle Tenant pays the amounts due for rent and property taxes on an updated payment schedule pursuant to a forbearance agreement. The LaSalle Tenant is currently in default of the forbearance agreement and owes us $4.2 million of rent, property taxes, late fees, and interest receivable thereunder. We have the entire receivable balance and related income from the LaSalle Tenant fully reserved as of December 31, 2018. We incurred $5.0 million of bad debt expense, including straight-line rent write-offs, related to the LaSalle Tenant during the year ended December 31, 2018, which is included in property operating and maintenance expense on the consolidated statement of operations.
The NuVista Tenants
We had tenants and former tenants at two of our properties in Florida (collectively, the "NuVista Tenants") that have been in default under their leases since July 2017 and collectively owe us $9.4 million of rent, property taxes, late fees, and interest receivable with respect to these properties as of December 31, 2018. There can be no guarantee on the collectibility of these receivables, as such, we have the entire receivable balance and related income from the NuVista Tenants fully reserved as of December 31, 2018. We incurred $6.0 million and $5.3 million of bad debt expense related to the NuVista Tenants during the years ended December 31, 2018 and 2017, respectively, which is included in property operating and maintenance expense on the consolidated statement of operations. The NuVista Tenants are related to Palm, the developer of our development property in Jupiter, Florida which is also currently in default to us (see Note 16 Commitments and Contingencies to our consolidated financial statements included in this Annual Report on Form 10-K for more information on the status of the relationship with Palm).
At one of the properties which is occupied by the NuVista Tenants, located in Wellington, Florida, we filed litigation against the tenant pursuing eviction proceedings against the NuVista Tenant and appointed a court ordered receiver in order to replace the NuVista Tenant with a new tenant and operator at the property. During the pendency of the litigation, we and the tenant entered into an agreement (the “OTA”) pursuant to which we and the tenant agreed to cooperate in transitioning operations at the property to a third party operator selected by us. Following the tenant’s failure to cooperate in transitioning the operations in accordance with the OTA, we filed a motion in the existing litigation seeking to enforce the OTA. On February 19, 2019, the court entered an agreed order whereby the tenant agreed to cooperate in transitioning operations to a manager of our choosing. There can be no assurance as to when this transition will be completed, and even then, there can be no assurance it will be completed during that time period, or at all. The court also entered into a final judgment with respect to monetary damages in the amount of $8.8 million, although there can be no assurance that we will recover any such amount. We have fully reserved for these monetary damages.
The other property which was occupied by the NuVista Tenants, located in Lutz, Florida, transitioned to the SHOP segment as of January 1, 2018. In connection with this transition, we have replaced the NuVista Tenant as a tenant with a TRS, and have engaged a third party to operate the property. This structure is permitted by RIDEA, under which a REIT may lease qualified healthcare properties on an arm's length basis to a TRS if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor. During the third quarter of 2018, the new operator obtained a Medicare license. Prior to the operator obtaining this Medicare license, we were unable to bill Medicare for services performed and accumulated receivables. We were able to bill and collect the majority of these receivables during the year ended December 31, 2018; however, $0.7 million of these receivables are not collectible. We have reserved for the uncollectible receivables, resulting in bad debt expense during the year ended December 31, 2018, which is included in property operating and maintenance expense on the consolidated statement of operations. There can be no assurance as to the collectibility of these Medicare receivables. The NuVista Tenants are related to Palm, the developer of our development property in Jupiter, Florida which is also currently in default to us. See “—Liquidity and Capital Resources — Palm and the NuVista Tenants” for further details.

2021.
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 years ended December 31, 20182021 and 2017:2020:
Segment Same Store (1)
Acquisitions (2)
Dispositions (3)
Segment Total
 Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)Year Ended December 31,Increase (Decrease)
(Dollar amounts in thousands)20212020$20212020$20212020$20212020$
Revenue from tenants$186,359 $204,932 $(18,573)$14,667 $12,780 $1,887 $5,462 $44,076 $(38,614)$206,488 $261,788 $(55,300)
Less: Property operating and maintenance154,080 160,406 (6,326)11,941 10,418 1,523 5,312 39,912 (34,600)171,333 210,736 (39,403)
NOI$32,279 $44,526 $(12,247)$2,726 $2,362 $364 $150 $4,164 $(4,014)$35,155 $51,052 $(15,897)
  
Segment Same Store (1)
 
Acquisitions (2)
 Segment Total
  Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease)
(Dollar amounts in thousands) 2018 2017 $ % 2018 2017 $ % 2018 2017 $ %
Revenues:                        
Resident services and fee income $230,193
 $198,182
 $32,011
 16% $8,647
 $1,232
 $7,415
 NM $238,840
 $199,414
 $39,426
 20%
Rental income 14
 6,729
 (6,715) NM
 
 10
 (10) NM 14
 6,739
 (6,725) NM
Total revenues 230,207
 204,911
 25,296
 12% 8,647
 1,242
 7,405
 NM 238,854
 206,153
 32,701
 16%
Property operating and maintenance 170,627
 148,530
 22,097
 15% 6,298
 821
 5,477
 NM 176,925
 149,351
 27,574
 18%
NOI $59,580
 $56,381
 $3,199
 6% $2,349
 $421
 $1,928
 NM $61,929
 $56,802
 $5,127
 9%
__________
_______________(1)    Our SHOP segment included 52 Same Store properties, including two land parcels.
(1)
(2)    Our SHOP segment included four Acquisitions properties.
(3) Our SHOP segment included 13 Dispositions properties.
(4) Our SHOP segment included 56 properties, including two land parcels.
Our Segment Same Store for our SHOP segment included 57 2017-2018 Same Store properties and all 18 Transition Properties (see "—Transition Properties" above for more information).
(2)
Our SHOP segment included three 2017-2018 Acquisitions which were acquired from third parties.
NM — Not Meaningful
Resident services and fee income isRevenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services.
Property operating and maintenance expenseexpenses relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators, and costs associated with maintaining the physical site.
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During the year ended December 31, 2018, resident2021, revenue from tenants decreased by $55.3 million in our SHOP segment as compared to the year ended December 31, 2020 primarily giving effect to a $38.6 million decrease from our Disposition properties, and a decrease of $18.6 million from our Same Store properties. These decreases were partially offset by $1.9 million of additional revenue through our Acquisition properties. For the year ended December 31, 2021, an additional $0.8 million was generated through COVID-19 surcharges for PPE as compared to $1.1 million in PPE billings during the year ended December 31, 2020. We also offered $0.1 million of rent concessions related to COVID-19 in the year ended December 31, 2021 as compared to $0.4 million of rent concessions granted during the year ended December 31, 2020.
Revenues declined in our Same Store SHOPs primarily due to a decrease in occupancy as a result of COVID-19 as discussed in Management Update on the Impacts of the COVID-19 Pandemic. Regulatory and government-imposed restrictions and infectious disease protocols have hindered our ability to accommodate and conduct in-person tours and process and attract new move-ins at our SHOPs which has affected and could continue to affect our ability to fill vacancies.
We also generated a portion of our SHOP revenue from skilled nursing facilities (which include ancillary revenue from non-residents) at two of our Same Store SHOPs and two of our Disposition SHOPs. This revenue declined $9.8 million from $13.3 million during the year ended December 31, 2020 to $3.5 million during the year ended December 31, 2021 as a result of limiting the services we offered at our skilled nursing facilities during the COVID-19 pandemic to protect our residents and fee income increased byon-site staff, as well as from disposing of our two largest SNFs in Lutz and Wellington, Florida in December 2020 and May 2021, respectively. The property in Wellington, Florida generated ancillary revenues of $1.6 million and $3.9 million in the years ended December 31, 2021 and 2020, respectively. The property in Lutz, Florida generated ancillary revenue of $4.0 million in the year ended December 31, 2020. These properties’ results are presented in Disposition properties in the table above. As a result of these dispositions, we expect ancillary revenue to continue to decline in future quarters relative to prior quarters where we owned these properties. Our remaining SNFs generated ancillary revenue of $1.9 million and $5.4 million in the years ended December 31, 2021 and 2020, respectively.
During the year ended December 31, 2021, property operating and maintenance expenses decreased $39.4 million in our SHOP segment as compared to the year ended December 31, 2017, which was2020, primarily due to increasesa decrease of $32.0$34.6 million from our Dispositions and a decrease of $6.3 million in our Segment Same Store properties. These increases were partially offset by an increase in property revenuesoperating and $7.4maintenance expenses from our Acquisitions of $1.5 million.
Our property operating and maintenance expenses for our Same Store properties decreased due to $5.1 million in Acquisition property revenues. Transition Properties contributed $32.4CARES Act funds received, $4.4 million of the $32.0 million increase inwhich related to our Segment Same Store Resident servicesproperties. We received $3.6 million of CARES Act funds in 2020, $0.9 million of which related to our Same Store properties. We consider the receipt of CARES Act funds as government grants which reduce property operating and fee income, primarilymaintenance expenses for the period in which they are received. In addition, we had lower operating costs as a result of the fact we were unable to collect rent from the tenants at severallower occupancy levels as well as some lessening of the Transition Properties prior to the transition but commenced collecting rentCOVID-related costs in connection with the replacement of the non-paying tenants (see "Transition Properties" above for more information).
During the year ended December 31, 2018, property operating and maintenance expense increased $27.6 million in our SHOP segment2021 as compared to the year ended December 31, 2017. The $22.1 million increase2020. There can be no assurance that the program will be extended or any further amounts received. See the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken in Same Store property operating and maintenance expense is due to increased wages and building operational expenses. Acquisitions, comprising our three SHOPs acquired from third parties, contributed to an increase of $5.5 million in property operating and maintenance expense.response.
Other Results of Operations
Impairment Charges
We incurred $20.7 million and $19.0$41.0 million of impairment charges for the yearsyear ended December 31, 20182021. The impairment charges for the year ended December 31, 2021 related to a $0.9 million impairment on our Wellington property, which was recorded to adjust the carrying value to its fair value as determined by its purchase and 2017, respectively. sale agreement, a $6.1 million impairment related to an MOB property located in Sun City, Arizona, and $34.0 million related to our LaSalle properties.
We incurred $36.4 million of impairment charges for the year ended December 31, 2020. We recorded $19.6 million of impairment charges related to the 11 Michigan SHOPs, which was recognized after an amendment to the PSA for the sale of these properties in April 2020 which reduced the number of properties under consideration as well as the contract purchase price. We recorded $16.9 million of impairment charges related to the two Florida properties in Jupiter and Wellington as a result of our marketing efforts during the COVID-19 pandemic which concluded with a PSA in August 2020, for which the contract purchase was less than the carrying values of the properties, as well as expected closing costs that were not previously anticipated, which reduced the net amount expected to be realized on the sale of properties.
See Note 3 — Real Estate Investments to our consolidated financial statements included in this Annual Report on Form 10-K for additional information on the impairment charges for the year ended December 31, 2018. The impairment charges for the year ended December 31, 2018 relate to the eight Missouri SNF Properties which were sold in 2018, one MOB property within the state of New York (one of the "New York Six MOBs") which was sold in 2019, and one held-for-use property. The impairment charges for the year ended December 31, 2017 relate to six held-for-use properties that had carrying values in excess of their estimated fair values.charges.
Operating Fees to Related Parties
Operating fees to related parties increased $0.8$0.3 million to $23.1$24.2 million for the year ended December 31, 20182021 from $22.3$23.9 million for the year ended December 31, 2017.2020.
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Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis. Effective February 17, 2017,The fixed portion of the base management fee we pay a basefor asset management feeservices is equal to $1.6 million per month, while the variable portion of the base management fee is equal, per month, to one twelfth per month of 1.25% of the cumulative net proceeds of any equity raised (but excluding proceeds from the DRIP) subsequent to February 17, 2017. During the period preceding the February 17, 2017 amendment, our asset management fee was based on a percentage of the lesser of (a) cost of assets and (b) fair value of assets.we raise. Asset management fees increased $0.3$0.7 million to $19.5$20.7 million for the year ended December 31, 2018 from $19.22021, due to the increase in the variable portion of the base management fee related to the issuance and sale of Series B Preferred Stock in October 2021.
Property management fees decreased $0.4 million forto $3.7 million, inclusive of $0.3 million of leasing commissions paid, during the year ended December 31, 2017. There were no variable management fees paid during the years ended December 31, 2018 and 2017, as no equity was raised during either period.

Property management fees increased $0.5 million to $3.62021 from $4.2 million during the year ended December 31, 2018 from $3.1 million during the year ended December 31, 2017.2020. Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.
SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements found in this Annual Report on Form 10-K which provides detail on our feesasset and expense reimbursements.property management fees.
Acquisition and Transaction Related Expenses
Acquisition and transaction related expenses generally increase in direct correlation with the number and contract purchase price of properties acquired or sold during the period, as well as the level of activity surrounding any contemplated and unconsummated transactions and strategic processes. Acquisition and transaction related expenses of $0.3were $2.7 million for the year ended December 31, 20182021 and $0.2 million for the year ended December 31, 2020. The increase is mainly due to $1.2 million of costs incurred from our terminated Preferred Stock Equity Line, $0.8 million from litigation costs related to our Michigan dispositions which occurred in the first quarter of 2021, $0.2 million from a legal settlement related to our Jupiter, Florida disposition which occurred in the second quarter of 2021, and $0.3 million of increased costs related to dead deal and other miscellaneous costs incurred in the year ended December 31, 2021 as compared to the year ended December 31, 2020. The expenses in both periods primarily related to indirect costs associated with potential acquisitions. Acquisition
General and transaction relatedAdministrative Expenses
General and administrative expenses of approximately $3.0decreased $4.7 million to $16.8 million for the year ended December 31, 2017, primarily related2021 compared to costs associated with the negotiation and execution of the Purchase Agreement.
General and Administrative Expenses
General and administrative expenses increased $1.6 million to $17.3$21.6 million for the year ended December 31, 2018 compared to $15.7 million for2020. For the year ended December 31, 2017, which includes $9.2 million2021 and $8.1 million2020, incurred from related parties during the years ended December 31, 2018 and 2017, respectively. Expenses incurred primarily relate to professional fees for audit, transfer agent and legal services, as well as certain expenses reimbursed to related partiesexpense reimbursements and distributions on partnership units of ourthe OP designated as Class B Units.Units to related parties were $8.4 million and $11.1 million, respectively. Class B Units will not receive cash distributions, and no further expense will be incurred, for so long as we pay distributions to our common stockholders in stock instead of cash. The decrease in expense reimbursements to related parties was primarily due to $2.2 million of costs incurred in the year ended December 31, 2020 related to severance payments to our former chief executive officer and related legal costs which did not occur in the year ended December 31, 2021. Both the years ended December 31, 2021 and 2020 include reductions of expenses related to 2020 and 2019 employee bonuses, respectively, of $1.0 million and $1.2 million of professional fee credits from the Advisor. For additional details on the 2020 and 2019 bonus awards (see Note 9 – Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K).
In addition to lower expense reimbursements, the decrease was primarily due the decrease in distributions on Class B Units of $0.2 million, lower legal expenses of $0.9 million, lower auditing expenses of $0.4 million, lower printing expenses of $0.6 million, and lower transfer agent expenses of $0.2 million.
The aforementioned professional reimbursement fees to the Advisor are subject to a cap which is equal to the greater of a fixed or variable component. We did not meet the cap for the years ended December 2021 and 2020. The fixed component increases 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. See Note 9 – Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
Depreciation and Amortization Expenses
Depreciation and amortization expense increased $5.6 milliondecreased marginally to $83.2$79.9 million for the year ended December 31, 20182021 from $77.6$81.1 million for the year ended December 31, 2017. Our 2017-2018 Acquisitions contributed $10.02020 as decreases from property dispositions were largely offset by increases from acquisitions.
Gain on Sale of Real Estate Investments
During the year ended December 31, 2021, we disposed of eight properties. The properties were sold for an aggregate contract price of $133.6 million, which resulted in an aggregate gain on sale of $3.6 million. See Note 3 — Real Estate Investments, Netto the increase. Our 2017-2018 Same Store depreciation and amortization decreased $3.8 million, as compared to the prior year comparable period, primarily due to several intangible assets becoming fully amortized.our consolidated financial statements in this Annual Report on Form 10-K for additional information.
Interest Expense
Interest expense increased $19.2decreased by $3.6 million to $49.5$47.9 million for the year ended December 31, 20182021 from $30.3$51.5 million for the year ended December 31, 2017.2020. The increasedecrease in interest expense is related to increasingresulted from lower interest rates as well as higher overalllower average outstanding debt including new borrowings under the Fannie Mae Master Credit Facilities and a $118.7 million secured loan with KeyBank (the “Multi-Property CMBS Loan”). This increase in outstanding debt was partially offset by paydowns of the Bridge Loan entered into in December 2017.2021 compared to 2020. As of December 31, 2018, we had total borrowings of2021 our outstanding debt obligations were $1.1 billion at a weighted average interest rate of 4.6%.3.44% per year. As of December 31, 2017,2020, we had total borrowings of $941.5 million,$1.2 billion, at a weighted average interest rate of 3.9%. 3.58% per year.
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Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings and the opportunity to acquire real estate assets which meet our investment objectives.among other factors.
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 $23,000$61,000 for the year ended December 31, 2018.2021. Interest and other income ofwas approximately $0.3 million$44,000 for the year ended December 31, 2017 resulted from the recognition of a prospective buyer's non refundable deposit on an unconsummated sale of a vacant land parcel.2020.
(Loss) GainLoss on Non-Designated Derivatives
Loss on non-designated derivative instruments for the years ended December 31, 20182021 and 20172020 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates.
(Loss) gain on Sale of Real Estate Investments
Loss on sale of real estate investmentsderivative instruments for the yearyears ended December 31, 2018 pertained to the sale of the eight Missouri SNF Properties, which resulted in a loss of2021 and 2020 were $37,000 and $0.1 million. Gain on sale of real estate investments for the year ended December 31, 2017 pertained to the sale of a real estate investment, which resulted in a gain of $0.4 million, during the period.


Gain on Asset Acquisition
Gain on Asset Acquisition for the year ended December 31, 2017 of $0.3 million resulted from the transfer of operations of 12 operating entities on June 8, 2017. See Note 3 — Real Estate Investments to our consolidated financial statements included in this Annual Report on Form 10-K for further details.respectively.
Income Tax Benefit (Expense)
We recorded an income tax benefitexpense of $0.2 million and $0.6$4.1 million for the years ended December 31, 20182021 and 2017,2020, respectively, primarily related to changes in deferred tax assets or liabilities generated by temporary differences and current period net operating income associated with our TRS. During the year ended December 31, 2020, we recorded an initial $4.6 million valuation allowance against our net deferred tax assets. During the year ended December 31, 2021, we continue to maintain a full valuation allowance against our net deferred tax assets. Income taxes generally relate to our SHOPs, which are leased by our TRS.
On December 22, 2017, the TCJA was signed into law.  The TCJA includes many changes to existing tax law, including a reduction in the maximum federal corporate income tax rate from 35% to 21%.  This reduction in rate became effective on January 1, 2018.  Due to this reduction in rate, we reduced the valueBecause of our TRS’TRS recent operating history of losses and the on-going impacts of the COVID-19 pandemic 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 which resulted in additional income tax expense of $2.0 millionassets; thus we have recorded a 100% valuation allowance in the year ended December 31, 2017.2020 and we have continued to maintain this valuation allowance through December 31, 2021. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive income (loss). As of December 31, 2021, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $13.3 million at December 31, 2021 (of which $7.6 million were incurred prior to January 1, 2018). For losses incurred prior to January 1, 2018, if unused, these will begin to expire in 2035. For net operating losses incurred subsequent to December 31, 2017, there is no expiration date.
Net Income/Loss Attributable to Non-Controlling Interests
Net loss attributable to non-controlling interests was approximately $0.2$0.3 million and net income attributable non-controlling interests was $0.3 million for the years ended December 31, 20182021 and 2017, respectively, which represents2020, respectively. These amounts represent the portion of our net incomeloss that is related to limited partner interests in our OP ("OP Units") and non-controlling interest holders.

Comparison of the Year Ended December 31, 2017 and 2016
Net loss attributable to stockholders was $42.5 million and $20.9 million for the years ended December 31, 2017 and 2016, respectively. The following table shows our results of operations for the years ended December 31, 2017 and 2016 and the year to year change by line item of the consolidated statements of operations:
  Year Ended December 31, Increase (Decrease)
(Dollar amounts in thousands) 2017 2016 $ %
Revenues:        
Rental income $95,152
 $103,375
 $(8,223) (8.0)%
Operating expense reimbursements 16,605
 15,876
 729
 4.6 %
Resident services and fee income 199,416
 183,177
 16,239
 8.9 %
Contingent purchase price consideration 
 138
 (138) (100.0)%
Total revenues 311,173
 302,566
 8,607
 2.8 %
         
Operating expenses:        
Property operating and maintenance 186,277
 172,077
 14,200
 8.3 %
Impairment charges 18,993
 389
 18,604
 NM
Operating fees to related parties 22,257
 20,583
 1,674
 8.1 %
Acquisition and transaction related 2,986
 3,163
 (177) (5.6)%
General and administrative 15,673
 12,105
 3,568
 29.5 %
Depreciation and amortization 77,641
 98,886
 (21,245) (21.5)%
Total expenses 323,827
 307,203
 16,624
 5.4 %
Operating loss before gain on sale of real estate investments (12,654) (4,637) (8,017) NM
Gain on sale of real estate investments 438
 1,330
 (892) (67.1)%
Operating loss (12,216) (3,307) (8,909) NM
Other income (expense):        
Interest expense (30,264) (19,881) (10,383) (52.2)%
Interest and other income 306
 47
 259
 NM
(Loss) gain on non-designated derivative instruments (198) 31
 (229) NM
Gain on asset acquisition 307
 
 307
 100.0 %
Gain on sale of investment securities 
 56
 (56) (100.0)%
Total other expenses (29,849) (19,747) (10,102) (51.2)%
Loss before income taxes (42,065) (23,054) (19,011) (82.5)%
Income tax (expense) benefit (647) 2,084
 (2,731) NM
Net loss (42,712) (20,970) (21,742) (103.7)%
Net loss attributable to non-controlling interests 164
 96
 68
 70.8 %
Net loss attributable to stockholders $(42,548) $(20,874) $(21,674) (103.8)%
_______________
NM — Not Meaningful
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to rental income and operating expense reimbursements less property operating expense. NOI excludes all other financial statement amounts included in net income (loss) attributable to stockholders. We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. See "Non-GAAP Financial Measures" included elsewhere in this Annual Report on Form 10-K for additional disclosure and a reconciliation to our net loss attributable to stockholders.
Segment Results
As of December 31, 2017, we owned 185 properties. There were 162 properties (our "2016-2017 Same Store" properties) owned for the entire year ended December 31, 2017, including two vacant land parcels and one property under development.

During the year ended December 31, 2017, we acquired 20 MOBs, one triple-net leased healthcare facility, and two SHOPs (our "2016-2017 Acquisitions"). We disposed of one MOB and two triple-net leased healthcare facilities during the year ended December 31, 2016 and one MOB during the year ended December 31, 2017 (four properties in total, our "2016-2017 Dispositions").
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 years ended December 31, 2017 and 2016:
  
Same Store(1)
 
Acquisitions(2)
 
Dispositions(3)
 
Segment Total(4)
  Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease)
(Dollar amounts in thousands) 2017 2016 $ % 2017 2016 $ % 2017 2016 $ % 2017 2016 $ %
Revenues:                                
Rental income $65,738
 $65,006
 $732
 1% $1,616
 $
 $1,616
 100% $36
 $988
 $(952) NM
 $67,390
 $65,994
 $1,396
 2%
Operating expense re-imbursement 15,184
 14,706
 478
 3% 274
 
 274
 100% 2
 220
 (218) NM
 15,460
 14,926
 534
 4%
Contingent purchase price consideration 
 (91) 91
 100% 
 
 
 % 
 
 
 % 
 (91) 91
 100%
Total revenues 80,922
 79,621
 1,301
 2% 1,890
 
 1,890
 100% 38
 1,208
 (1,170) NM
 82,850
 80,829
 $2,021
 3%
Property operating and maintenance 23,775
 23,395
 380
 2% 325
 
 325
 100% 37
 419
 (382) NM
 24,137
 23,814
 323
 1%
NOI $57,147
 $56,226
 $921
 2% $1,565
 $
 $1,565
 100% $1
 $789
 $(788) NM
 $58,713
 $57,015
 $1,698
 3%
_________________
(1)
Our MOB segment included 79 2016-2017 Same Store properties.
(2)
Our MOB segment included 20 2016-2017 Acquisition properties, all of which were acquired during the year ended December 31, 2017.
(3)
Our MOB segment included two 2016-2017 Disposition properties, one disposed in each of the years ending December 31, 2016 and 2017.
(4)
Our MOB segment included 101 properties, including 20 properties acquired and two sold.
NM — Not Meaningful
Rental income is primarily related to contractual rent received from tenants in our MOBs. Generally, operating expense reimbursements increase in proportion with the increase in property operating 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 expenses, which may be subject to expense exclusions and floors, in addition to base rent. Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, bad debt expense and unaffiliated third party property management fees.
During the year ended December 31, 2017, rental income, operating expense reimbursements and property operating and maintenance expense increased at the 2016-2017 Same Store properties in our MOB segment as compared to the year ended December 31, 2017, which was mainly attributable to a multi-tenant MOB located in Arizona and another multi-tenant MOB located in Pennsylvania.
Our Same Store property operating and maintenance expenses increased $0.4 million during the year ended December 31, 2017 due to increased property operating and maintenance expenses that are reimbursable by our tenants.
The following table presents the number of 2016-2017 Same Store MOBs, average occupancy and annualized straight line rental income per rented square foot for single- and multi-tenant MOBs in our MOB segment for the periods presented:
  Number of Same Store Properties 
Average Occupancy for the
Years Ended
December 31,
 
Annualized Straight Line Rental Income Per Rented Square Foot as of
December 31,
Type of Same Store MOB  2017 2016 2017 2016
Single-tenant MOBs 27
 100.0% 100.0% $21.55
 $21.55
Multi-tenant MOBs 52
 89.5% 82.6% 22.64
 22.64
Total/Weighted-Average 79
 87.7% 87.7% $22.28
 $22.28

Segment Results — Triple Net Leased Healthcare Facilities
The following table presents the revenue and property operating and maintenance expense and the period to period change within our triple net leased healthcare facilities segment for the years ended December 31, 2017 and 2016
  
Same Store (1)
 
Acquisitions (2)
 
Dispositions (3)
 
Segment Total (4)
  Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease)
(Dollar amounts in thousands) 2017 2016 $ % 2017 2016 $ % 2017 2016 $ % 2017 2016 $ %
Revenues:                                
Rental income $22,506
 $29,695
 $(7,189) (24)% $10
 $
 $10
 100% $2,617
 $7,679
 $(5,062) (66)% $25,133
 $37,374
 $(12,241) (33)%
Operating expense re-imbursements 1,147
 444
 703
 NM
 
 
 
 % (1) 505
 (506) NM
 1,146
 949
 197
 21 %
Total revenues 23,653
 30,139
 (6,486) (22)% 10
 
 10
 100% 2,616
 8,184
 (5,568) (68)% 26,279
 38,323
 (12,044) (31)%
Property operating and maintenance 17,006
 13,440
 3,566
 27 % 10
 
 10
 100% 2,928
 5,370
 (2,442) (45)% 19,944
 18,810
 1,134
 6 %
NOI $6,647
 $16,699
 $(10,052) (60)% $
 $
 $
 % $(312) $2,814
 $(3,126) (111)% $6,335
 $19,513
 $(13,178) (68)%
____________________
(1)
Our triple net leased healthcare facilities segment included 31 2016-2017 Same Store properties.
(2)
Our triple net leased healthcare facilities segment included one 2016-2017 Acquisition property.
(3)
Our triple-net leased healthcare facilities included two 2016-2017 Dispositions in 2016 and 12 Transition Properties that are deemed 2016-2017 Dispositions as they were transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the year ended December 31, 2017. In the discussion and analysis of the results of operations of our triple-net leased healthcare facilities segment above with respect to the year ended December 31, 2018 as compared to the year ended December 31, 2017, we no longer include these 12 Transition Properties as deemed dispositions. See "—Transition Properties" above for more information.
(4)
Our triple net leased healthcare facilities segment included 46 properties, including one property acquired and two disposed.
NM - Not Meaningful
Rental income is related to contractual rent received from tenants in our triple-net leased healthcare facilities. Operating expense reimbursements in our triple net leased healthcare facilities segment generally includes reimbursement for property operating expenses that we pay on behalf of tenants in this segment. Pursuant to many of our lease agreements in our triple net leased healthcare facilities, tenants are generally directly responsible for all operating costs of the respective properties in addition to base rent. Property operating and maintenance should typically include minimal activity in our triple-net leased healthcare facilities segment, as such expenses are typically paid directly by the tenants; however, real estate taxes and insurance may be included. Such expenses are normally reimbursed by the tenants in this segment. Bad debt expense is also reflected in our property operating and maintenance expenses.
During the year ended December 31, 2017, rental income in our 2016-2017 Same Store triple-net leased healthcare facilities segment decreased $7.2 million as compared to the year ended 2016. This decrease mainly relates to the early termination of six triple-net healthcare facilities located in Illinois in October 2016, in which a receiver was appointed by a court to manage and conserve these properties in November 2016 (the "Receiver"). According to the receivership order, the Receiver is only obligated to pay rental payments in the event that they produce excess cash flow from operations. No such rents have been received from the Receiver.
Operating expense reimbursements during the year ended December 31, 2017 reflect adjustments to operating expense reimbursements related to real estate taxes, which was also reflected in our property operating and maintenance expenses.
Property operating and maintenance in our 2016-2017 Same Store properties increased $3.6 million compared to the year ended December 31, 2016. The increase in property operating and maintenance expense is mainly due to bad debt expense recorded as a result of collection issues with several of our triple-net leased healthcare facility tenants. The financial and operational challenges faced by these tenants have had, and could continue to have, an impact on rent payments that we receive.
Revenues for our triple-net leased healthcare facilities generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms and do not vary based on the underlying operating performance of the properties.

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 years ended December 31, 2017 and 2016:
  
Same Store (1)
 
Acquisitions (2)
 
Segment Total (3)
  Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease)
(Dollar amounts in thousands) 2017 2016 $ % 2017 2016 $ % 2017 2016 $ %
Revenues:                        
Resident services and fee income $185,686
 $183,177
 $2,509
 1% $13,730
 $
 $13,730
 100% $199,416
 $183,177
 $16,239
 9 %
Contingent purchase price consideration 
 138
 (138) NM
 
 
 
 NM
 
 138
 (138) (100)%
Rental income 2,629
 7
 2,622
 NM
 
 
 
 NM
 2,629
 7
 2,622
 NM
Total revenues 188,315
 183,322
 4,993
 3% 13,730
 
 13,730
 100% 202,045
 183,322
 18,723
 10 %
Property operating and maintenance 129,579
 129,451
 128
 % 12,618
  12,618
 100% 142,197
 129,451
 12,746
 10 %
NOI $58,736
 $53,871
 $4,865
 9% $1,112
 $
 $1,112
 100% $59,848
 $53,871
 $5,977
 11 %
_______________
(1)
Our SHOP segment included 38 2016-2017 Same Store properties.
(2)
Our SHOP segment included 14 2016-2017 Acquisition properties and 12 Transition Properties that are deemed 2016-2017 Acquisitions as they were transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the year ended December 31, 2017. In the discussion and analysis of the results of operations of our SHOP segment during the year ended December 31, 2018 as compared to the year ended December 31, 2017, we include these 12 Transition Properties as part of our Segment Same Store and not as deemed acquisitions. See "—Transition Properties" above for more information.
(3)
Our SHOP segment included 54 properties during the year ended December 31, 2017, including 52 operating properties and two land parcels.
NM — Not Meaningful
Resident services and fee income is generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance relates to the costs associated with our properties and professional fees, as well as costs related to caring for the residents in our SHOPs, including food, labor, marketing, and other expenses.
During the year ended December 31, 2017, resident services and fee income and property operating and maintenance expense increased at the 2016-2017 Same Store properties in our SHOP segment as compared to the year ended December 31, 2016. The increase in resident services and fee income was primarily due to higher resident rental rates, which was partially offset by a decrease in occupancy levels compared to the prior year. The increase in property operating and maintenance expense primarily due to increases in labor and benefits cost.
During the year ended December 31, 2017, resident services and fee income and property operating and maintenance expense increased at our SHOP segment 2016-2017 Acquisitions as compared to the year ended December 31, 2016 primarily due to our acquisition of 12 SHOPs on June 8, 2017.
Other Results of Operations
Contingent Purchase Price Consideration
During the year ended December 31, 2016 we recognized $0.1 million in contingent purchase price consideration, which primarily related to releases from a holdback escrow for unit renovations at one of our SHOPs, partially offset by the settlement of certain property operating expenses related to vacancy escrow agreements at one acquisition which resulted in us making payments to the seller. We had no contingent purchase price consideration recognized during the year ended December 31, 2017.
Impairment on Sale of Real Estate Investments
We incurred $19.0 million of impairment charges for the year ended December 31, 2017. During 2017, there were six held for use properties for which we reconsidered the projected cash flows for these properties. As a result, we evaluated the impact on our ability to recover the carrying value of such properties based on the expected cash flows over our intended holding period. We determined that the carrying value of six of the held for use properties exceeded their estimated fair values and, as a result, recognized the impairment charge. Impairment related to the sale of real estate investments during the year ended December 31, 2016 related to two real estate investments held for sale with an accepted sales price less than the carrying value. This resulted in an impairment of $0.4 million during the period.
Operating Fees to Related Parties
Operating fees to related parties increased $1.7 million to $22.3 million for the year ended December 31, 2017 from $20.6 million for the year ended December 31, 2016.

Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis. Effective February 17, 2017, we pay a 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 (excluding proceeds from the DRIP) subsequent to February 17, 2017. During the year ended December 31, 2016, our asset management fee was equal to a percentage of the lesser of (a) cost of assets and (b) fair value of assets. Asset management fees increased $0.5 million to $19.2 million for the year ended December 31, 2017 from $17.6 million for the year ended December 31, 2016.
We incurred $3.1 million and $3.0 million in property management fees during the years ended December 31, 2017 and December 31, 2016, respectively. Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.
SeeNote 9 — Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K for additional detail on our fees and expense reimbursements.
Acquisition and Transaction Related Expenses
Acquisition and transaction related expenses generally increase in direct correlation with the number and contract purchase price of properties acquired or sold during the period and the level of activity surrounding any contemplated transaction or strategic process. Acquisition and transaction related expenses of $3.0 million for the year ended December 31, 2017 primarily related to costs associated with the negotiation and execution of the Purchase Agreement. Acquisition and transaction related expenses of approximately $3.2 million for the year ended December 31, 2016, primarily related to the Board's evaluation of potential strategic alternatives and costs associated with property acquisitions.
General and Administrative Expenses
General and administrative expenses increased $3.6 million to $15.7 million for the year ended December 31, 2017 compared to $12.1 million for the year ended December 31, 2016, which includes $8.1 million and $5.1 million incurred in expense reimbursements and distributions on Class B Units to related parties. General and administrative expenses primarily relate to professional fees for audit, transfer agent and legal services as well as certain expenses reimbursed to related parties.
Depreciation and Amortization Expenses
Depreciation and amortization expense decreased $21.3 million to $77.6 million for the year ended December 31, 2017 from $98.9 million for the year ended December 31, 2016. Same Store depreciation and amortization decreased $22.2 million, of which $15.5 million was related to the Same Store SHOP portfolio. This change was primarily attributed to several intangible assets becoming fully amortized in late 2016 as well as lower depreciation base in 2017 due to the $19.0 million asset impairment discussed above.
Interest Expense
Interest expense increased $10.4 million to $30.3 million for the year ended December 31, 2017 from $19.9 million for the year ended December 31, 2016. The increase in interest expense is related to higher overall outstanding debt including new borrowings under the Fannie Mae Master Credit Facilities. Our increased outstanding debt also includes a multi-property mortgage loan with Capital One, National Association, along with certain other lenders, that was entered into June 30, 2017 for $250.0 million (the "MOB Loan") and an $82.0 million multi-property mortgage loan (the "Bridge Loan") entered into in December 2017.
Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings and the opportunity to acquire real estate assets which meet our investment objectives.
Interest and Other Income
Interest and other income increased to approximately $0.3 million for the year ended December 31, 2017 from approximately $47 thousand for the year ended December 31, 2016. Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period. The increase resulted from the recognition of a prospective buyer's non-refundable deposit on an unconsummated sale of a vacant land parcel during the year ended December 31, 2017.
Loss on Non-Designated Derivative Instruments
Loss on non-designated derivative instruments for the year ended December 31, 2017 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates. The 2017 loss of approximately $0.2 million reflects mark-to-market fair value adjustments for the interest rate caps, which have not been designated as cash flow hedges.

Gain on Sale of Real Estate Investment
Gain on Sale of Real Estate Investments decreased to $0.4 million for the year ended December 31, 2017 from $1.3 million for the year ended December 31, 2016. Gain on sale of real estate investments for both years resulted from single disposition transactions. The gains resulted from sales of real estate in San Diego and Santa Clara, California in the years ended 2017 and 2016, respectively.
Gain on Asset Acquisition
Gain on Asset Acquisition for the year ended December 31, 2017 of $0.3 million resulted from the transfer of operations of 12 operating entities on June 8, 2017. See Note 3 — Real Estate Investments to our consolidated financial statements included in this Annual Report on Form 10-K for further details.
Gain on Sale of Investment Securities
Gain on sale of investment securities for the year ended December 31, 2016 of $0.1 million resulted from the sale of our investments in preferred stock with a cost basis of $1.1 million. We sold all of our investment securities in 2016 and, therefore, no longer have any investment securities as of December 31, 2017.
Income Tax Benefit/(Expense)
Income tax benefit expense of $(0.6) million and income tax benefit of $2.1 million for the years ended December 31, 2017 and December 31, 2016 primarily related to changes in deferred tax assets or liabilities generated by temporary differences and current period net operating income associated with our TRS. Income taxes generally relate to our SHOPs, which are leased by our TRS.
On December 22, 2017, the TCJA was signed into law.  The TCJA includes many changes to existing tax law, including a reduction in the maximum federal corporate income tax rate from 35% to 21%.  This reduction in rate became effective on January 1, 2018.  Due to this reduction in rate, we have reduced the value of our TRS’ deferred tax assets which results in additional income tax expense of $2.0 million in the year ended December 31, 2017.
Net Loss Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests was approximately $0.2 million and approximately $0.1 million for the years ended December 31, 2017 and 2016, respectively, which represents the portion or our net income that is related to limited partner interests in the OP Units and non-controlling interest holders.holders in our subsidiaries that own certain properties.
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Cash Flows Fromfrom Operating Activities
During the year ended December 31, 2018,2021, net cash provided by operating activities was $54.2$38.9 million. The level of cash flows provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of $38.8 million (net loss of $85.4 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges). In addition, cash provided by operating activities was impacted by an increase in accounts payable and accrued expenses of $1.3 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees, a net decrease in prepaid expenses and other assets of $2.1 million, and by an increase in deferred rent of $1.7 million. These cash inflows were partially offset by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $0.8 million.
During the year ended December 31, 2020, net cash provided by operating activities was $41.8 million. The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of $75.8$50.4 million (net loss of $53.0$75.5 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges) and an increase. These inflows were partially offset by a decrease in accounts payable and accrued expenses of $2.2$4.6 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees. These cash inflows were partially offset byfees, a net increase in prepaid expenses and other assets of $16.9$0.1 million, and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $7.7 million.
During the year ended December 31, 2017, net cash provided$2.4 million and by operating activities was $64.0 million. Cash flows provided by operating activities during the year ended December 31, 2017 included a deduction of $3.0 million for acquisition and transaction related costs. Cash inflows related to a net loss adjusted for non-cash items of $71.4 million (net loss of $42.7 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, equity based compensation, bad debt expense, gain on non-designated derivative instruments, gain on sale of investment securities and net gain on sales of real estate investments of $114.1 million), an increase of $0.5 milliondecrease in deferred rent and a net increase in accounts payable and accrued expenses of $8.7 million primarily related to accrued professional fees, real estate and income taxes and property operating expenses for our MOBs and SHOPs, as well as accrued related party expense reimbursements and interest expense. These cash inflows were partially offset by a net increase in prepaid expenses and other assets of $10.3 million due to rent, other receivables, prepaid real estate taxes and insurance and utility deposits, and a net increase of $6.2 million in unbilled receivables recorded in accordance with straight-line basis accounting.
During the year ended December 31, 2016, net cash provided by operating activities was $79.4$1.6 million. Cash flows provided by operating activities during the year ended December 31, 2016 included a deduction of $3.2 million for acquisition and transaction related costs. Cash inflows related to a net loss adjusted for non-cash items of $95.2 million (net loss of $21.0 million adjusted

for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, equity-based compensation, bad debt expense, gain on non-designated derivative instruments, gain on sale of investment securities and net gain on sales of real estate investments of $116.2 million), a $0.7 million decrease in restricted cash related to real estate tax and insurance escrows on mortgaged properties, an increase of $0.6 million in deferred rent and a net increase in accounts payable and accrued expenses of $0.5 million primarily related to accrued professional fees, real estate and income taxes and property operating expenses for our MOBs and SHOPs, as well as accrued related party expense reimbursements and interest expense. These cash inflows were partially offset by a net increase in prepaid expenses and other assets of $9.5 million due to rent, other receivables, prepaid real estate taxes and insurance and utility deposits, and a net increase of $8.2 million in unbilled receivables recorded in accordance with straight-line basis accounting.
Cash Flows Fromfrom Investing Activities
Net cash used in investing activities during the year ended December 31, 20182021 was $115.1$47.9 million. The cash used in investing activities included $128.1$159.3 million for the acquisition of 12 MOBs17 properties and two triple-net-leased properties during the period and to fund the ongoing development property in Jupiter, Florida, as well as $12.9$19.1 million in capital expenditures. These cash outflows were partially offset by proceeds from the sale of real estate of $25.9$130.4 million.
Net cash used in investing activities during the year ended December 31, 20172020 was $194.4$82.5 million. The cash used in investing activities included $188.9$95.0 million for investmentsthe acquisition of nine properties and $21.9 million in real estate, including the asset purchase from American Realty Capital Healthcare Trust III, Inc. (see Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements found in this Annual Report on Form 10-K), and to fund the ongoing development property in Jupiter, Florida, as well as $8.3 million of capital expenditures. These cash outflows were partially offset by proceeds from the sale of real estate of $0.8 million, proceeds from asset acquisitions of $0.9 million and proceeds from a deposit for a potential real estate sale of $1.1 million.
Net cash used in investing activities during the year ended December 31, 2016 was $19.1 million. The cash used in investing activities included $38.7 million to fund the ongoing development property in Jupiter, Florida as well as $7.5 million of capital expenditures. These cash outflows were partially offset by proceeds from the sale of real estate of $25.9 million, proceeds from the sale of investment securities of $1.1 million and proceeds from a deposit for a potential real estate sale of $0.1$34.4 million.
Cash Flows Fromfrom Financing Activities
Net cash provided by financing activities of $49.7$4.1 million during the year ended December 31, 20182021 related to net proceeds of $147.8 million from our Credit Facilities and $118.7 million from the Multi-Property CMBS Loan.issuance of Series A preferred stock of $56.3 million, net proceeds from the issuance of Series B preferred stock of $86.9 million and proceeds from a mortgage note payable of $42.8 million. These cash inflows were partially offset by payments onnet repayments under our PriorRevolving Credit Facility of $80.0$173.8 million, mortgage principal repayments of $63.3 million, distributions to stockholders of $55.3 million, common stock repurchases of $14.2 million,payment for deferred financing costs of $3.4$1.5 million and distributions to non-controlling interest holderspayments of $0.5preferred stock dividends of $5.1 million.
Net cash provided by financing activities of $199.8$19.4 million during the year ended December 31, 2017 related to the aggregate2020 included proceeds of $95.0 million from the Priorour Revolving Credit Facility and Fannie Mae Master Credit Facilities of $380.2 million, proceeds from mortgage notes payable of $336.9 million and contributions from non-controlling interest holders of $0.5 million.Facility. These cash inflows were partially offset by distributions to stockholders of $76.7 million, net of proceeds received pursuant to the DRIP of net of proceeds received pursuant to the DRIP of $61.2 million, repayments on the Prior Credit Facility of $326.8$31.4 million, common stock repurchases of $33.6 million, mortgage principal repayments of $65.3$10.5 million, payments offor deferred financing costs of $14.4$2.2 million, distributions tothe buyout of a non-controlling interest holders of $0.6 million and payments for non-designated derivative instruments of approximately $0.2dividends paid to preferred stockholders $2.4 million.
Net cash used in financing activities of $55.6 million during the year ended December 31, 2016 related to distributions to stockholders of $75.4 million, repayments on the Prior Credit Facility of $55.0 million, common stock repurchases of $12.2 million, mortgage principal repayments of $15.7 million, payments of deferred financing costs of $3.0 million, distributions to non-controlling interest holders of $0.7 million and payments for non-designated derivative instruments of approximately $30,000. These cash outflows were partially offset by aggregate proceeds from the Prior Credit Facility and Fannie Mae Master Credit Facilities of $106.5 million.
Liquidity and Capital Resources
Our principal demands for cash are for 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 Series B Preferred Stock. We closely monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months. Our future liquidity requirements, and available liquidity, however, depend on many factors, such as the on-going impact of COVID-19 on our tenants and operators.
We expect to fund our future short-term operating liquidity requirements, including dividends to holders of Series A Preferred Stock and holders of Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our property operations and draws on the Revolving Credit Facility, which may include amounts reborrowed following the repayments we were or are required to make thereunder.
As of December 31, 2018,2021 and 2020, we had $77.3$59.7 million and $72.4 million of cash and cash equivalents. Until the date, which will be no later than January 1, 2020, we are permittedequivalents, respectively. Our ability to increase distributions we may pay touse this cash on hand is restricted. Under our stockholders and become subject to other restrictions on distributions under our New Credit Facility, we will be subject to a covenant thereunder requiring usare required to maintain a combination of cash, cash equivalents and availability for future borrowings under our Revolving Credit Facility totaling at least $50.0 million. As of
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December 31, 2021, $236.6 million was available for future borrowings under our Revolving Credit Facility. Certain other restrictions and conditions described below, including those on paying cash dividends, will no longer apply starting in the “Commencement Quarter” which is a quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $50.0$100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and the Covenant Relief Period has terminated. The fiscal quarter ended June 30, 2021 was the first quarter that could have been the Commencement Quarter. We satisfied the conditions during the quarter ended December 31, 2021 in order to elect the quarter ending March 31, 2022 as the Commencement Quarter, but chose not to do so. There can be no assurance as to if, or when, we will elect to do so, including to the extent we may be unable to satisfy these conditions in future periods. We may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until the Commencement Quarter. Moreover, beginning in the Commencement Quarter, we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock and Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter.
Our Credit Facility also restricts our uses of liquidity. Until the first day of the Commencement Quarter, we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to repay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met. The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and availability has been, and may continue to be, adversely affected by the decreases in cash rent collected from our tenants and income from our operators that have resulted from the effects of the COVID-19 pandemic and may persist for some time.
During the year ended December 31, 2021, we generated liquidity through the sale of equity securities and from various financings as described below.
Preferred Stock Equity Line with B. Riley Principal Capital, LLC
On September 15, 2020, we entered into a preferred stock purchase agreement and registration rights agreement with B. Riley Principal Capital, LLC (“B. Riley”), pursuant to which we had the right from time to time to sell up to an aggregate of $15 million of shares of our Series A Preferred Stock to B. Riley until December 31, 2023, on the terms and subject to the conditions set forth in the purchase agreement (“Preferred Stock Equity Line”). We sold 15,000 shares of Series A Preferred Stock under the Preferred Stock Equity Line during the year ended December 31, 2021, resulting in gross proceeds of $0.4 million and the amount available for borrowings under our New Credit Facility based on the same borrowing base properties will be slightly lower. Our principal demands for cash will be for fundingnet proceeds of $0.3 million after fees and commissions.
In total, we incurred $1.2 million in costs related to establishing the Preferred Stock Equity Line which were all initially recorded in prepaid expenses and other assets on our ongoing development project, acquisitions,consolidated balance sheet. Upon receiving proceeds under the Preferred Stock Equity Line in the third quarter of 2021, the Company reclassified $30,000 of these prepaid costs to additional paid in capital expenditures,in our consolidated statement of changes in equity as a reduction of the paymentgross proceeds received under the Preferred Stock Equity Line.
In the fourth quarter of 2021, we determined that it was not probable that additional proceeds would be received from the Preferred Stock Equity Line and later terminated the Preferred Stock Equity Line. As a result, we expensed the remaining balance of prepaid costs within acquisition and transaction related costs on the consolidated statement of operations and comprehensive income during the year ended December 31, 2021.
We did not sell any Series A Preferred Stock under the Preferred Stock Equity Line during the year ended December 31, 2020.
Series A Preferred Stock Add-On Offering
On May 11, 2021, we completed an underwritten public offering of 2,352,144 shares (which included 152,144 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of our operatingSeries A Preferred Stock for net proceeds of $56.0 million after deducting the underwriters’ discount, structuring fees and administrative expenses, debt service obligations (including principal repayment), share repurchases and distributionsother offering costs aggregating to our stockholders.

We expect$2.9 million. Pursuant to fund our future short-term operating liquidity requirements, including distributions, through a combinationthe terms of current cash on hand, proceeds from DRIP, net cash provided by our property operations and proceeds from the Revolving Credit Facility, all proceeds were used to repay amounts outstanding under the Fannie Mae Master Credit Facilities,Facility. Subject to the terms and conditions set forth in the Credit Facility, we may then draw on the Credit Facility to borrow any amounts so repaid.
Series B Preferred Stock Offering
On October 6, 2021, we completed the initial issuance and sale of 3,630,000 shares (which includes 430,000 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of our 7.125% Series B Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share. The offering generated gross proceeds of $90.8 million and net proceeds of $86.8 million, after deducting underwriting discounts, structuring fees and other secured financings. Other potential future sourcesoffering costs. Pursuant to the terms of capital includethe Credit Facility, all proceeds from securedwere used to repay amounts outstanding under the
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Credit Facility. Subject to the terms and unsecured financings from banks or other lenders, proceeds from public and private offerings, proceeds fromconditions set forth in the sale of properties and undistributed funds from operations, if any.Credit Facility, we may then draw on the Credit Facility to borrow any amounts so repaid.
Financings
As of December 31, 2018,2021, our total debt leverage ratio (total(net debt divided by total assets)gross asset value) was approximately 45.2%40.1%. Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($59.7 million). Gross asset value totaled $2.6 billion, which represents total real estate investments, at cost ($2.6 billion), net of gross market lease intangible liabilities ($23.5 million). Impairment charges are already reflected within gross asset value.
As of December 31, 2021, we had total gross borrowings of $1.1 billion, at a weighted average interest rate of 4.6%3.44%. As of December 31, 2017,2020, we had total gross borrowings of $950.2 million$1.2 billion at a weighted average interest rate of 3.9%3.58%. As of December 31, 2018,2021, the Gross Asset Valuecarrying value of our real estate assetsinvestments, at cost was $2.6 billion, with $1.0$0.9 billion of real estate assetsthis amount pledged as collateral for mortgage notes payable, $601.7 million$0.6 billion of real estate assetsthis amount pledged to secure advances under the Fannie Mae Master Credit Facilities and $695.5 million$1.0 billion of real estate assetsthis amount comprising the borrowing base of the Prior Credit Facility. ThisThese real estate isassets 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 these propertiesthe property is first satisfied.satisfied or the property is removed from the borrowing base of the Credit Facility, which would impact availability thereunder.
We expect to increase our leverage over time and utilize proceeds from our Revolving Credit Facility and our Fannie Mae Master Credit Facilitiesto fund future property acquisitions, as well as, subject to the terms of our Credit Facility, other new and current secured financingssources of funds that may be available to complete future property acquisitions.us. These actions may require us to pledgeadd some or all of our unencumbered properties as security for that debt or add them to the borrowing base under our Revolving Credit Facility. The Gross Asset Value of unencumbered assetsUnencumbered real estate investments, at cost as of December 31, 20182021 was $278.4 million, although there$110.4 million. There can be no assurance as to the amount of liquidity we would be able to generate from using theseadding any of the unencumbered assets as collateral for mortgage loans or adding themwe own to the borrowing base of our New Credit Facility. We may borrow if we need funds to satisfy the REIT tax qualifications requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income, as calculated in accordance with GAAP, determined without regardPursuant to the deduction for dividends paid and excludingCredit Facility, any resulting net capital gain). We also may borrow if we otherwise deem it necessary or advisableproceeds from these dispositions prior to assure that we maintain our qualification as a REIT.the Commencement Quarter must be used to prepay amounts outstanding under the Revolving Credit Facility.
Mortgage Notes Payable
As of December 31, 2018,2021, we had $470.8$591.8 million in gross mortgage notes payable outstanding. Future scheduled principal payments on our mortgage notes payable for the year ended December 31, 20192022 are $38.3$1.3 million. We plan on refinancing or exercising extension options for the mortgages due in 2019 prior to their maturity. SeeNote 4 Mortgages Notes Payable, Net to our consolidated financial statements found in this Annual Report on Form 10-K for additional information.
Credit FacilitiesFacility
On March 13, 2019, we amended and restated the Prior Credit Facility, which was scheduled to mature on March 21, 2019, by entering into our New Credit Facility with primarily the same lenders that were lenders under the Prior Credit Facility, with Keybank National Association remaining as agent for the lenders. Our New Credit Facility consists of two components, the Revolving Credit Facility and our Term Loan. The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to one one-year extension at our option. Our Term Loan is interest-only and matures on March 13, 2024. Loans under our New Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs. Any amounts repaid under our Term Loan may not be re-borrowed.
We drew $125.0 million under our Credit Facility during the year ended December 31, 2021, primarily to fund acquisitions during the year. We repaid $298.8 million of amounts outstanding under our Revolving Credit Facility during the year ended December 31, 2021 derived from $88.0 million of net proceeds of our dispositions of the Wellington, Florida and Jupiter, Florida properties, all $56.7 million of net cash proceeds from our May 2021 Series A Preferred Stock offering, $87.6 million of net cash proceeds from our October Series B Preferred Stock Offering, $37.0 million of proceeds from our BMO CMBS Loan and $29.4 million from cash on hand.
The total commitments under the Credit Facility are $630.0 million including $480.0 million under the Revolving Credit Facility. The Credit Facility includes an uncommitted “accordion feature” that may be used to increase the commitments under either component of the Credit Facility by up to an additional $370.0 million to a total of $1.0 billion. As of December 31, 2021, $150.0 million was outstanding under the Term Loan, and no amounts were outstanding under the Revolving Credit Facility. The unused borrowing availability under the Credit Facility was $236.6 million. The amount available for future borrowings under our Newthe Revolving Credit Facility is based on the lesser of (1) a percentage ofeither the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, and (2) a maximum amount permitted to maintainor satisfying a minimum debt service coverage ratio with respect to the borrowing base, in each case, asbase. Both of these amounts are calculated using the adjusted net operating income of the determination date.
As of December 31, 2018, $243.3 million was outstanding under the Prior Credit Facility and the unused borrowing capacity was $17.8 million under the Prior Credit Facility. At the closing under our New Credit Facility, we had a total borrowing capacity thereunder of $263.1 million based on the value ofreal estate assets comprising the borrowing base, thereunder. Of this amount, $233.6 million was outstanding including $150.0 million outstandingand, therefore, availability under our Term Loan, and $83.6 million was outstanding under the Revolving Credit Facility. $29.5 million remained available for future borrowings underFacility has been adversely affected by the Revolving Credit Facility. Likedecreases in cash rent collected from our tenants and income from our operators due to the Prior Credit Facility, our New Credit Facility is secured byeffects of the COVID-19 pandemic, and may continue to be adversely affected. See also the discussion above regarding the need to maintain certain levels of liquidity until the Commencement Quarter.
The equity interests and related rights in our wholly owned subsidiaries that directly own or lease thesethe eligible unencumbered real estate assets have beencomprising the borrowing base of the Revolving Credit Facility are pledged for the benefit of the lenders thereunder.
During The Credit Facility also contains a subfacility for letters of credit of up to $25.0 million. The applicable margin used to determine the year ended December 31, 2018, 28 properties were added tointerest rate under both the borrowing baseTerm Loan and Revolving Credit Facility components of the Prior Credit Facility and, asvaries based on our leverage. As of December 31, 2018, 69 properties comprised2021, the borrowing base of the Prior Credit Facility. During the period between December 31, 2018 and the closing of the New Credit Facility, four properties were released from the borrowing base of the Prior Credit Facility, in connection with which we repaid $9.7 million outstanding thereunder. After the closing of our New Credit Facility, the 65 properties that had comprised the borrowing base under the Prior Credit Facility comprised the borrowing base under our New Credit Facility.


At the closing of the Multi-Property CMBS Loan, the net proceeds after accrued interest and closing costs were used primarily to repay approximately $80.0 million of indebtedness under the Revolving Credit Facility, under which 13 of the properties were included as part of the borrowing base prior to the Multi-Property CMBS Loan. SeeNote 4 Mortgages Notes Payable, Net to our consolidated financial statements found in this Annual Report on Form 10-K for additional information.
At the closing under our New Credit Facility, the Revolving Credit Facility and our Term Loan borehad an effective interest at a weighted average rate per annum equal to 4.61%4.11%. PriorThe Credit Facility prohibits us from exceeding a maximum ratio of consolidated total indebtedness to consolidated total asset value, and requires us to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges (the “Fixed Charge
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Coverage Ratio”) on a quarterly basis and a minimum consolidated tangible net worth. We entered into an amendment to our Credit Facility on November 12, 2021. We would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended September 30, 2021. Pursuant to the closingterms of our Newa third amendment entered into on November 12, 2021 by us, the agent and the requisite lenders under the Credit Facility, the lenders waived any defaults or event of defaults under the covenant requiring us to maintain a Fixed Charge Coverage Ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and any further defaults or Events of Default (as defined in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant. In addition, as described above, the Fixed Charge Coverage Ratio we are required to maintain was reduced from 1.60 to 1.00 to 1.50 to 1.00 until the earlier of December 31, 2018,2022, and such earlier date as we elect to terminate this relief. There can be no assurance our lenders will consent to any amendments or waivers that may become necessary to comply with the Priorterms of the Credit Facility bore interest at a rate per annum equal to 4.62%.
in the future. As of December 31, 2018,2021, we were in compliance with the financial covenants under the Prior Credit Facility, and, as of the date of the closing thereunder, we were in compliance with the financial covenants under our New Credit Facility. Based upon our current expectations, we believe we will be able to comply with these covenants during the next 12 months. Please see “Item 1A. Risk Factors. Risks Related to our Indebtedness.”
Fannie Mae Master Credit Facilities
As of December 31, 2018, $359.32021, $355.0 million was outstanding under the Fannie Mae Master Credit Facilities. We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool or by borrowing-up against the increased value of the collateral pool, subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. Future advances basedWe do not expect to draw any further amounts on the increased value of the collateral pool may only occur during the first five years of the term and not more than one annually for each of the Fannie Mae Master Credit Facilities. Borrowings under the Fannie Mae Master Credit facilities bear annual interest at a rate that varies on a monthly basis and is equal to the sum of the current LIBOR for one month U.S. dollar-denominated deposits and 2.62%, with a combined floor of 2.62%. The Fannie Mae Master Credit Facilities mature on November 1, 2026.
On March 2, 2018, we incurred approximately $64.2 million in aggregate additional indebtedness under the Future scheduled principal payments on our Fannie Mae Master Credit Facilities. All ofFacilities for 2022 are $2.8 million.
Capital Expenditures
During the $61.7year ended December 31, 2021, our capital expenditures were $19.1 million, of which approximately $6.2 million related our MOB segment and $12.9 million related to our SHOP segment. We anticipate this rate of capital expenditures will be similar for the net proceeds, after closing costs,MOB and SHOP segments throughout 2022, however, the recent economic uncertainty created by the COVID-19 global pandemic will continue to impact our decisions on the amount and timing of this advancefuture capital expenditures. Our capital expenditures in 2021 were usedfunded using cash on hand, and we also expect to prepay a portion of mortgage notes payable.fund future capital expenditures using cash on hand.
Acquisitions — Year Ended December 31, 2021
On March 5, 2018,During the year ended December 31, 2021, we through a wholly-owned subsidiarycompleted the acquisitions of our OP, completedfive multi-tenant MOBs and 12 single tenant MOBs for an aggregate contract purchase price of $160.2 million. The acquisition of aone multi-tenant triple-net leased MOB and two single-tenant MOBs for a contract purchase price of $6.7 million. The property is located in Houston, TX and comprises approximately 24,000 square feet. We accounted for$12.8 million, was completed during the purchase as an asset acquisition.
On March 29, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of four single-tenant, triple-net leased MOBs for a contracted purchase price of $10.1 million. Three of the properties are located in Tampa, FL and one in Wesley Chapel, FL and comprise approximately 33,000 square feet. We accounted for the purchase as an asset acquisition.
On April 17, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a single-tenant, triple-net leased MOB for a contracted purchase price of $6.0 million. The property is located in Milwaukee, WI and comprises approximately 24,000 square feet. We accounted for the purchase as an asset acquisition.
On May 11, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a single-tenant, triple-net leased MOB for a contracted purchase price of $7.5 million. The property is located in Tallahassee, FL and comprises approximately 22,000 square feet. We accounted for the purchase as an asset acquisition.
On August 28, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a multi-tenant, triple-net leased MOB for a contracted purchase price of $14.3 million. The property is located in Farmington Hills, MI and comprises approximately 45,000 square feet. We accounted for the purchase as an asset acquisition.
On September 12, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of two multi-tenant, triple-net leased MOBs for a contracted purchase price of $10.3 million.three months ended December 31, 2021. The properties are located in Sterling Heights, MI and Washington Heights, MI and comprise approximately 36,000 square feet. We accounted foracquired during the purchase as an asset acquisition.
On September 24, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a single-tenant, triple-net leased MOB for a contracted purchase price of $11.3 million. The property is located in Elkhorn, WI and comprises approximately 30,000 square feet. We accounted for the purchase as an asset acquisition.
On November 13, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a single-tenant, triple-net leased MOB for a contracted purchase price of $6.1 million. The property is located in Lemoyne, PA and comprises approximately 23,000 square feet. We accounted for the purchase as an asset acquisition.
On November 15, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of two single-tenant, triple-net leased hospitals for a contracted purchase price of $46.3 million. Both properties are located in Las Vegas, NV and comprise in aggregate approximately 86,000 square feet. We accounted for the purchase as an asset acquisition.
All 2018 acquisitionsyear were funded with proceeds from financings (including amounts borrowed under the Prior Revolving Credit Facility) and cash on hand.



2019 Completed Acquisitions
On January 17, 2019, we, through a wholly-owned subsidiary of our OP, completed an acquisition of three multi-tenant, triple-net leased MOBs for a contracted purchase price of $30.2 million. The properties are located in St. Francis, WI, Greenfield, WI,hand and S. Milwaukee, WI which comprise approximately 112,000 square feet. We accounted for the purchase as an asset acquisition. We funded these acquisitions primarily with cash on hand.
Future Acquisitions
We expect to finance future acquisitions primarily with additional borrowings underfrom our Revolving Credit Facility, as well as cashand in one case, in part by the issuance of our Series A Preferred OP Units (see Note 8 — Stockholders’ Equity andNote 13 — Non-Controlling Interests to our consolidated financial statements included in this Annual Report on hand. In orderForm 10-K).
Acquisitions — Subsequent to increase the amount available for borrowing under our Revolving Credit Facility, we intend to add the 2019 completed acquisitions, future acquisitions, as well as additional, eligible unencumbered properties that we owned as of December 31, 2018,2021
We did not acquire any properties subsequent to December 31, 2021. We have entered into one non-binding letter of intent to purchase one MOB property for a contract purchase price of $8.2 million. There can be no assurance we will complete this acquisition on its contemplated terms, or at all.
Dispositions — Year Ended December 31, 2021
During the year ended December 31, 2021, we sold eight properties (three MOBs and five SHOPs) for an aggregate contract price of $133.6 million, which resulted in an aggregate gain on sale of $3.6 million. Two of these properties were sold in the fourth quarter of 2021 and had an aggregate contract sales price of $37.8 million, which resulted in an aggregate gain on sale of $1.3 million. Of the properties disposed in the year ended December 31, 2021, one was encumbered under the Capital One MOB loan, one was unencumbered, and six were part of the borrowing base of our RevolvingCredit Facility. Pursuant to the terms of our amended Credit Facility, (see above for additional details on our Revolvingall proceeds from these dispositions were used to repay amounts outstanding under the Credit Facility).Facility.
Assets Held for SaleDispositions — Subsequent to December 31, 2021
New York Six MOBs
During the third quarterSubsequent to December 31, 2021, we did not dispose of 2018, we reconsidered the intended holding period for the New York Six MOBs due to various market conditions and the potential to reinvest in properties generating a higher yield. On July 26, 2018, weany properties. We have entered into a purchase and sale agreement for the salePSA to dispose of the New York Six MOBs,four LaSalle properties located in Texas for an aggregate contract sale price of approximately $68.0 million. On September 25, 2018, we amended the purchase and sale agreement to decrease the aggregate contract sale price to $58.8 million. In connection with this amendment, we recognized an impairment charge of approximately $6.4 million on the New York Six MOBs for the year ended December 31, 2018, which is included on the consolidated statement of operations and comprehensive loss.
The disposition of five of the New York Six MOBs closed on February 6, 2019 for a contract sales price of $45.0 million, while the remaining property is still classified as held-for-sale. Four of these were included on the borrowing base of the Revolving Line of Credit and one was mortgaged under the Multi-Property CMBS Loan.$12.4 million. The net proceeds after closing costs and the repayment of debt, including prepayment penalties, was $26.6 million.
The remaining held-for-sale New York Six MOB is still pending andPSA is subject to conditions, and there can be no assurance that itthis, or any, disposition will be completed on the currentcontemplated terms, or at all, or that we will be able to reinvest the net proceeds in an accretive manner.
Dispositions
On November 6, 2018, we entered into the final amendment to our January 2017 agreement (as amended to date, the "Amended Missouri SNF PSA") to sell the eight Missouri SNF Properties for an aggregate contract purchase price of $27.5 million. In connection with the Amended Missouri SNF PSA, we recognized an impairment charge of approximately $11.9 million on the Missouri SNF Properties in the third quarter of 2018 which is included on the consolidated statement of operations and comprehensive loss. The sale of these properties pursuant to the Amended Missouri SNF PSA, which occurred in the fourth quarter of 2018, resulted in a loss of $0.1 million for the year ended December 31, 2018, which is reflected within gain (loss) on sale of real estate investment in the consolidated statements of operations and comprehensive loss.
The LaSalle Tenant
We are currently exploring options to replace the LaSalle Tenant. In January 2018, we entered into an agreement with the LaSalle Tenant in which we agreed to forbear from exercising legal remedies, including staying a lawsuit against the LaSalle Tenant, as long as the LaSalle Tenant pays the amounts due for rent and property taxes on an updated payment schedule pursuant to the forbearance agreement. The LaSalle Tenant is currently in default of the forbearance agreement and owes us $4.2 million of rent, property taxes, late fees, and interest receivable thereunder. We have the entire receivable balance and related income from the LaSalle Tenant fully reserved as of December 31, 2018. We incurred $5.0 million of bad debt expense, including straight-line rent write-offs, related to the LaSalle Tenant during the year ended December 31, 2018, which is included in property operating and maintenance expense on the consolidated statement of operations.
Palm and the NuVista Tenants
In August 2015, we entered into an asset purchase agreement and development agreement to acquire land and construction in progress, and subsequently fund the remaining construction, of a development property in Jupiter, Florida for $82.0 million. As of December 31, 2018, we had funded $90.6 million, including $10.0 million for the land and $80.6 million for construction in progress. As a result, we believe that we have satisfied our funding commitments for the construction. As of December 31, 2018, we had funded $8.6 million in excess of its $72.0 million funding commitment for the construction. We have and may continue, at our election, to provide additional funding to ensure completion of the construction. To the extent we fund additional monies for the completion of the development, Palm, the developer of the facility, is responsible for reimbursing us for any amounts

funded. As described in more detail below, entities related to Palm are, however, in default to us under leases at other properties in our portfolio and there can be no assurance that Palm will reimburse us for construction overruns so funded.
Palm is also responsible for completing the development and obtaining a final certificate of occupancy for the facility, which we refer to as the CO. However, Palm is in default of the development agreement and has ceased providing services under the development agreement. There is no assurance as to when and if Palm will comply with its obligations, and this has resulted in delays in obtaining the CO. We have paid, and expect to continue to pay, ongoing maintenance expenses related to the property and other costs related to our work to obtain the CO while this process continues. We are currently working to obtain the CO, but there can be no assurance as to how long this process will take, or if we will be able to complete it at all.
Under the development agreement, the targeted completion date was December 31, 2016. Additionally, the estimated rent commencement date was expected to be no later than April 1, 2017 with the Jupiter Tenant, entities related to Palm, operating the property as the tenants. We do not expect entities related to Palm to become the tenant and we are working to find a replacement tenant once we obtain the CO, although there can be no assurance we will be able to do so on a timely basis, or at all. Pursuant to an agreement between the Jupiter Tenant and us, the Jupiter Tenant agreed to transfer all contracts, licenses and permits (including all operational permissions and certificates of need) to a replacement tenant designated by us. Until a replacement tenant is identified, there can be no assurance that the Jupiter Tenant will comply with its obligations when required to do so. Moreover, until the CO is obtained and a replacement tenant is identified, we will not receive income from the property, and the amount of cash we are able to generate to fund distributions to our stockholders will continue to be adversely affected.
The NuVista Tenants have been in default under their leases since July 2017 and collectively owe us $9.4 million of rent, property taxes, late fees, and interest receivable with respect to these properties as of December 31, 2018. There can be no guarantee on the collectibility of these receivables, and as such, we have the entire receivable balance and related income from the NuVista Tenants fully reserved as of December 31, 2018. We incurred $6.0 million and $5.3 million of bad debt expense related to the NuVista Tenants during the year ended December 31, 2018 and 2017, respectively which is included in property operating and maintenance expense on the consolidated statement of operations. The NuVista Tenants are related to Palm, the developerterms of our development property in Jupiter, Florida which is also currently in defaultCredit Facility, the net cash proceeds from any completed dispositions must be used to us.
At one ofprepay amounts outstanding under the properties which is occupied by the NuVista Tenants, located in Wellington, Florida, we filed litigation against the tenant pursuing eviction proceedings against the NuVista TenantRevolving Credit Facility and appointed a court ordered receiver in orderwill therefore not be available to replace the NuVista Tenant with a new tenant and operator at the property. During the pendency of the litigation, we and the tenant entered into an agreement (the “OTA”) pursuant to which we and the tenant agreed to cooperate in transitioning operations at the property to a third party operator selected by us. Following the tenant’s failure to cooperate in transitioning the operations in accordance with the OTA, we filed a motion in the existing litigation seeking to enforce the OTA. On February 19, 2019, the court entered an agreed order whereby the tenant agreed to cooperate in transitioning operations to a manager of our choosing.us for any other purpose. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance as to when this transitionthese conditions will be completed, and even then, there can be no assurance it will be completed during that time period, or at all. The court also entered into a final judgment with respect to monetary damages in the amount of $8.8 million, although there can be no assurance that we will recover any such amount. We have fully reserved for these monetary damages.met.
The other property which was occupied by the NuVista Tenants, located in Lutz, Florida, transitioned to the SHOP segment as of January 1, 2018. In connection with this transition, we have replaced the NuVista Tenant as a tenant with a TRS, and have engaged a third party to operate the property. This structure is permitted by RIDEA, under which a REIT may lease qualified healthcare properties on an arm's length basis to a TRS if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor. During the third quarter of 2018, the new operator obtained a Medicare license. Prior to the operator obtaining this Medicare license, we were unable to bill Medicare for services performed and accumulated receivables. We were able to bill and collect the majority of these receivables during the year ended December 31, 2018; however, $0.7 million of these receivables are not collectible. We have reserved for the uncollectible receivables, resulting in bad debt expense during the year ended December 31, 2018, which is included in property operating and maintenance expense on the consolidated statement of operations. There can be no assurance as to the collectibility of these Medicare receivables.
Share Repurchase Program
Our
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Under the Credit Facility, we are restricted from repurchasing shares until the end of the Commencement Quarter. Thus, the Board has adoptedsuspended repurchases under the SRP which enableseffective August 14, 2020. No further repurchase requests under the SRP may be made unless and until the SRP is reactivated. There can be no assurance, however, as to whether our stockholders to sell their shares to us under limited circumstances. AtSRP will be reactivated or on what terms. Beginning in the time a stockholder requests a repurchase,Commencement Quarter, we may, subject to certain conditions, repurchase the shares presented for repurchase for cash. There are limits on the number of shares we may repurchase under this program during any calendar year. We are only authorizedwill be permitted to repurchase shares using the proceeds secured from our DRIP in any given period, although the Board has the power, in its sole discretion,up to determine the number$50.0 million of shares repurchased during any period as well as the amount of funds to be used for that purpose.

On June 14, 2017, we announced that our Board approved and adopted an amended and restated SRP that superseded and replaced the existing SRP, effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more transactions would be considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP, including that shares repurchased in connection with the death or disability of a stockholder will be repurchased at a purchase price equal to the then-current Estimated Per-Share NAV.
On June 29, 2018, we announced that our Board unanimously determined to reactivate our SRP, effective June 30, 2018. We(including amounts previously suspended the SRP concurrent with the commencement of our offer to purchase up to 230,000 shares of our common stock on March 13, 2018. In connection with reactivating the SRP, the Board approved all repurchase requests received during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. We funded these repurchases from cash on hand.
On January 29, 2019, we announced that our Board approved an amendment to our SRP changing the date on which any repurchases are to be made in respect of requests made during the period commencing March 13, 2018 up to and including December 31, 2018 to no later than March 31, 2019, rather than on or before the 31st day following December 31, 2018. This SRP amendment became effective on January 30, 2019.
The following table reflects the number of shares repurchased cumulatively through December 31, 2018:
  Number of Shares Repurchased Average Price per Share
Cumulative repurchases as of December 31, 2017 (1)
 2,529,798
 $22.43
Year ended December 31, 2018 (2)
 758,458
 18.73
Cumulative repurchases as of December 31, 2018 3,288,256
 21.56
_____________________________
(1) Includes 1,554,768 shares repurchased during the year ended December 31, 2017 for approximately $33.6 million at a weighted average price per share of $21.61. Excludes rejected repurchases received during 2016 with respect to 2.3 million shares for $48.7 million at a weighted average price per share of $21.27. In July 2017, following the effectivenessterm of the amendmentRevolving Credit Facility) if, after giving effect to the repurchases, we maintain cash and restatementcash equivalents of theat least $30.0 million and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 55.0%.
No assurances can be made as to when or if our SRP the Board approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to September 30, 2017, which was equal to 267,723 shares repurchased for approximately $5.7 million at an average price per share of $21.47. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.reactivated.
(2) Includes (i) 373,967 shares repurchased during January 2018 with respect to requests received following the death or qualifying disability of stockholders during the six months ended December 31, 2017 for approximately $8.0 million at a weighted average price per share of $21.45, and (ii) 155,904 shares that were repurchased for $3.2 million at an average price per share of $20.25 on July 31, 2018, representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. No repurchase requests received during the SRP suspension were accepted.
Tender Offer
On March 13, 2018, we announced a tender offer (the "Tender Offer") to purchase up to 2.0 million shares of our common stock for cash at a purchase price equal to $13.15 per share with the proration period and withdrawal rights expiring on April 12, 2018. We made the Tender Offer in response to an unsolicited offer to stockholders commenced on February 27, 2018. On April 4, 2018 and April 16, 2018 the Tender offer was amended to reduce the number of shares we were offering to purchase to 230,000 shares and extend the expiration date to May 1, 2018. The Tender Offer expired in accordance with its terms on May 1, 2018. In accordance with the terms of the Tender Offer, we accepted for purchase 229,999 shares for a total cost of approximately $3.0 million, which was funded with available cash.
American Realty Capital Healthcare Trust III, Inc. Asset Purchase
On December 22, 2017, we purchased 19 properties from HT III in the Asset Purchase. Concurrently, we borrowed approximately $45.0 million under the Prior Credit Facility and added 15 properties, including 14 of the 19 properties purchased in the Asset Purchase, to the pool of eligible unencumbered real estate assets comprising the borrowing base under the Prior Credit Facility. This advance was used to fund a portion of the amount required to complete the Asset Purchase.
At the closing of the Asset Purchase, we paid HT III $108.4 million, representing the purchase price under the Purchase Agreement of $120.0 million, less (i) $0.7 million reflecting prorations and closing adjustments in accordance with the Purchase Agreement, (ii) $4.9 million reflecting the outstanding principal amount of the loan secured by HT III’s Philip Center property assumed by us at the closing in accordance with the Purchase Agreement, and (iii) $6.0 million deposited by us into an escrow account in accordance with the Purchase Agreement. This escrow amount, was released in full to HT III in installments over a period of 14 months following the closing, with the final installment being released in March 2019. No indemnification claims were made under the Purchase Agreement. In addition, we incurred $1.2 million in closing and other transaction costs. As of December 31, 2018 we have a $0.2 million net receivable from HT III included on our Consolidated Balance Sheet.

Non-GAAP Financial Measures
This section includesdiscusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations ("FFO"(“FFO”), Modified Funds from Operations ("MFFO"(“MFFO”) and NOI. While NOI is a property-level measure, MFFO is based on our total performance as a company and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined here, includes straight-line rent which is excluded from MFFO. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net income, are provided below:
Funds from Operations and Modified Funds from Operations
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
Because of these factors, the National Association of Real Estate Investment Trusts ("NAREIT"(“NAREIT”), an industry trade group, has published a standardized measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT'sREIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.
We definecalculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the "White Paper"“White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT'sNAREIT’s definition.
We believe that the use of FFO provides a more complete understanding of our operating performance to investors and to management, and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT'sNAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
Because of these factors, the Institute of Portfolio Alternatives ("IPA"(“IPA”), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.
We definecalculate MFFO, a non-GAAP measure, consistent with the IPA'sIPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the "Practice Guideline"“Practice Guideline”) issued by the IPA in
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November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition fees and expenses, amortization of above and below market and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and

joint ventures, with such adjustments calculated to reflect MFFO on the same basis. We also exclude other non-operating items in calculating MFFO, such as transaction-related fees and expenses (which include costs associated with a strategic review we conducted during the year ended December 31, 2016) and capitalized interest. In addition, because we currently believe that concessions granted to our tenants as a result of the COVID-19 pandemic are collectable (see Accounting Treatment of Rent Deferrals below), we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these deferrals, which is not considered by the Practice Guideline.
We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance once our portfolio is stabilized. Our Modified FFO (as defined in our New Credit Facility) is similar but not identical to MFFO as discussed in this Annual Report on Form 10-K. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.
Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to pay dividends and other distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.
Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guideline may be published or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.
Accounting Treatment of Rent Deferrals
All of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information). As a result of relief granted by the FASB and SEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO has not been, and we do not expect it to be, significantly impacted by these types of deferrals. In addition, because we currently believe that these deferred amounts are collectable, we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these deferrals. For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 — Significant Accounting Polices to our consolidated financial statements included in this Annual Report on Form 10-K.
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The table below reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of FFO and MFFO for the periods indicated. In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests.
  Year Ended December 31,
(In thousands) 2018 2017 2016
Net loss attributable to stockholders (in accordance with GAAP) $(52,762) $(42,548) $(20,874)
Depreciation and amortization (1)
 82,226
 76,563
 98,023
Impairment charges 20,655
 18,993
 389
Loss (gain) on sale of real estate investment 70
 (438) (1,330)
Gain on asset acquisition 
 (307) 
Adjustments for non-controlling interests (2)
 (484) (443) (475)
FFO attributable to stockholders 49,705
 51,820
 75,733
Acquisition and transaction related 302
 2,986
 3,163
Amortization of market lease and other lease intangibles, net 255
 236
 168
Straight-line rent adjustments, net of related bad debt expense of $5,591, $2,941 and $7,654, respectively (1,863) (3,166) (403)
Amortization of mortgage premiums and discounts, net (263) (1,576) (1,937)
Gain on sale of investment securities 
 
 (56)
Loss (gain) on non-designated derivatives 157
 198
 (31)
Contingent purchase price consideration 
 
 (138)
Capitalized construction interest costs (3,198) (2,085) (998)
Adjustments for non-controlling interests (2)
 24
 15
 2
MFFO attributable to stockholders $45,119
 $48,428
 $75,503
Year Ended December 31,
(In thousands)20212020
Net loss attributable to common stockholders (in accordance with GAAP)$(92,942)$(78,781)
Depreciation and amortization (1)
78,115 79,643 
Impairment charges40,951 36,446 
Gain on sale of real estate investments(3,648)(5,230)
Adjustments for non-controlling interests (2)
(529)(526)
FFO (as defined by NAREIT) attributable to common stockholders21,947 31,552 
Acquisition and transaction related2,714 173 
(Accretion) amortization of market lease and other lease intangibles, net(198)(80)
Straight-line rent adjustments(780)(2,405)
Straight-line rent (rent deferral agreements) (3)
(280)280 
Amortization of mortgage premiums and discounts, net55 60 
(Gain) loss on non-designated derivatives(37)102 
Deferred tax asset valuation allowance (4)
(482)4,641 
Adjustments for non-controlling interests (2)
(9)
MFFO attributable to common stockholders$22,940 $34,314 
_______________________
(1) Net of non-real estate depreciation and amortization.
(2) Represents the portion of the adjustments allocable to non-controlling interests.

(3) Represents the amount of deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on our consolidated balance sheet but are considered to be earned revenue attributed to the current period for purposes of MFFO as they are expected to be collected.
(4) This is a non-cash item and is added back as it is not considered a part of operating performance.
Net Operating Income
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate.estate portfolio. NOI is equal to total revenues, excluding contingent purchase price consideration,revenue from tenants less property operating and maintenance expense.expenses. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss).
We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. We use NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).
NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property'sproperty’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay distributions.

The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the year ended December 31, 2021:
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(In thousands)Same StoreAcquisitionsDispositionsNon-Property SpecificTotal
Net (loss) income attributable to common stockholders (in accordance with GAAP)$(133)$2,527 $2,074 $(97,410)$(92,942)
Impairment charges40,073 — 878 — 40,951 
Operating fees to related parties— — — 24,206 24,206 
Acquisition and transaction related— — 2,711 2,714 
General and administrative135 — — 16,693 16,828 
Depreciation and amortization70,972 6,705 2,249 — 79,926 
Interest expense1,726 — — 46,174 47,900 
Interest and other income(19)— — (42)(61)
Loss on non-designated derivative instruments— (37)(37)
Loss on sale of real estate investments— — (3,648)— (3,648)
Income tax expense— — — 203 203 
Net income attributable to non-controlling interests— — — (260)(260)
Allocation for preferred stock— — — 7,762 7,762 
NOI$112,757 $9,232 $1,553 $— $123,542 
The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the year ended December 31, 2018:2020:
(In thousands)Same StoreAcquisitionsDispositionsNon-Property SpecificTotal
Net income (loss) attributable to common stockholders (in accordance with GAAP)$62,691 $983 $(40,010)$(102,445)$(78,781)
Impairment charges(10,135)— 46,581 — 36,446 
Operating fees to related parties— — — 23,922 23,922 
Acquisition and transaction related— — — 173 173 
General and administrative95 — — 21,477 21,572 
Depreciation and amortization72,653 3,076 5,324 — 81,053 
Interest expense2,036 — — 49,483 51,519 
Interest and other income— — — (44)(44)
Loss on non-designated derivative instruments— — — 102 102 
Gain on sale of real estate investments— — (5,230)— (5,230)
Income tax expense— — — 4,061 4,061 
Net income (loss) attributable to non-controlling interests— — — 303 303 
Allocation for preferred stock— — — 2,968 2,968 
NOI$127,340 $4,059 $6,665 $— $138,064 
(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total
Net income (loss) attributable to stockholders (in accordance with GAAP) $43,782
 $4,013
 $(10,976) $(89,581) $(52,762)
Impairment charges 8,736
 
 11,919
 
 20,655
Operating fees to related parties 
 
 
 23,071
 23,071
Acquisition and transaction related 5
 179
 
 118
 302
General and administrative 75
 5
 
 17,195
 17,275
Depreciation and amortization 71,752
 10,863
 381
 216
 83,212
Interest expense 369
 244
 
 48,858
 49,471
Interest and other income (22) 
 
 (1) (23)
Loss on non-designated derivative instruments 
 
 
 157
 157
Loss on sale of real estate investments 
 
 70
 
 70
Income tax expense 
 
 
 197
 197
Net income (loss) attributable to non-controlling interests (1) 15
 
 (230) (216)
NOI $124,696
 $15,319
 $1,394
 $
 $141,409
The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of NOI for the year ended December 31, 2017:
(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total
Net income (loss) attributable to stockholders (in accordance with GAAP) $21,758
 $981
 $252
 $(65,539) $(42,548)
Impairment charges 18,958
 
 35
 
 18,993
Operating fees to related parties 
 
 
 22,257
 22,257
Acquisition and transaction related 
 101
 2,800
 85
 2,986
General and administrative 
 
 
 15,673
 15,673
Depreciation and amortization 75,534
 897
 677
 533
 77,641
Interest expense 3,625
 6
 
 26,633
 30,264
Interest and other income (6) 
 
 (300) (306)
Loss on non-designated derivative instruments 
 
 
 198
 198
Gain on sale of real estate investments 
 
 (438) 
 (438)
Gain on asset acquisition (307) 
 
 
 (307)
Income tax expense 
 
 
 647
 647
Net income (loss) attributable to non-controlling interests 5
 1
 17
 (187) (164)
NOI $119,567
 $1,986
 $3,343
 $
 $124,896

The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of NOI for the year ended December 31, 2016:
(In thousands) Same Store Acquisitions Dispositions Non-Property Specific Total
Net income (loss) attributable to stockholders (in accordance with GAAP) $25,998
 $(81) $1,090
 $(47,881) $(20,874)
Contingent purchase price consideration (138) 
 
 
 (138)
Impairment on sale of real estate investments 
 
 384
 
 384
Operating fees to related parties 
 
 
 20,583
 20,583
Acquisition and transaction related (19) 
 
 3,182
 3,163
General and administrative 
 
 
 12,105
 12,105
Depreciation and amortization 94,815
 2,830
 708
 533
 98,886
Interest expense 6,096
 
 
 13,785
 19,881
Interest and other income (7) 
 
 (39) (46)
Loss on non-designated derivative instruments 
 
 
 (31) (31)
Gain on sale of real estate investment 
 
 (1,325) 
 (1,325)
Gain on sale of investment securities 
 
 
 (56) (56)
Income tax benefit (expense) 
 
 
 (2,084) (2,084)
Net loss attributable to non-controlling interests 1
 
 
 (97) (96)
NOI $126,746
 $2,749
 $857
 $
 $130,352
Refer to Note 15 — Segment Reporting to our consolidated financial statements found in this Annual Report on Form 10-K for a reconciliation of NOI to net loss attributable to stockholders by reportable segment.
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Dividends and Other Distributions
In May 2013,Dividends on our Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375% per annum on the $25.00 liquidation preference per share of Series A Preferred Stock. Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.
Dividends on our Series B Preferred Stock accrue in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to Series B Preferred Stock holders, which is equivalent to 7.125% of per annum in the $25.00 liquidation preference per share of Series B Preferred Stock. Dividends on the Series B Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us. The first dividend on the Series B Preferred Stock was paid in January 2022.
From March 1, 2018 until June 20, 2020, we began payingpaid distributions on a monthly basisto our common stockholders, at a rate equivalent of $1.70to $0.85 per annum, per share of common stock. In March 2017, the Board authorized a decrease in the rate at which we pay monthly distributions to stockholders, effective as of April 1, 2017, to a rate equivalent of $1.45 per annum, per share of common stock. In February 2018, the Board authorized a further decrease in the rate at which we pay monthly distributions to stockholders, effective for record dates as of and after March 1, 2018, to a rate equivalent of $0.85 per share annum, per share of common stock. Distributions arewere payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.
On June 29, 2020, the Board approved a change in our common stock distribution policy changing from daily record dates to a single record date during the applicable month.
Under our Credit Facility we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions. These exceptions include paying cash dividends on the Series A Preferred Stock and the Series B Preferred Stock or any other preferred stock we may issue and paying any cash distributions necessary to maintain our status as a REIT. We may not pay any cash distributions (including dividends on Series A Preferred Stock and Series B Preferred Stock) if a default or event of default exists or would result therefrom. The restrictions on paying cash distributions will no longer apply starting in the quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter, we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%, and the Covenant Relief Period has ended. There can be no assurance as to if, or when, we will be able to satisfy these conditions. We may only pay cash distributions on our common stock beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock and Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter. In addition, our ability to pay cash distributions may be limited by financial covenants in the Credit Facility, including our requirement to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges. Until four full fiscal quarters have elapsed after the commencement of Commencement Quarter, the aggregate amount of permitted distributions and Modified FFO will be determined by using only the fiscal quarters that have elapsed from and after the Commencement Quarter and annualizing those amounts.
On August 13, 2020, the Board changed our common stock distribution policy in order to preserve our liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with the Credit Facility described above. Under the new policy, distributions authorized by the Board on shares of our common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of our common stock valued at the Estimated Per-Share NAV in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter. In each of October 2020 and January 2021, we declared and issued stock dividends equal to 0.01349 shares of common stock on each share of outstanding common stock, and in April 2021, July 2021, October 2021 and January 2022, we declared and issued a stock dividend equal to 0.014655 shares of common stock on each share of outstanding common stock. The amounts of these stock dividends were based on our prior cash distribution rate of $0.85 per share per annum and the then applicable Estimated Per-Share NAV. We did not pay any cash dividends on our common stock during the year ended December 31, 2021. See “— Overview” for additional information on the impact of the stock dividends.
Subject to the restrictions in our Credit Facility, the amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the "Code").Code. Distribution payments are dependent on the availability of funds. The Board may further 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.
During the year ended December 31, 2018, distributions paid to common stockholders and OP Unit holders totaled $91.5 million, including $35.7 million which was reinvested into additional shares
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Table of common stock through our DRIP. For the year ended December 31, 2018, cash flows provided by operations were $54.2 million.Contents

The following table shows the sources for the payment of distributions to common stockholders and preferred stockholders, including distributions on unvested restricted shares and OP Units, but excluding distributions related to Class B Units asbecause these distributions are recorded as an expense in our consolidated statement of operations and comprehensive loss, for the periods indicated:
Three Months EndedYear Ended
March 31, 2021June 30, 2021September 30, 2021December 31, 2021December 31, 2021
(In thousands)Percentage of DistributionsPercentage of DistributionsPercentage of DistributionsPercentage of DistributionsPercentage of Distributions
Distributions:
Dividends paid to holders of Series A Preferred Stock$742 $742 $1,827 $1,833 $5,144 
Distributions paid to holders of Series A OP Units— — — 46 46 
Total cash distributions [1] [3]
$742 $742 $1,827 $1,879 $5,190 
Source of distribution coverage:
Cash flows provided by operations [2]
$742 100.0 %$742 100.0 %$1,827 100.0 %$1,879 100.0 %$5,190 100.0 %
Total source of distribution coverage$742 100.0 %$742 100.0 %$1,827 100.0 %$1,879 100.0 %$5,190 100.0 %
Cash flows provided by operations (in accordance with GAAP)$13,959 $3,644 $8,401 $12,875 $38,879 
Net loss (in accordance with GAAP)$(11,442)$(14,103)$(40,465)$(19,430)$(85,440)
  Three Months Ended Year Ended
  March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 December 31, 2018
(In thousands)   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions   Percentage of Distributions
Distributions:                    
Distributions to stockholders not reinvested in common stock under the DRIP $19,126
   $11,816
   $12,154
   $12,233
   $55,329
  
Distributions reinvested in common stock issued under the DRIP 13,355
   7,739
   7,457
   7,186
   35,737
  
Distributions on OP Units 145
   87
   87
   86
   405
  
Total distributions (1)
 $32,626
   $19,642
   $19,698
   $19,505
   $91,471
  
                     
Source of distribution coverage:                    
Cash flows provided by operations $16,918
 51.9% $10,671
 54.3% $10,694
 54.3% $15,868
 81.4% $54,151
 59.2%
Proceeds received from common stock issued under the DRIP (2)
 13,355
 40.9% 7,739
 39.4% 7,457
 37.9% 3,637
 18.6% 32,188
 35.2%
Available cash on hand (3)
 2,353
 7.2% 1,232
 6.3% 1,547
 7.8% 
 % 5,132
 5.6%
Total source of distribution coverage $32,626
 100.0% $19,642
 100.0% $19,698
 100.0% $19,505
 100.0% $91,471
 100.0%
                     
Cash flows provided by operations (in accordance with GAAP) $16,918
   $10,671
   $10,694
   $15,868
   $54,151
  
Net loss attributable to stockholders (in accordance with GAAP) $(5,991)   $(6,950)   $(29,607)   $(10,214)   $(52,762)  
_______
_______________[1]Assumes the use of available cash flows from operations before any other sources.
(1)
Excludes distributions related to Class B Units and distributions to non-controlling interest holders other than those paid on our OP Units.
(2)
Net of share repurchases during the period.
(3)
Includes proceeds received from credit facilities and mortgage notes payable.
[2]During 2021 all dividends on common stock and common stock OP Units were issued in the form of additional shares and therefore, are not included in the table above.
[3]Our Series B Preferred Stock was first issued in October 2021, and we are required to begin paying dividends on the Series B Preferred Stock in January 2022.
For the year ended December 31, 2021, cash flows provided by operations were $38.9 million. We had not historically generated sufficient cash flow 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 distributions with cash flows provided by operations as well as proceeds received fromoperations. Because shares of common stock issued under ourare only offered and sold pursuant to the DRIP and financings. Toin connection with the extentreinvestment of distributions paid in cash, participants in the DRIP will not be able to reinvest in shares thereunder for so long as we pay distributions in excessstock instead of cash flows provided by operations, our stockholders' investment may be adversely impacted. Distributions paid from sources other than our cash flows from operations will result in us having fewer funds available for other needs such as property acquisitions and other real estate-related investments.cash.
We have historically not generated sufficient cash flow from operationsOur ability to fund distributions. The amount of cash available for distributions is affected by many factors, such as rental income from acquired properties and our operating expense levels, as well as many other variables. Our interest expense in future periods will vary basedpay dividends on our levelSeries A Preferred Stock and Series B Preferred Stock and starting with the Commencement Quarter, other distributions and maintain compliance with the restrictions on the payment of future borrowings, the cost of borrowings and the opportunity to acquire real estate assets which meet our investment objectives. To the extent interest expense increases, we will have less cash available for distribution. Actual cash available for distributions may vary substantially from estimates. We cannot give any assurance that future acquisitions of real properties, if any, will increase our cash available for distributions to stockholders. Our actual results may differ significantly from the assumptions used by the Board in establishing a distribution rate to stockholders.
If we do not generate sufficient cash flows from our operations to fund distributions, we may have to further reduce or suspend distributions. We have funded a portion of our distributions from, among other things, DRIP proceeds, borrowings and proceeds from the sale of real estate investments. A decrease in the level of stockholder participation in our DRIP could have an adverse impactCredit Facility depends on our ability to continue to use DRIP proceeds. Borrowings required to fund distributions may not be available at favorable rates, or at all, and could restrict the amount we can borrow for investments and other purposes. Likewise, the proceeds from any property sale may not be available to fund distributions. Distributions paid from sources other than our cash flows from operations also reduce the funds available for other needs such as property acquisitions, capital expenditures and other real estate-related investments.

We may not have sufficient cash from operations to pay a distribution required to maintain our REIT status, which may materially adversely affect an investment in our common stock. Moreover, the Board may change our distribution policy, in its sole discretion, at any time.
Further, paying distributions from sources other than operating cash flow is not sustainable particularly where limited by the terms of instruments governing borrowings. Pursuant to our New Credit Facility, until the earlier of the first day of the first fiscal quarter in 2019 in which we elect to be subject to other restrictions on distributions under our New Credit Facility or January 1, 2020, we are not permitted to amend or modify our current distribution policy in any manner (including, without limitation, to change the timing, amount or frequency of payments), except to reduceincrease the amount of cash we generate from property operations which in turn depends on a variety of factors, including the distribution. Once we are permitted to increaseduration and scope of the COVID-19 pandemic and its impact on our distribution rate, provisions in our New Credit Facility will restrict us from paying distributions in any fiscal quarter that, when added to the aggregate amount of all other distributions paid in the same fiscal quartertenants and the preceding three fiscal quarters (calculated on an annualized basis during the first three fiscal quarters for which the provisions are in effect), exceed 95% of our Modified FFO (as defined in our New Credit Facility and which is similar but not identical to MFFO as discussed in this Annual Report on Form 10-K) during the applicable period. The Prior Credit Facility also contained a covenant that restrictedproperties, our ability to pay distributions exceeding certain percentagescomplete acquisitions of Modified FFO. This covenant was amended twice during 2017 to permit us to pay a certain level of distributions. There can be no assurance that the lenders under our New Credit Facility will agree to any amendments to covenants impactingnew properties and our ability to pay distributions.improve operations at our existing properties. There also can be no assurance that we will be able to continue paying distributions at the current rate,complete acquisitions on a timely basis or on acceptable terms and conditions, if at all. See "Item 1A. Risk Factors - Risks RelatedOur ability to Our Propertiesimprove operations at our existing properties is also subject to a variety of risks and Operations - Provisions inuncertainties, many of which are beyond our New Credit Facility currently restrict us from increasing the rate we pay distributions to our stockholders,control, and there can be no assurance that we will be ablesuccessful in achieving this objective.
We may still pay any cash distributions necessary to continue payingmaintain its status as a REIT and may not pay any cash distributions at(including dividends on Series A Preferred Stock and Series B Preferred Stock) if a default or event of default exists or would result therefrom under the current rate, or at all."Credit Facility.
Loan Obligations
The payment terms of our mortgage notes payable generally require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Revolving Credit Facility require interest only amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Fannie Mae Master Credit Facilities requirerequired interest only payments through November 2021 and principal and interest payments thereafter. Our loan agreements require us to comply with specific reporting covenants. As of December 31, 2018,2021, we were in compliance with the financial and reporting covenants under our loan agreements.
Contractual Obligations
The following table reflects contractual debt obligations under our mortgage notes payable, Revolving Credit Facility and Fannie Mae Master Credit Facilities and minimum base rental cash payments due for leasehold interests over the next five years and thereafter as of December 31, 2018. The minimum base rental cash payments due for leasehold interests amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes, among other items. As of December 31, 2018, the outstanding mortgage notes payable and loans under the Revolving Credit Facility and Fannie Mae Master Credit Facilities had weighted-average effective interest rates of 4.5%, 4.6% and 4.9%, respectively.
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    Years Ended December 31,  
(In thousands) Total 2019 2020 - 2021 2022 -2023 Thereafter
Principal on mortgage notes payable $470,803
 $38,348
 $25,171
 $256,985
 $150,299
Interest on mortgage notes payable 70,600
 15,049
 25,515
 9,414
 20,622
Prior Credit Facility (1)
 243,300
 243,300
 
 
 
Interest on Prior Credit Facility (1)
 2,465
 2,465
 
 
 
Fannie Mae Master Credit Facilities 359,322
 
 
 
 359,322
Interest on Fannie Mae Master Credit Facilities 140,197
 17,414
 34,876
 36,188
 51,719
Lease rental payments due (2)
 46,239
 860
 1,721
 1,724
 41,934
Total $1,332,926
 $317,436
 $87,283
 $304,311
 $623,896

(1)In March 2019, we entered into our New Credit Facility by amending and restating our Prior Credit Facility prior to its maturity.
(2)Lease rental payments due includes $3.2 million of imputed interest related to our capital lease obligations.


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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. Commencing with suchthat taxable year, we werehave been organized and operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner but can provide no assurance can be givenassurances that we will operate in a manner so as to remain qualified for taxation as a REIT. In order toTo continue to qualify for taxation as a REIT, we must among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to U.S. federal corporate income tax on thatthe portion of our REIT taxable income that we distribute to our stockholders. Even if we continue to qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as U.S. federal income and excise taxes on our undistributed income.
Inflation
We may be adversely impacted by inflation on anythe 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. For the year ended December 31, 2021, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 7.0%. To help mitigate the adverse impact of inflation, approximately 87% of our leases with our tenants in our MOB segment contain rent escalation provisions which average 1.8% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). Approximately 84% are fixed-rate, 3% are based on the Consumer Price Index and 13% do not contain any escalation provisions.
In addition to base rent, depending on the specific lease, MOB tenants are generally reuired 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. Increased operating costs paid by our tenants under these net leases could have an adverse impact on our tenants if increases in their operating expenses exceed increases in their revenue, which may adversely affect our tenants’ ability to pay rent owed to us or property expenses to be paid, or reimbursed to us, by our tenants. Renewals of leases or future leases for our net lease properties may not be negotiated on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs.
Leases with residents at our SHOPs typically do not have rent escalations, however, we are able to renew leases at market rates as they mature due to their short-term nature. As inflation rates increase or persist at high levels, the cost of providing medical care at our SHOPs, particularly labor costs, for maintenance and operation of properties, which may adversely impactwill increase. If we are unable to admit new residents or renew resident leases at market rates, while bearing these increased costs from providing services to our residents, our results of operations due to potential increases in costs and operating expenses resulting from inflation.may be affected.
Related-Party Transactions and Agreements
Please see Note 9 Related Party Transactions and Arrangements to our consolidated financial statements included in this Annual Report on Form 10-K.10-K for a discussion of the various related party transactions, agreements and fees.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings, our Credit Facility (which includes a Revolving Credit Facility (which replaced the Prior Credit Facility in effect as of December 31, 2018)and a Term Loan) and the Fannie Mae Master Credit Facilities, bearsbear interest at fixed rates and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars, and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We will not hold or issue these derivative contracts for trading or speculative purposes. As of December 31, 2018,2021, we had entered into sevennine non-designated interest rate caps with a notional amount of approximately $359.3$355.2 million and twonine designated interest rate swaps with a notional amount of $250.0$578.5 million. We do not have any foreign operations and thus we are generally not directly exposed to foreign currency fluctuations.
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Mortgage Notes Payable
As of December 31, 2018,2021, all of our debt consistedmortgages are either fixed-rate ($213.3 million) or variable-rate ($378.5 million), before consideration of both fixed and variable-rate debt. Weinterest rate swaps. Our mortgages had total secured mortgage financings with ana gross aggregate carrying value of $470.8$591.8 million and a fair value of $472.6$594.3 million as of December 31, 2021.
Credit Facilities
Our Credit Facilities are variable-rate, before consideration of interest rate swaps, and are comprised of our Revolving Credit Facility, our Term Loan and our Fannie Mae Master Credit Facilities. Our Credit Facilities had a gross aggregate carrying amount of $505.0 million and a fair value of $499.5 million as of December 31, 2021.
Sensitivity Analysis - Interest Expense
Interest rate volatility associated with all of our variable-rate borrowings, which totaled $0.9 billion as of December 31, 2021, affects interest expense incurred and cash flow to the extent they are not fixed via interest rate swap. As noted above, we have nine designated interest rate swaps with a notional amount of $578.5 million, which effectively creates a fixed interest rate for a portion of our variable-rate debt. We also have six non-designated interest rate cap contracts, which are substantially out of the money and, therefore do not currently affect our near-term interest rate sensitivity. The sensitivity analysis related to the portion of our variable-rate debt that is not fixed via designated interest rate swaps assumes an immediate 100 basis point move in interest rates from their December 31, 2021 levels, with all other variables held constant. A 100 basis point increase and decrease in variable interest rates on the portion of our variable-rate debt that is not fixed via designated interest rate swaps would increase and decrease our interest expense by $3.1 million.
Sensitivity Analysis - Fair Value of Debt
Changes in market interest rates on our debt impact theinstruments impacts their fair value, of the mortgage notes, even if it has no impact on interest due on the mortgage notes.them. For instance, if interest rates rise 100 basis points and the balances on our debt balance remainsinstruments remain constant, we expect the fair value of our obligationobligations to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our debt assumes an immediate 100 basis point move in interest rates from their December 31, 20182021 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our debt by $12.5$15.3 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our debt by $13.9$22.6 million.
At December 31, 2018, our variable-rate Prior Credit Facility and Fannie Mae Master Credit Facilities had an aggregate carrying and fair value of $602.6 million. Interest rate volatility associated with these variable-rate borrowings affects interest expense incurred and cash flow. The sensitivity analysis related to all other variable-rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2018 levels, with all other variables held constant. A 100 basis point increase andin market interest rates would result in an increase in the fair value of our nine designated interest rate swaps by $21.8 million. A 100 basis point decrease in variablemarket interest rates onwould result in a decrease in the fair value of our variable-rate Prior Credit Facility and Fannie Mae Master Credit Facilities would increase and decrease ournine designated interest expenserate swaps by $1.6 million and $1.0 million, respectively.$23.0 million.
These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and assuming no other changes in our capital structure. The information presented above includes only those exposures that existed as of December 31, 20182021 and does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

Item 8. Financial Statements and Supplementary Data.
The information required by this Item 8 is hereby incorporated by reference to our Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), we,our disclosure controls and procedures include internal controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the supervisionExchange Act is recorded, processed, summarized and withreported within the participationrequired time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. It should be noted that no system of ourcontrols can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.
Our Chief Executive Officer and Chief Financial Officer, carried out an evaluation, together with other members of our management, of the effectiveness of our disclosure controls and procedures (as defined in RuleRules 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief
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Executive Officer and Chief Financial Officer have concluded as of the end of such period, that our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, onas of December 31, 2021 at a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.reasonable level of assurance.
Management'sManagement’s Annual Report on Internal Control over Financial Reporting
ManagementOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in RuleRules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act and as set forth below. Under Rule 13a-15(c), management must evaluate, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness, as of the end of each calendar year, of our internal control over financial reporting. The term internalAct. Internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted accounting principles andin the United States of America.
Our internal control over financial reporting includes those policies and procedures that:
1)Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;
2)Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and
3)Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements.
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. ProjectionsAlso, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In the course of preparing this Annual Report on Form 10-K and the consolidated financial statements included herein, ourOur management conducted an evaluation ofassessed the effectiveness of our internal control over financial reporting as of December 31, 2018 using2021. In making that assessment, management used the criteria issuedset forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(“COSO”) in the Internal Control-Integrated Framework (2013). Based on that evaluation,its assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was effective as of December 31, 2018.based on those criteria.
KPMG LLP, an independent registered public accounting firm, was engaged to audit the consolidated financial statements included in this Annual Report on Form 10-K and their audit report is included on Page F-2 of this Annual Report on Form 10-K. The rules of the SEC do not require, and thisThis Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. The effectiveness of our internal control over financial reporting has not been audited by our independent registered public accounting firm because we are a “non-accelerated filer” as defined under SEC rules.
Changes in Internal Control Over Financial Reporting
No change occurredDuring the three months ended December 31, 2021, there were no changes in our internal control over financial reporting (as defined in RuleRules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2018 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
Item9B. Other Information.
New Credit FacilityNone.

On March 13, 2019, we amended and restated the Prior Credit Facility, which was scheduled to mature on March 21, 2019, by entering into our New Credit Facility with primarily the same lenders that were lenders under the Prior Credit Facility, with Keybank National Association remaining as agent for the lenders.Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
The total commitments under our New Credit Facility are $630.0 million, increased from $565.0 million under the Prior Credit Facility. Our New Credit Facility also includes an uncommitted “accordion feature” whereby, upon our request, but at the sole discretion of the participating lenders, the commitments under our New Credit Facility may be increased by up to an additional $370.0 million, subject to obtaining commitments from new lenders or additional commitments from participating lenders and other conditions.Not Applicable.
Our New Credit Facility consists of two components, the Revolving Credit Facility and our Term Loan. The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to one one-year extension at our option. Our Term Loan is interest-only and matures on March 13, 2024. Loans under our New Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs. Any amounts repaid under our Term Loan may not be re-borrowed.
The amount available for borrowings under our New Credit Facility is based on the lesser of (1) a percentage of the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, and (2) a maximum amount permitted to maintain a minimum debt service coverage ratio with respect to the borrowing base, in each case, as of the determination date.
As of December 31, 2018, $243.3 million was outstanding under the Prior Credit Facility and the unused borrowing capacity was $17.8 million under the Prior Credit Facility. At the closing under our New Credit Facility, we had a total borrowing capacity thereunder of $263.1 million based on the value of the borrowing base thereunder. Of this amount, $233.6 million was outstanding including $150.0 million outstanding under our Term Loan, $83.6 million was outstanding under the Revolving Credit Facility and $29.5 million remained available for future borrowings under the Revolving Credit Facility.
Like the Prior Revolving Credit Facility, our New Credit Facility is secured by a pledged pool of the equity interests and related rights in our wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base thereunder. After the closing of our New Credit Facility, the 64 properties that had comprised the borrowing base under the Prior Credit Facility comprised the borrowing base under our New Credit Facility.
We have the option to have amounts outstanding under the New Revolving Credit Facility bear interest at a rate per annum equal to either: (a) LIBOR, plus an applicable margin that ranges, depending on our leverage, from 1.60% to 2.20%; or (b) the Base Rate (as defined in our New Credit Facility), plus an applicable margin that ranges, depending on our leverage, from 0.35% to 0.95%. The Base Rate is defined in our New Credit Facility as the greatest of (a) the fluctuating annual rate of interest announced from time to time by the agent as its “prime rate”, (b) 0.5% above the Federal Funds Effective Rate or (c) the then applicable LIBOR for a one month interest period plus 1.0% per annum.
We have the option to have amounts outstanding under our Term Loan bear interest at a rate per annum equal to either: (a) LIBOR, plus an applicable margin that ranges, depending on our leverage, from 1.55% to 2.15%; or (b) the Base Rate (as defined in the paragraph above), plus an applicable margin that ranges, depending on our leverage, from 0.30% to 0.90%.
At the closing under our New Credit Facility, the Revolving Credit Facility and our Term Loan bore interest at a weighted average rate per annum equal to 4.61%. Prior to the closing of our New Credit Facility, the Prior Credit Facility bore interest at a rate per annum equal to 4.62%.
Our New Credit Facility contains customary representations, warranties and affirmative covenants. Our New Credit Facility contains various customary negative covenants, including a restricted payments covenant pursuant to which, until the earlier of the first day of the first fiscal quarter in 2019 in which we elect to be subject to other restrictions on distributions under our New Credit Facility or January 1, 2020, we are not permitted to amend or modify our current distribution policy in any manner (including, without limitation, to change the timing, amount or frequency of payments), except to reduce the amount of the distribution. Once we are permitted to increase our distribution rate, provisions in our New Credit Facility will restrict us from paying distributions in any fiscal quarter that, when added to the aggregate amount of all other distributions paid in the same fiscal quarter and the preceding three fiscal quarters (calculated on an annualized basis during the first three fiscal quarters for which the provisions are in effect), exceed 95% of our Modified FFO (as defined in our New Credit Facility and which is similar but not identical to MFFO as discussed in this Annual Report on Form 10-K) during the applicable period. Until we become subject to these distribution restrictions, we will be subject to a covenant requiring us to maintain a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $50.0 million, and the amount available for borrowings under our New Credit Facility based on the same borrowing base properties will be slightly lower. We are also restricted from making share repurchases to the extent they would be aggregated with distributions to our stockholders under the covenant in our New Credit Facility that restricts payments of distributions to our stockholders. Although this covenant exempts payments for share repurchases up to $50.0 million during the term of our New Credit Facility from being aggregated in this way, we must maintain cash and cash equivalents of at least $30.0 million and compliance with a leverage ratio after giving effect to those payments. Our New Credit Facility also contains other negative covenants restricting, among other things, the incurrence of liens, investments, fundamental changes, recourse indebtedness (subject to permitted exceptions) and entering agreements with the

Advisor and its affiliates. Our New Credit Facility also contains financial maintenance covenants with respect to maximum consolidated leverage, minimum fixed charge coverage, minimum consolidated tangible net worth and, for a limited period, minimum liquidity.
Certain of the lenders or their affiliates are or have been lenders to us under the Prior Credit Facility, the Fannie Mae Master Credit Facilities and other loans or counterparties with respect to certain of our derivative contracts. The foregoing description of the material terms of our New Credit Facility in this Item 9B does not purport to be complete and is qualified in its entirety by reference to the full text of our New Credit Facility, which is filed as an exhibit to this Annual Report on Form 10-K and incorporated herein by reference.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
We have adopted a Code of Business Conduct and Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer and principal financial officer. A copy of our code of ethics may be obtained, free of charge, by sending a written request to our executive office – 405 Parkoffice: 650 Fifth Avenue – 3rd- 30th Floor, New York, NY 10022,10019, Attention: Chief Financial Officer.
Our codeCode of ethicsBusiness Conduct and Ethics is also publicly available on our website at www.healthcaretrustinc.com/corporate_governance.html.www.healthcaretrustinc.com. If we make any substantive amendments to the Codecode of Ethicsethics or grant any waiver, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics to our chief executive officer, chief financial officer, chief accounting officer or controller or persons performing similar functions, we will disclose the nature of the amendment or waiver on that website or in a report on Form 8-K.
The information required by this Item is incorporated by reference towill be set forth in our definitive proxy statement to be filed with the SEC with respect to our 20192022 annual meeting of stockholders.stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this Item is incorporated by reference towill be set forth in our definitive proxy statement to be filed with the SEC with respect to our 20192022 annual meeting of stockholders.stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.

79


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Securities Authorized for Issuance Under Equity Compensation Plans
Restricted Share Plan
We have an employee and director incentive restricted share plan (as amended from time to time, the “RSP”), which provides us with the ability to grant awards of restricted shares to our directors, officers and employees (if we ever have employees), and, among other eligible persons, employees of the Advisor and its affiliates who provide services to us. For additional information, see Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Annual Report on Form 10-K.
The following table sets forth information regarding securities authorized for issuance under the RSP as of December 31, 2021:
Plan CategoryNumber of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and RightsWeighted-Average Exercise Price of Outstanding Options, Warrants and RightsNumber of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) )
(a)(b)(c)
Equity Compensation Plans approved by security holders3,214,372 (1)
Equity Compensation Plans not approved by security holders
Total3,214,372 (1)
________
(1) The total number of shares of common stock that may be subject to awards granted under the RSP may not exceed 5.0% of our outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 3,648,153 shares (as such number may be further adjusted for stock splits, stock dividends, combinations and similar events). As of December 31, 2021, we had 99,281,754 shares of common stock issued and outstanding and 433,781 shares of common stock that were subject to awards granted under the RSP. For additional information on the RSP, please see Note 11 — Equity-Based Compensation to our consolidated financial statements included in this Annual Report on Form 10-K.
The other information required by this Item is incorporated by reference towill be set forth in our definitive proxy statement to be filed with the SEC with respect to our 20192022 annual meeting of stockholders.stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item is incorporated by reference towill be set forth in our definitive proxy statement to be filed with the SEC with respect to our 20192022 annual meeting of stockholders.stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information required by this Item is incorporated by reference towill be set forth in our definitive proxy statement to be filed with the SEC with respect to our 20192022 annual meeting of stockholders.stockholders to be filed not later than 120 days after the end of the 2021 fiscal year, and is incorporated herein by reference.

PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Financial Statements and Financial Statement Schedules
1.    Financial Statements:
See the Index to Consolidated Financial Statements at page F-1 of this Annual Report on Form 10-K.
2.    Financial Statement Schedules:
The following financial statement schedule is included herein at page F-42 of this Annual Report on Form 10-K: Schedule III — Real Estate and Accumulated Depreciation


(b) Exhibits
See Exhibit Index below.






Table of Contents
EXHIBIT INDEX


The following exhibits are included, or incorporated by reference, in this Annual Report on Form 10-K for the year ended December 31, 20182021 (and are numbered in accordance with Item 601 of Regulation S-K):
Exhibit No.Description
3.1(10)(1)
Articles of Amendment and Restatement for Healthcare Trust, Inc.
3.2(20)(2)
Articles Supplementary of Healthcare Trust, Inc. relating to election to be subject to Section 3-803 of the Maryland General Corporation Law, dated November 9, 2017
3.3(3)
Articles Supplementary relating to the designation of shares of 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, dated December 6, 2019
3.4(4)
Amended and Restated Bylaws of Healthcare Trust, Inc.
3.33.5(18)(5)
Articles SupplementaryAmendment to Amended and Restated Bylaws of Healthcare Trust, Inc.
3.6(6)
Articles Supplementary designating additional shares of 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock
3.7(32)
Articles Supplementary relating to the designation of shares of 7.125% Series B Cumulative Redeemable Perpetual Preferred Stock, dated October 4, 2021
4.1(1)(7)
Agreement of Limited Partnership of Healthcare Trust Operating Partnership, L.P. (f/k/a American Realty Capital Healthcare Trust II Operating Partnership, L.P.), dated as of February 14, 2013
4.2(2)(8)
First Amendment to the Agreement of Limited Partnership of American Realty Capital Healthcare Trust II, L.P., dated as of December 31, 2013
4.3(8)(9)
Second Amendment to the Agreement of Limited Partnership of American Realty Capital Healthcare Trust II, L.P., dated as of April 15, 2015
4.4(10)
Third Amendment, dated December 6, 2019, to the Agreement of Limited Partnership of Healthcare Trust Operating Partnership, L.P., dated February 14, 2013
4.5(30)
Fourth Amendment, dated September 15, 2020, to the Agreement of Limited Partnership of Healthcare Trust Operating Partnership, L.P., dated February 14, 2013
4.6(31)
Fifth Amendment, dated May 7, 2021, to the Agreement of Limited Partnership of Healthcare Trust Operating Partnership, L.P., dated February 14, 2013
4.7(32)
Sixth Amendment, dated October 4, 2021, to the Agreement of Limited Partnership of Healthcare Trust Operating Partnership, L.P., dated February 14, 2013
4.8 *
Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

4.9 (11)
Rights Agreement, dated May 18, 2020, between Healthcare Trust, Inc.,and Computershare Trust Company, N.A., as Rights Agent
10.1(12)(9)
Second Amended and Restated Advisory Agreement, dated as of February 17, 2017, by and among the Company, Healthcare Trust Operating Partnership, L.P. and Healthcare Trust Advisors, LLC
10.2(12)

Amendment No. 1, dated as of July 25, 2019, to the Second Amended and Restated Advisory Agreement, by and among Healthcare Trust, Inc., Healthcare Trust Operating Partnership, L.P. and Healthcare Trust Advisors, LLC

10.3(9)

Amended and Restated Property Management and Leasing Agreement, dated as of February 17, 2017, by and among the Company, Healthcare Trust Operating Partnership, L.P. and Healthcare Trust Properties, LLC
10.310.4(3)(13)
Senior Secured Revolving Credit AgreementFirst Amendment, dated as of March 21, 2014April 9, 2018, to Amended and Restated Property Management and Leasing Agreement, by and among American Realty Capital Healthcare Trust, IIInc., Healthcare Trust Operating Partnership, L.P., KeyBank National Association, the other lenders which are parties to this agreement and other lenders that may become parties to the agreementHealthcare Trust Properties, LLC
10.41(4)0.5(33)
Increase Letter, dated April 15, 2014, with KeyBank National Association, relating to the Senior Secured Revolving Credit Agreement dated as of March 21, 2014 by and among American Realty Capital Healthcare Trust II Operating Partnership, L.P., KeyBank National Association and the lenders party thereto
10.5(8)
Increase Letter, dated July 31, 2015, with KeyBank National Association, relating to the Senior Secured Revolving Credit Agreement dated as of March 21, 2014 by and among American Realty Capital Healthcare Trust II Operating Partnership, L.P., KeyBank National Association and the lenders party thereto
10.6(5)
Agreement for Lease of Real Property, dated as of June 14, 2014, by and between American Realty Capital VII, LLC and Pinnacle Health Hospitals
10.7(5)
First Amendment to Agreement for Lease of Real Property, dated as of July 16, 2014, by and between American Realty Capital VII, LLC and Pinnacle Health Hospitals
10.8(5)
Second Amendment, to Agreement for Lease of Real Property, dated as of August 1, 2014, by and between American Realty Capital VII, LLC and Pinnacle Health Hospitals
10.9(5)
Third Amendment to Agreement for Lease of Real Property, dated as of September 26, 2014, by and between American Realty Capital VII, LLC and Pinnacle Health Hospitals
Fourth Amendment to Agreement for Lease of Real Property, dated as of October 10, 2014, by and between American Realty Capital VII, LLC, ARHC BRHBGPA01, LLC, ARHC FOMBGPA01, LLC, ARHC LMHBGPA01, LLC, ARHC CHHBGPA01, LLC and Pinnacle Health Hospitals
First Amendment to Senior Secured Revolving Credit Agreement, dated September 18, 2014, to the Senior Secured Revolving Credit Agreement dated as of March 21, 2014, between American Realty Capital Healthcare Trust II Operating Partnership, LP, American Realty Capital Healthcare Trust II, Inc. and KeyBank National Association, individually and as agent for itself and the other lenders party from time to time
Fifth Amendment to Agreement for Lease of Real Property, dated as of October 22, 2014, by and between American Realty Capital VII, LLC, ARHC BRHBGPA01, LLC, ARHC FOMBGPA01, LLC, ARHC LMHBGPA01, LLC and ARHC CHHBGPA01, LLC and Pinnacle Health Hospitals
Sixth Amendment to Agreement for Lease of Real Property, dated as of October 31, 2014, by and between American Realty Capital VII, LLC, ARHC BRHBGPA01, LLC, ARHC FOMBGPA01, LLC, ARHC LMHBGPA01, LLC and ARHC CHHBGPA01, LLC and Pinnacle Health Hospitals
Seventh Amendment to Agreement for Lease of Real Property, dated as of November 12, 2014,11, 2021, to Amended and Restated Property Management and Leasing Agreement, by and between American Realty Capital VII,among Healthcare Trust, Inc., Healthcare Trust Operating Partnership, L.P., and Healthcare Trust Properties, LLC ARHC BRHBGPA01, LLC, ARHC FOMBGPA01, LLC, ARHC LMHBGPA01, LLC and ARHC CHHBGPA01, LLC and Pinnacle Health Hospitals
10.1510.6(6)(14)
Eighth Amendment to Agreement for Lease of Real Property, dated as of November 21, 2014, by and between American Realty Capital VII, LLC, ARHC BRHBGPA01, LLC, ARHC FOMBGPA01, LLC, ARHC LMHBGPA01, LLC and ARHC CHHBGPA01, LLC and Pinnacle Health Hospitals

Exhibit No.Description
Ninth Amendment to Agreement for Lease of Real Property, dated as of December 5, 2014, by and between American Realty Capital VII, LLC, ARHC BRHBGPA01, LLC, ARHC FOMBGPA01, LLC, ARHC LMHBGPA01, LLC and ARHC CHHBGPA01, LLC and Pinnacle Health Hospitals
Tenth Amendment to Agreement for Lease of Real Property, dated as of December 12, 2014, by and between American Realty Capital VII, LLC, ARHC BRHBGPA01, LLC, ARHC FOMBGPA01, LLC, ARHC LMHBGPA01, LLC and ARHC CHHBGPA01, LLC and Pinnacle Health Hospitals
Indemnification Agreement, dated as of December 31, 2014, with Directors, Officers, Advisor and Dealer Manager
10.1910.7(6)(14)
Indemnification Agreement, dated April 14, 2015, with Mr. Randolph C. Read
10.2010.8(7)(15)
Second Amendment to Senior Secured Revolving Credit Agreement, dated June 26, 2015, by and among American Realty Capital Healthcare Trust II Operating Partnership, L.P., American Realty Capital Healthcare Trust II, Inc., KeyBank National Association individually and as agent for itself and the other lenders party from time to time to the Senior Secured Revolving Credit Agreement by and among the same parties dated as of March 21, 2014
Third Amendment to Senior Secured Revolving Credit Agreement, dated February 17, 2016, by and among Healthcare Trust Operating Partnership, L.P., Healthcare Trust, Inc., KeyBank National Association individually and as agent for itself and the other lenders party from time to time to the Senior Secured Revolving Credit Agreement by and among the same parties dated as of March 21, 2014
Form of Restricted Stock Award Agreement Pursuant to the Employee and Director Incentive Restricted Share Plan of Healthcare Trust, Inc.
10.2310.9(11)(16)
Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as of October 20, 2016, by and among Healthcare Trust Operating Partnership, L.P., Healthcare Trust, Inc., KeyBank National Association, individually and as agent for itself and the other lenders party from time to time to the Senior Secured Revolving Credit Agreement by and among the same parties, dated as of March 21, 2014.
10.24(11)
Master Credit Facility Agreement, dated as of October 31, 2016, by and among the borrowers party thereto and KeyBank National Association.Association
10.2510.10(11)(4)
First Amendment to Master Credit Facility, dated April 26, 2017, by among the borrowers party thereto and KeyBank National Association

Reaffirmation, Joinder and Second Amendment to Master Credit Facility, dated October 26, 2017, by among the borrowers party thereto and KeyBank National Association

81

Table of Contents
Exhibit No.Description
10.12(16)
Master Credit Facility Agreement, dated as of October 31, 2016, by and among the borrowers party thereto and Capital One Multifamily Finance, LLC.LLC
10.2610.13(13)(4)
Fifth
Reaffirmation, Joinder and First Amendment to Senior Secured RevolvingMaster Credit Agreement,Facility, dated as of February 24,March 30, 2017, by and among Healthcare Trust Operating Partnership, L.P., Healthcare Trust, Inc., KeyBank National Association, individually and as agent for itself and the other lenders party from time to time to the Senior Secured Revolving Credit Agreement by and among the same parties, dated as of March 21, 2014borrowers party thereto and Capital One Multifamily Finance, LLC

10.2710.14(15)(4)
Purchase Agreement,
Second Amendment to Master Credit Facility, dated as of June 16,October 26, 2017, by among the borrowers party thereto and among Healthcare Trust, Inc., Healthcare Trust Operating Partnership, L.P., ARHC TRS Holdco II,Capital One Multifamily Finance, LLC American Realty Capital Healthcare Trust III, Inc., American Realty Capital Healthcare Trust III Operating Partnership, L.P. and ARHC TRS Holdco III, LLC.

10.2810.15(16)(4)
Third Amendment to Master Credit Facility, dated March 2, 2018, by among the borrowers party thereto and Capital One Multifamily Finance, LLC

10.16(17)
Amended and Restated Loan Agreement, dated as of June 30, 2017December 20, 2019, by and among the borrower entities party thereto, Capital One, National Association and the other lenders party thereto.thereto

10.2910.17(16)(17)
Amended and Restated Guaranty of Recourse Obligations, dated as of June 30, 2017December 20, 2019, by Healthcare Trust Operating Partnership, L.P. in favor of Capital One, National Association.Association

10.3010.18(16)(17)
Amended and Restated Hazardous Materials Indemnity Agreement, dated as of June 30, 2017December 20, 2019, by Healthcare Trust Operating Partnership, L.P. and the borrower entities party thereto, for the benefit of Capital One, National Association.Association

10.3110.19(18)(2)
Amended and Restated Employee and Director Incentive Restricted Share Plan of Healthcare Trust, Inc., effective as of August 31, 2017.2017
10.3210.20(18)(2)
Form of Restricted Stock Award Agreement Pursuant to the Amended and Restated Employee and Director Incentive Restricted Share Plan of Healthcare Trust, Inc.
10.3310.21(17)(18)
Sixth Amendment to Senior Secured Revolving Credit Agreement, dated as of October 20, 2017.
10.34(19)
Loan Agreement, dated as of December 28, 2017, among the borrower entities party thereto and Capital One, National Association.Association
10.3510.22(19)(18)
Guaranty of Recourse Obligation, dated as of December 28, 2017, by Healthcare Trust Operating Partnership, L.P. in favor of Capital One, National Association.Association
10.3610.23(19)(18)
Hazardous Materials Indemnity Agreement, dated as of December 28, 2017, by Healthcare Trust Operating Partnership, L.P. and the borrower entities party thereto, for the benefit of Capital One, National Association.Association
10.3710.24 (20)(13)
First Amendment to Master Credit Facility, dated April 26, 2017, by among the borrowers party thereto and KeyBank National Association

Exhibit No.Description
10.38(20)
Reaffirmation, Joinder and Second Amendment to Master Credit Facility, dated October 26, 2017, by among the borrowers party thereto and KeyBank National Association
10.39(20)
Reaffirmation, Joinder and First Amendment to Master Credit Facility, dated March 30, 2017, by among the borrowers party thereto and Capital One Multifamily Finance, LLC
10.40(20)
Second Amendment to Master Credit Facility, dated October 26, 2017, by among the borrowers party thereto and Capital One Multifamily Finance, LLC
10.41(20)
Third Amendment to Master Credit Facility, dated March 2, 2018, by among the borrowers party thereto and Capital One Multifamily Finance, LLC
10.42(21)
 Loan Agreement, dated as of April 10, 2018, by and among the borrowers party thereto, and KeyBank National Association, as lender
10.4310.25(21)(13)
Promissory Note A -1, dated as of April 10, 2018, by the borrowers party thereto in favor of KeyBank National
Association, as lender
10.4410.26(21)(13)
 Promissory Note A-2, dated as of April 10, 2018, by the borrowers party thereto in favor of KeyBank National
Association, as lender
10.4510.27(21)(13)
Guarantee Agreement, dated as of April 10, 2018, by Healthcare Trust Operating Partnership, L.P. in favor of KeyBank National Association, as lender
10.4610.28(21)(13)
Environmental Indemnity Agreement, dated as of April 10, 2018, by the borrowers party thereto and Healthcare Trust Operating Partnership, L.P. in favor of KeyBank National Association, as indemnitee
10.4710.29(21)(19)
 First Amendment to Form of Indemnification Agreement
10.30(20)
Amended and Restated Property Management and LeasingSenior Secured Revolving Credit Agreement dated as of April 10, 2018,March 13, 2019 by and among Healthcare Trust Inc., Healthcare Trust Operating Partnership, L.P., KeyBank National Association and Healthcare Trust Properties, LLCthe other lender parties thereto

10.4810.31(22)(21)
Form of Indemnification Agreement
First Amendment, dated March 24, 2020, to Amended and Restated Senior Secured Revolving Credit Agreement dated as of March 13, 2019 by and among Healthcare Trust Operating Partnership, L.P., KeyBank National Association and the other lender parties thereto
10.32(22)
Second Amendment to First Amended and Restated Senior Secured Credit Agreement, entered into as of August 10, 2020, among Healthcare Trust Operating Partnership, L.P., Healthcare Trust, Inc., the other guarantor parties thereto, Keybank National Association and the other lenders party thereto
10.33(33)
Third Amendment to First Amended and Restated Senior Secured Credit Agreement, entered into as of November 12, 2021, among Healthcare Trust Operating Partnership, L.P., Healthcare Trust, Inc., the other guarantor parties thereto, Keybank National Association and the other lenders party thereto
List of Subsidiaries of Healthcare Trust, Inc.
Consent of KPMGPricewaterhouseCoopers LLP
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
32 *
Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002
82

Table of Contents
Exhibit No.Description
99.1(14)(24)
Second Amended and Restated Share Repurchase Program of Healthcare Trust, Inc.
99.2(23)(25)
Amendment to Second Amended and Restated Share Repurchase Program of Healthcare Trust, Inc.
101
99.3(26)
Second Amendment to Second Amended and Restated Share Repurchase Program

99.4(27)
Third Amendment to Second Amended and Restated Share Repurchase Program

99.5(28)
Fourth Amendment to Second Amended and Restated Share Repurchase Program

99.6(29)
Fifth Amendment to Second Amended and Restated Share Repurchase Program

101.INS *
XBRL (eXtensible Business Reporting Language). The following materials from Healthcare Trust, Inc.'s Annual Report on Form 10-K forInstance Document - the annual period ended December 31, 2018, formattedinstance document does not appear in XBRL: (i) the Consolidated Balance Sheets, (ii)Interactive Data File because its XBRL
tags are embedded within the Consolidated Statements of Operations and Comprehensive Loss, (iii)Inline XBRL document.

101.SCH *XBRL Taxonomy Extension Schema Document
101.CAL *XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *XBRL Taxonomy Extension Label Linkbase Document
101.PRE *XBRL Taxonomy Extension Presentation Linkbase Document
104 *Cover Page Interactive Data File - the Consolidated Statements of Changescover page interactive data file does not appear in Equity, (iv) the Consolidated Statements of Cash Flows and (v)Interactive Data File because its XBRL tags are embedded within the Notes to the Consolidated Financial Statements.Inline XBRL document
____________________________
*Filed herewith

*    Filed herewith
(1)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed with the Securities and Exchange Commission on May 13, 2013.
(2)Filed as an exhibit to the Company’s Quarterly Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the Securities and Exchange Commission on March 7, 2014.
(3)Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 filed with the Securities and Exchange Commission on May 15, 2014.
(4)Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed with the Securities and Exchange Commission on August 7, 2014.
(5)Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 filed with the Securities and Exchange Commission on November 14, 2014.
(6)Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on April 15, 2015.


(7)Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the Securities and Exchange Commission on August 12, 2015.
(8)Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission on March 11, 2016.
(9)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the Securities and Exchange Commission on August 15, 2016.
(10)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2016.
(11)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed with the Securities and Exchange Commission on November 10, 2016.
(12)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2017.
(13)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 2, 2017.
(14)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 14, 2017.
(15)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 19, 2017.
(16)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 7, 2017.
(17)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 20, 2017.
(18)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 filed with the Securities and Exchange Commission on November 14, 2017.
(19)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2018.
(20)Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 20, 2018.
(21)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2018.
(22)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2018 filed with the Securities and Exchange Commission on August 3, 2018.
(23)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019.
(1)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2016.
(2)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 filed with the Securities and Exchange Commission on November 14, 2017.
(3)Filed as an exhibit to the Company’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on December 6, 2019.
(4)Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 20, 2018.
(5)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on May 19, 2020.
(6)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on September 15, 2020.
(7)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed with the Securities and Exchange Commission on May 13, 2013.
(8)Filed as an exhibit to the Company’s Quarterly Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the Securities and Exchange Commission on March 7, 2014.
(9)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2017.
(10)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 6, 2019.
(11)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2020.
(12)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 25, 2019.
(13)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2018.
(14)Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on April 15, 2015.
(15)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 filed with the Securities and Exchange Commission on August 15, 2016.
(16)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed with the Securities and Exchange Commission on November 10, 2016.
(17)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 27, 2019.
(18)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 4, 2018.
(19)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2018 filed with the Securities and Exchange Commission on August 3, 2018.
(20)Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 14, 2019.
(21)Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 24, 2020.
(22)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 13, 2020.
(23)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2019.
(24)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2017.
(25)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2019.
(26)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 27, 2019.
(27)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2019.
(28)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2019.
(29)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 9, 2020.
Item 16. Form 10-K Summary.
Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 13th18th day of March, 2019.2022.

HEALTHCARE TRUST, INC. 
By/s/ Edward M. Weil, Jr.
Edward M. Weil, Jr.
Chief Executive Officer and President

(Principal Executive Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
NameCapacityDate
/s/ Leslie D. MichelsonNon-Executive Chairman of the Board of Directors, Independent DirectorMarch 18, 2022
Leslie D. Michelson
NameCapacityDate
/s/ Leslie D. MichelsonScott M. LappetitoNon-Executive Chairman of the Board of Directors, Independent DirectorMarch 13, 2019
Leslie D. Michelson
/s/ Katie P. KurtzChief Financial Officer, Treasurer and SecretaryMarch 13, 201918, 2022
Katie P. KurtzScott M. Lappetito(Principal Financial Officer and Principal Accounting Officer)
/s/ Edward M. Weil, Jr.Chief Executive Officer, President and DirectorMarch 13, 201918, 2022
Edward M. Weil, Jr.(Principal Executive Officer)
/s/ Elizabeth K. TuppenyIndependent DirectorMarch 13, 201918, 2022
Elizabeth K. Tuppeny
/s/ Edward G. RendellIndependent DirectorMarch 13, 201918, 2022
Edward G. Rendell
/s/ Lee M. ElmanIndependent DirectorMarch 13, 201918, 2022
Lee M. Elman
/s/ B.J. PennIndependent DirectorMarch 18, 2022
B.J. Penn

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
Financial Statement Schedule:



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting Firm



To theBoard of Directors and Stockholders
of Healthcare Trust, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Healthcare Trust, Inc. and its subsidiaries (the "Company"“Company”) as of December 31, 20182021 and 2017,2020, and the related consolidated statements of operations and comprehensive loss, of changes in equity and of cash flows for each of the three years in the three-year period ended December 31, 2018, and2021, including the related notes and financial statement schedule IIIlisted in the accompanying index (collectively referred to as the "consolidated“consolidated financial statements"statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182021 and 2017,2020, and the results of its operations and its cash flows for each of the three years in the three-year period ended December 31, 2018,2021 in conformity with U.S.accounting principles generally accepted accounting principles.in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’sCompany's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Purchase Price Allocations for Property Acquisitions
As described in Note 3 to the consolidated financial statements, during the year ended December 31, 2021, the Company completed real estate acquisitions of $161.9 million. For acquired properties with leases classified as operating leases, management allocated the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. Management utilizes various estimates, processes and information to determine the as-if vacant property value. Management estimates fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, fair market lease rates, discount rates and land values per square foot. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates and the value of in-place leases. 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.
The principal considerations for our determination that performing procedures relating to purchase price allocations for property acquisitions is a critical audit matter are (i) the significant judgment by management when developing the fair value
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Report of Independent Registered Public Accounting Firm
estimates of tangible and intangible assets acquired and liabilities assumed; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to capitalization rates, fair market lease rates, discount rates and land values per square foot; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others (i) reading the purchase agreements and lease documents; (ii) testing the completeness and accuracy of underlying data used by management in the fair value estimates, and (iii) testing management’s process for estimating the fair value of tangible and intangible assets acquired and liabilities assumed, including testing management’s projected cash flows and evaluating the accuracy of valuation outputs. Testing management’s process included evaluating the appropriateness of the valuation methods and reasonableness of the significant assumptions related to capitalization rates, fair market lease rates, discount rates and land values per square foot. Evaluating the reasonableness of the significant assumptions included considering whether these assumptions were consistent with external market data, comparable transactions, and evidence obtained in other areas of the audit. In conjunction with certain purchase price allocations, professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of certain assumptions utilized by management related to capitalization rates, fair market lease rates, discount rates and land values per square foot.

/s/ KPMGPricewaterhouseCoopers LLP

New York, New York
March 18, 2022
We have served as the Company's auditor since 2014.2019.
Chicago, Illinois
March 13, 2019




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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)



December 31,
20212020
ASSETS 
Real estate investments, at cost:
Land$206,392 $212,651 
Buildings, fixtures and improvements2,117,896 2,133,057 
Acquired intangible assets288,372 276,015 
Total real estate investments, at cost2,612,660 2,621,723 
Less: accumulated depreciation and amortization(562,733)(512,775)
Total real estate investments, net2,049,927 2,108,948 
Assets held for sale— 90 
Cash and cash equivalents59,738 72,357 
Restricted cash25,644 17,989 
Derivative assets, at fair value174 13 
Straight-line rent receivable, net23,858 23,322 
Operating lease right-of-use assets7,914 13,912 
Prepaid expenses and other assets (including $929 and $1,278 due from related parties as of December 31, 2021 and 2020, respectively)32,564 34,932 
Deferred costs, net14,581 15,332 
Total assets$2,214,400 $2,286,895 
LIABILITIES AND EQUITY  
Mortgage notes payable, net$584,239 $542,698 
Credit facilities, net502,051 674,551 
Market lease intangible liabilities, net10,943 10,803 
Derivative liabilities, at fair value13,903 38,389 
Accounts payable and accrued expenses (including $47 and $299 due to related parties as of December 31, 2021 and 2020, respectively)42,709 42,271 
Operating lease liabilities8,130 9,155 
Deferred rent8,619 6,914 
Distributions payable3,406 742 
Total liabilities1,174,000 1,325,523 
Stockholders’ Equity
7.375% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, 4,740,000 authorized as of December 31, 2021 and 2020; 3,977,144 and 1,610,000 issued and outstanding as of December 31, 2021 and 2020, respectively40 16 
7.125% Series B cumulative redeemable perpetual preferred stock, $0.01 par value, 3,680,000 authorized as of December 31, 2021; 3,630,000 issued and outstanding as of December 31, 2021, none authorized, issued or outstanding as of December 31, 202036 — 
Common stock, $0.01 par value, 300,000,000 shares authorized, 99,281,754 shares and 93,775,746 shares issued and outstanding as of December 31, 2021 and 2020, respectively993 938 
Additional paid-in capital2,329,839 2,104,261 
Accumulated other comprehensive loss(14,341)(39,673)
Distributions in excess of accumulated earnings(1,282,871)(1,108,557)
Total stockholders’ equity1,033,696 956,985 
Non-controlling interests6,704 4,387 
Total equity1,040,400 961,372 
Total liabilities and equity$2,214,400 $2,286,895 
  December 31,
  2018 2017
ASSETS    
Real estate investments, at cost:    
Land $209,284
 $201,427
Buildings, fixtures and improvements 2,006,745
 1,955,940
Construction in progress 80,598
 72,007
Acquired intangible assets 256,452
 256,678
Total real estate investments, at cost 2,553,079
 2,486,052
Less: accumulated depreciation and amortization (381,909) (309,711)
Total real estate investments, net 2,171,170
 2,176,341
Cash and cash equivalents 77,264
 94,177
Restricted cash 14,094
 8,411
Assets held for sale 52,397
 37,822
Derivative assets, at fair value 4,633
 2,550
Straight-line rent receivable, net 17,351
 15,327
Prepaid expenses and other assets (including $154 due from related parties as of December 31, 2018) 28,785
 22,099
Deferred costs, net 11,752
 15,134
Total assets $2,377,446
 $2,371,861
LIABILITIES AND EQUITY    
Mortgage notes payable, net $462,839
 $406,630
Credit facilities 602,622
 534,869
Market lease intangible liabilities, net 17,104
 18,829
Accounts payable and accrued expenses (including $764 and $1,637 due to related parties as of December 31, 2018 and December 31, 2017, respectively) 40,298
 38,112
Deferred rent 7,011
 6,201
Distributions payable 6,638
 11,161
Total liabilities 1,136,512
 1,015,802
     
Stockholders' Equity    
Preferred stock, $0.01 par value, 50,000,000 authorized, none issued and outstanding as of December 31, 2018 and December 31, 2017 
 
Common stock, $0.01 par value, 300,000,000 shares authorized, 91,963,532 and 91,002,766 shares of common stock issued and outstanding as of December 31, 2018 and December 31, 2017, respectively 919
 910
Additional paid-in capital 2,031,967
 2,009,197
Accumulated other comprehensive income 4,582
 2,473
Accumulated deficit (804,331) (665,026)
Total stockholders' equity 1,233,137
 1,347,554
Non-controlling interests 7,797
 8,505
Total equity 1,240,934
 1,356,059
Total liabilities and equity $2,377,446
 $2,371,861


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

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except for share and per share data)

 Year Ended December 31,
202120202019
Revenue from tenants$329,355 $381,612 $374,914 
Operating expenses:  
Property operating and maintenance205,813 243,548 234,185 
Impairment charges40,951 36,446 55,969 
Operating fees to related parties24,206 23,922 23,414 
Acquisition and transaction related2,714 173 362 
General and administrative16,828 21,572 20,530 
Depreciation and amortization79,926 81,053 81,032 
Total expenses370,438 406,714 415,492 
Operating loss before gain on sale of real estate investments(41,083)(25,102)(40,578)
Gain on sale of real estate investments3,648 5,230 8,790 
Operating loss(37,435)(19,872)(31,788)
Other income (expense):
Interest expense(47,900)(51,519)(56,059)
Interest and other income61 44 
Gain (loss) on non-designated derivatives37 (102)(68)
Total other expenses(47,802)(51,577)(56,120)
Loss before income taxes(85,237)(71,449)(87,908)
Income tax expense(203)(4,061)(399)
Net loss(85,440)(75,510)(88,307)
Net loss (income) attributable to non-controlling interests260 (303)393 
Allocation for preferred stock(7,762)(2,968)(173)
Net loss attributable to common stockholders(92,942)(78,781)(88,087)
Other comprehensive income (loss):
Unrealized gain (loss) on designated derivatives25,332 (32,630)(11,625)
Comprehensive loss attributable to common stockholders$(67,610)$(111,411)$(99,712)
Weighted-average common shares outstanding — Basic and Diluted (1)
100,534,438 100,312,245 100,093,694 
Net loss per common share attributable to common stockholders — Basic and Diluted (1)
$(0.92)$(0.79)$(0.88)
_____
  Year Ended December 31,
  2018 2017 2016
Revenues:      
Rental income $102,708
 $95,152
 $103,375
Operating expense reimbursements 20,858
 16,605
 15,876
Resident services and fee income 238,840
 199,416
 183,177
Contingent purchase price consideration 
 
 138
Total revenues 362,406
 311,173
 302,566
       
Operating expenses:      
Property operating and maintenance 220,997
 186,277
 172,077
Impairment charges 20,655
 18,993
 389
Operating fees to related parties 23,071
 22,257
 20,583
Acquisition and transaction related 302
 2,986
 3,163
General and administrative 17,275
 15,673
 12,105
Depreciation and amortization 83,212
 77,641
 98,886
Total expenses 365,512
 323,827
 307,203
Operating loss before (loss) gain on sale of real estate investments (3,106) (12,654) (4,637)
(Loss) gain on sale of real estate investments (70) 438
 1,330
Operating loss (3,176) (12,216) (3,307)
Other income (expense):      
Interest expense (49,471) (30,264) (19,881)
Interest and other income 23
 306
 47
(Loss) gain on non-designated derivatives (157) (198) 31
Gain on asset acquisition 
 307
 
Gain on sale of investment securities 
 
 56
Total other expenses (49,605) (29,849) (19,747)
Loss before income taxes (52,781) (42,065) (23,054)
Income tax (expense) benefit (197) (647) 2,084
Net loss (52,978) (42,712) (20,970)
Net loss attributable to non-controlling interests 216
 164
 96
Net loss attributable to stockholders (52,762) (42,548) (20,874)
       
Other comprehensive income (loss):      
Unrealized gain on designated derivative 2,109
 2,473
 
Unrealized loss on investment securities, net 
 
 6
Comprehensive loss attributable to stockholders $(50,653) $(40,075) $(20,868)
       
Basic and diluted weighted-average shares outstanding 91,118,929
 89,802,174
 87,878,907
Basic and diluted net loss per share $(0.58) $(0.47) $(0.24)
Distributions declared per share $0.95
 $1.51
 $1.70
(1) Retroactively adjusted for the effects of the Stock Dividends (see Note 1).




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

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years Ended December 31, 2021, 2020 and 2019
(In thousands, except for share data)

Series A Preferred StockSeries B Preferred StockCommon StockAccumulated Other Comprehensive Income (Loss)
Number of
Shares
Par ValueNumber of
Shares
Par ValueNumber of
Shares
Par ValueAdditional
Paid-in
Capital
Distributions in Excess of Accumulated EarningsTotal Stockholders’ EquityNon-controlling InterestsTotal Equity
Balance, December 31, 2018— $— — $— 91,963,532 $919 $2,031,967 $4,582 $(804,331)$1,233,137 $7,797 $1,240,934 
Impact of adoption of ASC 842— — — — — — — — (87)(87)— (87)
Issuance of Series A Preferred Stock, net1,610,000 16 — — — — 37,601 — — 37,617 — 37,617 
Common stock issued through distribution reinvestment plan— — — — 1,481,395 15 27,195 — — 27,210 — 27,210 
Common stock repurchases— — — — (1,103,263)(11)(21,102)— — (21,113)— (21,113)
Share-based compensation, net— — — — 15,000 — 1,319 — — 1,319 — 1,319 
Distributions declared on common stock, $0.83 per share— — — — — — — — (78,685)(78,685)— (78,685)
Dividends declared on preferred stock, $0.11 per share— — — — — — — — (173)(173)— (173)
Distributions to non-controlling interest holders— — — — — — — — — — (346)(346)
Unrealized loss on designated derivative— — — — — — — (11,625)— (11,625)— (11,625)
Net loss— — — — — — — — (87,914)(87,914)(393)(88,307)
Rebalancing of ownership percentage— — — — — — 1,648 — — 1,648 (1,648)
Balance, December 31, 20191,610,000 16 — — 92,356,664 923 2,078,628 (7,043)(971,190)1,101,334 5,410 1,106,744 
Issuance of Series A Preferred Stock, net— — — — — — (59)— — (59)— (59)
Common stock issued through distribution reinvestment plan— — — — 875,986 14,595 — — 14,604 — 14,604 
Common stock repurchases— — — — (705,101)(7)(10,539)— — (10,546)— (10,546)
Share-based compensation, net— — — — — — 1,345 — — 1,345 — 1,345 
Distributions declared in common stock, $0.21 per share— — — — 1,248,197 13 19,646 — (19,659)— — — 
Distributions declared in cash on common stock, $0.42 per share
— — — — — — — — (38,839)(38,839)— (38,839)
Dividends declared on preferred stock, $1.84 per share— — — — — — — — (2,968)(2,968)— (2,968)
Distributions to non-controlling interest holders— — — — — — — — — — (201)(201)
Unrealized loss on designated derivative— — — — — — — (32,615)— (32,615)— (32,615)
Buyout of NCI— — — — — — — (88)(88)(495)(583)
Net loss— — — — — — — — (75,813)(75,813)303 (75,510)
Rebalancing of ownership percentage— — — — — — 645 (15)— 630 (630)— 
Balance, December 31, 20201,610,000 16 — — 93,775,746 938 2,104,261 (39,673)(1,108,557)956,985 4,387 961,372 
Issuance of Series A Preferred Stock, net2,367,144 24 — — — — 56,241 — — 56,265 — 56,265 
Issuance of Series B Preferred Stock, net— — 3,630,000 36 — — 86,783 — — 86,819 — 86,819 
Share-based compensation, net— — — — — — 1,329 — — 1,329 — 1,329 
Distributions declared in common stock, $0.85 per share— — — — 5,506,008 55 81,316 — (81,371)— — — 
Dividends declared Series A Preferred Stock, $1.57 per share— — — — — — — — (6,236)(6,236)— (6,236)
Dividends declared on Series B Preferred Stock, $0.42 per share— — — — — — — — (1,527)(1,527)— (1,527)
Distributions to non-controlling interest holders— — — — — — — — — — (92)(92)
Issuance of Series A Preferred OP Units— — — — — — — — — — 2,578 2,578 
Net loss— — — — — — — — (85,180)(85,180)(260)(85,440)
Unrealized loss on designated derivative— — — — — — — 25,332 — 25,332 — 25,332 
Rebalancing of ownership percentage— — — — — — (91)— — (91)91 — 
Balance, December 31, 20213,977,144 $40 3,630,000 $36 99,281,754 $993 $2,329,839 $(14,341)$(1,282,871)$1,033,696 $6,704 $1,040,400 

 Common Stock   Accumulated Other Comprehensive Income        
 
Number of
Shares
 Par Value 
Additional
Paid-in
Capital
  Accumulated Deficit Total Stockholders' Equity Non-controlling Interests Total Equity
Balance, December 31, 201586,135,411
 $861
 $1,907,549
 $(6) $(316,284) $1,592,120
 $9,697
 $1,601,817
Common stock issued through distribution reinvestment plan3,234,746
 33
 73,597
 
 
 73,630
 
 73,630
Common stock repurchases(6,660) 
 (170) 
 
 (170) 
 (170)
Share-based compensation, net5,402
 
 160
 
 
 160
 
 160
Distributions declared
 
 
 
 (149,416) (149,416) 
 (149,416)
Distributions to non-controlling interest holders
 
 
 
 
 
 (731) (731)
Unrealized gain on investments
 
 
 6
 
 6
 
 6
Net loss
 
 
 
 (20,874) (20,874) (96) (20,970)
Balance, December 31, 201689,368,899
 894
 1,981,136
 
 (486,574) 1,495,456
 8,870
 1,504,326
Common stock issued through distribution reinvestment plan2,813,635
 28
 61,178
 
 
 61,206
 
 61,206
Common stock repurchases(1,554,768) (16) (33,583) 
 
 (33,599) (28) (33,627)
Share-based compensation, net375,000
 4
 466
 
 
 470
 
 470
Distributions declared
 
 
 
 (135,904) (135,904) 
 (135,904)
Contributions from non-controlling interest holders
 
 
 
 
 
 472
 472
Distributions to non-controlling interest holders
 
 
 
 
 
 (645) (645)
Unrealized gain on designated derivative
 
 
 2,473
 
 2,473
 
 2,473
Net loss
 
 
 
 (42,548) (42,548) (164) (42,712)
Balance, December 31, 201791,002,766
 910
 2,009,197
 2,473
 (665,026) 1,347,554
 8,505
 1,356,059
Common stock issued through distribution reinvestment plan1,720,633
 17
 35,720
 
 
 35,737
 
 35,737
Common stock repurchases(759,867) (8) (14,194) 
 
 (14,202) 
 (14,202)
Share-based compensation, net
 
 1,244
 
 
 1,244
 
 1,244
Distributions declared
 
 
 
 (86,543) (86,543) 
 (86,543)
Distributions to non-controlling interest holders
 
 
 
 
 
 (492) (492)
Unrealized gain on designated derivative
 
 
 2,109
 
 2,109
 
 2,109
Net loss
 
 
 
 (52,762) (52,762) (216) (52,978)
Balance, December 31, 201891,963,532
 $919
 $2,031,967
 $4,582
 $(804,331) $1,233,137
 $7,797
 $1,240,934


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

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended December 31,
202120202019
Cash flows from operating activities:  
Net loss$(85,440)$(75,510)$(88,307)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization79,926 81,053 81,032 
Amortization (including write-offs) of deferred financing costs4,427 4,059 9,171 
Amortization of terminated swap846 846 — 
Amortization of mortgage premiums and discounts, net55 60 (162)
(Accretion) amortization of market lease and other intangibles, net(198)(80)(4)
Bad debt expense1,094 2,708 6,464 
Equity-based compensation1,329 1,345 1,319 
Loss (gain) on non-designated derivative instruments(37)102 68 
(Gain) loss on sales of real estate investments, net(3,648)(5,230)(8,790)
Impairment charges40,951 36,446 55,969 
Deferred tax valuation allowance(483)4,641 — 
Changes in assets and liabilities:
Straight-line rent receivable(761)(2,409)(3,831)
Prepaid expenses and other assets(2,139)(63)(9,667)
Accounts payable, accrued expenses and other liabilities1,252 (4,554)2,632 
Deferred rent1,705 (1,607)1,510 
Net cash provided by operating activities38,879 41,807 47,404 
Cash flows from investing activities:
Property acquisitions and development costs(159,300)(94,984)(91,998)
Capital expenditures and other assets acquired(19,071)(21,892)(16,719)
Proceeds from sales of real estate investments130,449 34,385 62,468 
Net cash used in investing activities(47,922)(82,491)(46,249)
Cash flows from financing activities: 
Payments on credit facilities(298,804)(26,091)(368,300)
Proceeds from credit facilities125,000 95,000 225,618 
Proceeds from term loan— — 150,000 
Proceeds from mortgage notes payable42,750 — 136,513 
Payments on mortgage notes payable(1,264)(1,048)(67,797)
Payments for derivative instruments(85)(97)(2,147)
Payments of deferred financing costs(1,490)(2,241)(19,532)
Proceeds from issuance of Series A Preferred Stock, net56,265 (1,016)37,617 
Proceeds from issuance of Series B Preferred Stock, net86,897 — — 
Common stock repurchases— (10,539)(21,113)
Distributions paid on common stock— (31,354)(51,427)
Dividends paid on preferred stock(5,144)(2,399)— 
Buyout of non-controlling interest holders— (583)— 
Distributions to non-controlling interest holders(46)(201)(346)
Net cash, provided by financing activities4,079 19,431 19,086 
Net change in cash, cash equivalents and restricted cash(4,964)(21,253)20,241 
Cash, cash equivalents and restricted cash, beginning of year90,346 111,599 91,358 
Cash, cash equivalents and restricted cash, end of year$85,382 $90,346 $111,599 
F-7
  Year Ended December 31,
  2018 2017 2016
Cash flows from operating activities:      
Net loss $(52,978) $(42,712) $(20,970)
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 83,212
 77,641
 98,886
Amortization of deferred financing costs 8,633
 6,170
 4,523
Amortization of mortgage premiums and discounts, net (263) (1,576) (1,937)
Amortization of market lease and other intangibles, net 255
 236
 168
Bad debt expense 14,797
 12,413
 15,425
Equity-based compensation 1,244
 470
 160
Gain on sale of investment securities 
 
 (56)
Loss (gain) on non-designated derivative instruments 157
 198
 (31)
Loss (gain) on sales of real estate investments, net 70
 (438) (941)
Impairment of held-for-use investments 20,655
 18,993
 
Changes in assets and liabilities:      
Straight-line rent receivable (7,744) (6,242) (8,210)
Prepaid expenses and other assets (16,888) (10,345) (9,467)
Accounts payable, accrued expenses and other liabilities 2,191
 8,688
 545
Deferred rent 810
 471
 630
Net cash provided by operating activities 54,151
 63,967
 78,725
Cash flows from investing activities:      
Investments in real estate (128,056) (188,928) (38,746)
Deposits returned for unconsummated acquisitions 
 50
 
Deposit received for unconsummated disposition 
 1,125
 100
Capital expenditures (12,910) (8,278) (7,476)
Proceeds from sales of investment securities 
 
 1,140
Proceeds from sales of real estate investments 25,903
 757
 25,890
Proceeds from asset acquisition 
 865
 
Net cash used in investing activities (115,063) (194,409) (19,092)
Cash flows from financing activities:    
  
Proceeds from credit facilities 147,753
 380,170
 106,500
Repayments of credit facility borrowings (80,000) (326,800) (55,000)
Proceeds from mortgage notes payable 118,700
 336,897
 
Payments on mortgage notes payable (63,263) (65,335) (15,650)
Payments for undesignated derivative instruments (131) (214) (30)
Payments of deferred financing costs (3,354) (14,388) (3,040)
Common stock repurchases (14,202) (33,599) (12,184)
Distributions paid (55,329) (76,717) (75,432)
Contributions from non-controlling interest holders 
 472
 
Distributions to non-controlling interest holders (492) (643) (731)
Net cash provided by (used in) financing activities 49,682
 199,843
 (55,567)
Net change in cash, cash equivalents and restricted cash (11,230) 69,401
 4,066
Cash, cash equivalents and restricted cash, beginning of year 102,588
 33,187
 29,121
Cash, cash equivalents and restricted cash, end of year $91,358
 $102,588
 $33,187

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended December 31,
202120202019
Cash, cash equivalents, end of period$59,738 $72,357 $95,691 
Restricted cash, end of period25,644 17,989 15,908 
Cash, cash equivalents and restricted cash, end of period$85,382 $90,346 $111,599 
Supplemental disclosures of cash flow information:
Cash paid for interest$42,815 $47,878 $47,621 
Cash paid for income taxes311 315 447 
Non-cash investing and financing activities:
Common stock issued through distribution reinvestment plan$— $14,604 $27,210 
Common stock issued through stock dividends81,371 19,659 — 
Accrued capital expenditures (payable)— 1,287 — 
Accrued offering costs on Series B Preferred Stock78 — — 
Mortgage assumed in acquisition— 13,883 — 
  Year Ended December 31,
  2018 2017 2016
Supplemental disclosures of cash flow information:      
Cash paid for interest $43,266
 $26,097
 $18,512
Cash paid for income taxes 407
 28
 339
       
Non-cash investing and financing activities:      
Common stock issued through distribution reinvestment plan 35,737
 61,206
 73,630
Assumption of mortgage notes payable used to acquire investments in real estate 
 4,897
 
Liabilities assumed in real estate acquisitions 
 1,056
 
Asset acquisition (inflows/outflows from operations) 
 416
 
Asset acquisition (inflows/outflows from investing activity) 
 (723) 
Asset acquisition gain 
 307
 


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

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021




Note 1 — Organization
Healthcare Trust, Inc. (including, as required by context, Healthcare Trust Operating Partnership, L.P. (the "OP"“OP”) and its subsidiaries, the "Company") invests in healthcare real estate, focusing on seniors housing and medical office buildings ("MOB"“Company”), located in the United States for investment purposes. As of December 31, 2018, the Company owned 191 properties (all references to number of properties and square footage are unaudited) located in 31 states and comprised of 9.1 million rentable square feet.
The Company, which was incorporated on October 15, 2012, is a Maryland corporation that elected to be taxed as aan externally managed real estate investment trust for U.S. federal income tax purposes ("REIT"(“REIT”) beginning with its taxable year endedthat focuses on acquiring and managing a diversified portfolio of healthcare-related real estate, focused on medical office and other healthcare-related buildings (“MOBs”), and senior housing operating properties (“SHOPs”). Prior to December 31, 2013. 2021, the Company reported in 3 reportable segments, see Note 15—Segment Reporting for additional information.
As of December 31, 2021, the Company owned 202 properties located in 33 states and comprised of 9.2 million rentable square feet.
Substantially all of the Company'sCompany’s business is conducted through the OP.
In February 2013, the Company commencedOP and its initial public offering (the "IPO") on a "reasonable best efforts" basis of up to $1.7 billion of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts.wholly owned subsidiaries. The Company closed its IPO in November 2014 and as of such date the Company had received cumulative proceeds of $2.0 billion from its IPO. As of December 31, 2018, the Company has received total proceeds of $2.3 billion, net of shares repurchased under the Share Repurchase Program (as amended, the "SRP") (see Note 8 — Common Stock) and including $292.0 million in proceeds received under the Company's distribution reinvestment plan (the "DRIP").
On April 7, 2016 (the "Original NAV Pricing Date"), the board of directors of the Company (the "Board") approved an estimate of per share net asset value ("NAV"). On March 29, 2018, the Board approved an updated estimate of per-share net asset value ("Estimated Per-Share NAV") as of December 31, 2017. Subsequent valuations will occur periodically, at the discretion of the Board, provided that such estimates will be made at least annually. Pursuant to the DRIP, the Company's stockholders can elect to reinvest distributions by purchasing shares of the Company's common stock. Prior to the Original NAV Pricing Date, the Company offered shares pursuant to the DRIP at $23.75 per share, which was 95% of the initial offering price of shares of common stock in the IPO. Effective April 7, 2016, the Company began offering shares pursuant to the DRIP at the then-current NAV approved by the Board (see Note 8 — Common Stock).
The Company has no employees.Company’s advisor, Healthcare Trust Advisors, LLC (the "Advisor"“Advisor”) has been retained bymanages our day-to-day business with the Company to manage the Company's affairs on a day-to-day basis. The Company has retainedassistance of our property manager, Healthcare Trust Properties, LLC (the "Property Manager"“Property Manager”) to serve as the Company's property manager.. The Company’s Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to (“AR Capital, LLC, "AR Global"Global”), and these related parties receive compensation and fees and expense reimbursements fromfor providing services to us. The Company also reimburses these entities for certain expenses they incur in providing these services to the Company for services related to managing its business and investments.Company. Healthcare Trust Special Limited Partnership, LLC (the "Special“Special Limited Partner"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 December 31, 2021, the Company owned 54 seniors housing properties under the REIT Investment Diversification and Empowerment Act (“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 2 reportable business segments for management and internal financial reporting purposes: MOBs and SHOPs. In its MOB operating segment, the Company owns, manages, and leases single and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent. The Property Manager or third party managers manage the Company’s MOBs. In its SHOP segment, the Company invests in seniors housing properties using the RIDEA structure. As of December 31, 2021, the Company had 6 eligible independent contractors operating 54 SHOPs (not including 2 land parcels). All of the Company’s properties across both business segments are located throughout the United States.
Since October 2020, the Company has declared and paid quarterly dividends solely in shares of its common stock during the periods described in more detail below (the “Stock Dividends”). Stock Dividends issued in October 2020 and January 2021 were equal to 0.01349 shares of common stock on each share of outstanding common stock. The Stock Dividends issued in April 2021, July 2021, October 2021 and January 2022 were equal to 0.014655 shares of common stock on each share of outstanding common stock. Dividends payable entirely in shares of common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods. The Company has issued an aggregate of 6,754,203 shares in respect to the Stock Dividends. No other additional shares of common stock were issued during the year ended December 31, 2021. 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 increase of 0.08871 shares for every share outstanding resulting from the Stock Dividends, and are noted as such throughout the accompanying financial statements and notes.
On March 31, 2021, the Company published a new estimate of per-share net asset value (“Estimated Per-Share NAV”) as of December 31, 2020. The Company’s previous Estimated Per-Share NAV was as of December 31, 2019. The Estimated Per-Share NAV published on March 31, 2021 has not been adjusted since publication and will not be adjusted until the board of directors (the “Board”) determines a new Estimated Per-Share NAV which is expected in early April 2022. Issuing dividends in additional shares of common stock will, all things equal, cause the value of each share to decline because the number of shares outstanding increases when shares of common stock are issued in respect of a stock dividend; however, because each stockholder will receive the same number of new shares, the total value of a common stockholder’s investment, all things equal, will not change assuming no sales or other transfers. 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Note 2 — Summary of Significant Accounting Policies
Basis of Accounting
The accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States ("GAAP"(“GAAP”).
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year presentation.
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of the Company, the OP and its wholly-owned subsidiaries and consolidated joint venture arrangements in which the Company has controlling financial interests. The portions of the consolidated joint venture arrangements not owned by the Company are presented as non-controlling interests as of and during the period consolidated.subsidiaries. All inter-company accounts and transactions have beenare eliminated in consolidation.
The Company evaluates its relationships and investments to determine if it has variable interests. A variable interest is an investment or other interest that will absorb portions of an entity's expected losses or receive portions of the entity's expected residual returns. If the Company determines that it has a variable interest in an entity, it evaluates whether such interest is in a variable interest entity ("VIE"). A VIE is broadly defined as an entity where either (1) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of an entity that most significantly impact the entity's economic performance or (2) the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support. The Company consolidates any VIEs when it is determined to be the primary beneficiary of the VIE's operations.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

A variable interest holder is considered to be the primary beneficiary of a VIE if it has the power to direct the activities of a VIE that most significantly impact the entity's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The Company qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE. Consideration of various factors include, but are not limited to, the Company's ability to direct the activities that most significantly impact the entity's economic performance, its form of ownership interest, its representation on the entity's governing body, the size and seniority of its investment, its ability and the rights of other investors to participate in policy making decisions and to replace the manager of or liquidate the entity.
The Company continually evaluates the need to consolidate joint ventures based on standards set forth in GAAP. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, powerauthority to make decisions and contractual and substantive participating rights of the partners/other partners or members as well as whether the entity is a VIEvariable interest entity (“VIE”) for which the Company is the primary beneficiary.
The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company'sCompany’s assets and liabilities are held by the OP.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, real estate taxes,impairments, fair value measurements and income taxes, as applicable.
Out-of-Period Adjustments
During the year ended December 31, 2019, the Company identified certain historical errors in its tax provision and its net deferred taxes asset as well as its statements of operations and comprehensive income (loss), consolidated statements of changes in equity, and statements of cash flows since 2014, which impacted the quarterly financial statements and annual periods previously issued. Specifically, the Company had overstated intercompany rent on certain leases with the taxable REIT subsidiary (“TRS”) and reflected a portion of depreciation on REIT assets in the TRS’s tax provision, thereby overstating previously recorded tax benefits, deferred tax assets and net income by $0.8 million, $0.3 million and $0.2 million for the years ended December 31, 2018, 2017 and for Pre-2017 periods, respectively.  The intercompany rent and allocation of depreciation only affected the tax provision and did not affect the pre-tax consolidated financial results. The Company concluded that the errors noted above were not material for the period ended December 31, 2019 or any prior periods and has adjusted the amounts on a cumulative basis in 2019.
During the year ended December 31, 2019, the Company did not record quarterly interest expense related to borrowings under the Revolving Credit Facility (as defined below) that were borrowed and repaid during the fourth quarter of 2019. The amount of interest expense and related payable that should have been recorded was $0.3 million. In 2020, the Company identified that the cumulative interest payable balance was understated, and as a result a true up entry was recorded to record the payable and related expense, resulting in an out of period adjustment. The Company concluded that the errors noted above were not material for the period ended December 31, 2019 or any prior periods and has adjusted the amounts on a cumulative basis in 2020.
Impacts of the COVID-19 Pandemic
During the first quarter of 2020, the global COVID-19 pandemic that has spread around the world and to every state in the United States commenced. The pandemic has had and could continue to have an adverse impact on economic and market conditions, including a global economic slowdown and recession that may continue for some time. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The COVID-19 pandemic has had, and another pandemic in the future could have, impacts across many sectors and areas of the global economy and financial markets, leading to significant adverse impacts on economic activity including volatility in financial markets. The impact of the COVID-19 pandemic hasevolved rapidly. In many states and cities where our properties are located, measures including “shelter-in-place” or “stay-at-home” orders issued by local, state and federal authorities for much of 2020 and early part of 2021 and social distancing measures have resulted in closure and limitations on the operations of many businesses and organizations. While strict “shelter-in-place” and similar orders have generally been lifted, continued limitations on indoor occupancy or other restrictions applicable to in-person operations have been and may in future be re-instituted in some jurisdictions as rates of infection increase in those locations, including in light of the current spread of the Delta and Omicron variants and other potentially more contagious variants of the SARS-CoV-2 virus. As the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
COVID-19 pandemic continues, it is highly uncertain to what extent and when any such continuing restrictions will be lifted in various jurisdictions and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against these variants and the response by governmental bodies and regulators. Our tenants and SHOP properties operate businesses that require in-person interactions with their patients and residents. Even for businesses that have not closed or have closed and reopened, concern regarding the transmission of COVID-19 has impacted, and will likely continue to impact, the willingness of persons to, among other things, live in or use facilities at our properties, and impact the revenues generated by our tenants which may further impact the ability of our tenants to pay their rent obligations to us when due. The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2021, however uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of December 31, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates.
The Company has taken precautionary steps to increase liquidity and preserve financial flexibility in light of the uncertainty resulting from the COVID-19 pandemic. These steps include borrowing an additional $95.0 million under the Credit Facility (as defined below) in March 2020. A portion of the $95.0 million in borrowings was used for general corporate purposes and for acquisitions. In August 2020 and November 2021, the Company amended the Credit Facility as part of its efforts to continue addressing the adverse impacts of the COVID-19 pandemic. For additional information on the Credit Facility amendment see Note 5Credit Facilities.
The COVID-19 pandemic has impacted global economic activity. Our ability to lease space and negotiate and maintain favorable rents and the results of operations at our SHOPs could also continue to be negatively impacted by a prolonged recession in the U.S. economy as could the rates charged to residents at our SHOPs. Moreover, the demand for leasing space at our MOB properties could decline further negatively impacting occupancy percentage, revenue and net income. Additionally, downturns or stagnation the U.S. housing market as a result of an economic downturn could adversely affect the ability, or perceived ability, of seniors to afford the resident fees and services at our seniors housing properties.
Starting in March 2020, the COVID-19 pandemic and measures to prevent its spread began to affect us in a number of ways that vary by operating segment.
COVID-19 Impact — MOB Segment
The financial stability and overall health of our tenants is critical to our business. The negative effects that the global pandemic has had on the economy includes the closure or reduction in occupancy activity at some of our MOBs. The economic impact of the pandemic has impacted the ability of some of our tenants to pay their monthly rent either temporarily or in the long term. We experienced delays in rent collections in the second, third and fourth quarters of 2020, although collections have been approximately 100% of original cash rent for the MOB segment throughout the year endedDecember 31, 2021. We have taken a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, during the year ended December 31, 2020, we executed lease amendments providing for deferral of rent. During the year ended December 31, 2021, the Company did not enter into any rent deferral agreements with any of its tenants, and all amounts previously deferred under prior rent deferral agreements have been collected.
For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which doesn’t apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases are being modified, the FASB and SEC have provided relief that allows companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief, (1) as if the changes were originally contemplated in the lease contract or (2) as if the deferred payments are variable lease payments contained in the lease contract.
For all other lease changes that did not qualify for FASB relief, the Company is required to apply modification accounting including assessing classification under ASC 842. Some, but not all of the Company’s lease modifications qualify for the FASB relief. In accordance with the relief provisions, instead of treating these qualifying leases as modifications, the Company has elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be no impact on overall rental revenue and for
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease. For leases not qualifying for this relief, the Company has applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.
COVID-19 Impact — SHOP Segment
In the Company’s SHOP portfolio, occupancy had trended lower since March 2020 and the declines only recently began to level off in June 2021. Government policies and implementation of infection control best practices materially limited or closed communities to new resident move-ins which has affected the Company’s ability to fill vacancies. The Company also experienced lower inquiry volumes and reduced in-person tours during the pandemic. In addition, starting in mid-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 SHOP facilities, the Company generally bears these cost increases, which were partially offset by funds received under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), and to a lesser extent, cost recoveries for personal protective equipment from residents. See below for additional information on the CARES Act. These trends accelerated beginning in the second quarter of 2020, continued into early 2021 until stabilizing in the third quarter, and are expected to improve in 2022. Future developments in the course of the pandemic may cause further adverse impacts to the Company’s occupancy and cost levels, and these trends may continue to impact the Company and have a material adverse effect on its revenues and income in the other quarters. While the development of COVID vaccines may limit that effect, the effectiveness of vaccines and the willingness to receive vaccines are highly uncertain and cannot be predicted with confidence.
The financial impact of the COVID-19 pandemic on the Company has been partially offset by funds received under the CARES Act. The Company received $5.1 million and $3.6 million in these funds during the years ended December 31, 2021 and 2020, respectively. The Company considers these funds to be a grant contribution from the government. The full amounts received were recognized as a reduction of property operating expenses in our consolidated statement of operations for the years ended December 31, 2021 and 2020, respectively, to partially offset the incurred COVID-19 expenses. In addition, the Company has applied for additional funds, however, those applications have not yet been approved. There can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs.
Revenue Recognition
The Company’s revenues, which are derived primarily from lease contracts, include rent received from tenants in its MOBs. As of December 31, 2021, these leases had a weighted average remaining lease term of 4.9 years. Rent from tenants in the Company’s MOB operating segment (as discussed below) is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. 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. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. 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 the increase in property operating and maintenance expenses in our MOB 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) the 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.
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 SHOPs held using a structure permitted under the REIT Investment and Diversification and Empowerment Act of 2007 and to fees for ancillary services performed for SHOP residents, which are generally variable in nature. Rental income from residents in the Company’s SHOP segment is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. Also included in revenue from tenants is fees for ancillary revenue from non-residents of $3.5 million $13.3 million, and $15.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. Fees for ancillary services are recorded in the period in which the services are performed.
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December 31, 2021
The decline in ancillary revenue since the year ended December 31, 2019 is primarily due to the Company’s dispositions of its SNF properties in Lutz and Wellington, Florida, which were sold in November 2020 and May 2021, respectively.
The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating 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 costs of the respective properties.
The following table presents future base rent payments on a cash basis due to the Company as of December 31, 2021 over the next five years and thereafter. These amounts exclude tenant reimbursements and contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items. These amounts also exclude SHOP leases which are short-term in nature.
(In thousands)Future 
Base Rent Payments
2022$105,694 
202394,047 
202485,918 
202575,192 
202667,200 
Thereafter221,313 
Total$649,364 
The Company continually reviews receivables related to rent and unbilled rents receivable 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 (see the “Recently Issued Accounting Pronouncements” section below), 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 beginning on January 1, 2019, in accordance with new accounting rules, on the accompanying consolidated statements of operations and comprehensive income (loss) in the period the related costs are incurred, as applicable.
Under ASC 842, which was adopted effective on January 1, 2019, uncollectable amounts are reflected as reductions in revenue. Under ASC 840, the Company recorded such amounts as bad debt expense as part of property operating expenses. During the years ended December 31, 2021, 2020 and 2019 such amounts were $1.1 million, $2.7 million and $6.5 million, respectively, which include bad debt expense related to the NuVista and LaSalle Tenants (see Note 3Real Estate Investment, Net to the consolidated financial statements included in this Annual Report on Form 10-K for additional information).
Investments in Real Estate
Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.
TheAt the time an asset is acquired, the Company evaluates the inputs, processes and outputs of eachthe asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statementstatements of operations.operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. See the “Purchase Price Allocation” section in this Note for a discussion of the initial accounting for investments in real estate.
In business combinations,
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December 31, 2021
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 years ended December 31, 2021, 2020 and 2019. 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. The Company evaluates probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. There were no real estate investments held for sale as of December 31, 2021 and there were $0.1 million in real estate investments held for sale as of December 31, 2020 (see Note 3Real Estate Investments, Net to the consolidated financial statements included in this Annual Report on Form 10-K for additional information).
As more fully discussed in this Note under Recently Issued Accounting Pronouncements - ASU No. 2016-02 Leases, all of the Company’s leases as lessor prior to adoption were accounted for as operating leases and they continue to be accounted for as operating leases under the transition guidance. The Company evaluates new leases originated after the adoption date (by the Company allocatesor 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. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase priceoption, the non-cancelable lease term is for more than major part of acquired propertiesremaining economic useful life of the asset (e.g., equal to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings and fixtures. Intangible assets may includegreater than 75%), if the present value of in-placethe 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 if the asset 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 above- and below-market leases and other identifiable intangible assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests are recorded at their estimated fair values.
In asset acquisitions,accounted for as financing transactions by the lessor. For the three-year period ended December 31, 2019, the Company allocateshas no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.
The Company is also the purchase pricelessee under certain land leases which were previously classified prior to adoption of lease accounting and will continue to be classified as well as other costs of acquisition, such as transaction costs, to tangible and identifiable intangible assets or liabilities basedoperating leases under transition elections unless subsequently modified. These leases are reflected on the balance sheet as of December 31, 2021 and 2020, and the rent expense is reflected on a straight-line basis over the lease term in the consolidated statements of relative fair values. This cost accumulation model is unique to asset acquisitionsoperations for the years ended December 31, 2021, 2020, and differs from business combinations as there is no goodwill recognized.2019.
The Company generally determines the value of construction in progress based upon the replacement cost. During the construction period, the Company capitalizes interest, insurance and real estate taxes until the development has reached substantial completion.
ThePurchase Price Allocation
In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair value of the tangiblevalues. Tangible assets ofmay include land, land improvements, buildings, fixtures and tenant improvements on an acquired property with an in-place operating lease is determined by valuing the property as if it were vacant andbasis. Intangible assets may include the “as-if-vacant” value is then allocated to the tangible assets based on the fair value of the tangible assets. The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases. The fair value ofand above- orand below-market leases is recordedand other identifiable assets or liabilities based on the present value of the difference between the contractual amount to be paid pursuant to the in-place lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and the Company’s estimate of theany assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair market lease rate for the corresponding in-place lease, measured over the remaining term of the lease including any below-market fixed rate renewal options for below-market leases.
In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including real estate valuations prepared by independent valuation firms. The Company also considers information and other factors including market conditions, the industry that the tenant operates in, characteristics of the real estate, i.e. location, size, demographics, value and comparative rental rates, tenant credit profile and the importance of the location of the real estate to the operations of the tenant’s business.

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December 31, 2018

values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above-above or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. 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 years ended December 31, 2021, 2020 and 2019 were accounted for as asset acquisitions.
For acquired properties with leases classified as operating leases, the Company allocates the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values. In making estimates of fair values for purposes of allocating non-controlling interests,purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.
Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. The Company estimates fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value
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December 31, 2021
estimates are also made using significant assumptions such as capitalization rates, fair market lease rates, discount rates and land values per square foot.
Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates and the value of in-place leases. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.
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.
The aggregate value of units issued or percentageintangible assets related to customer relationship, as applicable, is measured based on the Company’s evaluation of investment contributed at the datespecific characteristics of acquisition, as determinedeach 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 years ended December 31, 2021 and 2020.
Gain on Dispositions of Real Estate Investments
Gains on sales of rental real estate after January 1, 2018 are not considered sales to customers and will generally be recognized pursuant to the provisions included in ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”).
Gain on sales of real estate prior to January 1, 2018 are recognized pursuant to the provisions included in ASC 360-20, Real Estate Sales (“ASC 360-20”). The specific timing of a sale was measured against various criteria in and ASC 360-20 related to the terms of the applicable agreement.
Real estate investments thattransaction and any continuing involvement in the form of management or financial assistance associated with the properties. If the sales criteria for the full accrual method are intended to be sold are designated as "held for sale"not met, depending on the consolidated balance sheets atcircumstances, the lesserCompany may not record a sale or it may record a sale but may defer some or all of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale. Real estate investments are no longer depreciated when they are classified as held for sale.the gain recognition. If the disposal,criteria for full accrual are not met, the Company may account for the transaction by applying the finance, leasing, profit sharing, deposit, installment or intended disposal, of certain real estate investments represents a strategic shift that has had or will have a major effect on the Company's operations and financial results, the operations of such real estate investments would be presentedcost recovery methods, as discontinued operations in the consolidated statements of operations and comprehensive loss for all applicable periods. There were $52.4 million and $37.8 million in real estate investments held for sale as of December 31, 2018 and 2017, respectively.
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, five years for fixtures and improvements, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Construction in progress, including capitalized interest, insurance and real estate taxes, is not depreciatedappropriate, until the development has reached substantial completion.
The assumed mortgage premiums or discountssales criteria for the full accrual method are amortized as an increase or reduction to interest expense over the remaining term of the respective mortgages.
Capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market lease values are accreted as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.
Capitalized above-market ground lease values are accreted as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.
The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.met.
Impairment of Long LivedLong-Lived Assets
IfWhen circumstances indicate that the carrying value of a property may not be recoverable, the Company reviews the assetproperty for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. 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 is recordedin the consolidated statement 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 and used. For properties held for sale, the impairment loss isrecorded would equal the adjustment to fair value less estimated cost to dispose of the asset. ImpairmentThese assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.earnings.
Reportable Segments
As of December 31, 2021, the Company has determined that it has 2 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. For additional information see Note 15 — Segment Reporting.
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.
Construction in progress, including capitalized interest, insurance and real estate taxes, is not depreciated until the development has reached substantial completion. The value of certain other intangibles such as certificates of need in certain jurisdictions are amortized over the expected period of benefit (generally the life of the related building).
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December 31, 2021
The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.
The value of customer relationship intangibles, if any, is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.
Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.
Above and Below-Market Lease Amortization
Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below-market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.
Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.
Derivative Instruments
The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions.
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.  The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any change in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the accompanying consolidated statements of operations and comprehensive loss prior to the adoption of ASU 2017-2 on January 1, 2019. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective, with any ineffective portion of a derivative’s change in fair value immediately recognized in earnings. After the adoption of ASU 2017-2, if the derivative qualifies for hedge accounting, all of the change in value is recorded in other comprehensive income (loss).
Non-controlling Interests
The non-controlling interests represent the portion of the common and preferred equity in the OP that is not owned by the Company as well as certain investment arrangements with other unaffiliated third parties whereby such investors receive an ownership interest in certain of the Company’s property-owning subsidiaries and are entitled to receive a proportionate share of the net operating cash flow derived from the subsidiaries’ property. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and presented as net loss attributable to non-controlling interests on the consolidated statements of operations and comprehensive loss. Non-controlling interests are allocated a share of net income or loss based on their share of equity ownership, including any preferential amounts. See Note 13 — Non-Controlling Interests for additional information.
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December 31, 2021
Cash and Cash Equivalents
Cash and cash equivalents includes cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less. As of December 31, 2017, approximately $17.9 million was invested in money market funds. The Company did not have any cash invested in money market funds at December 31, 2018.2021 or 2020.
The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company ("FDIC"(“FDIC”) up to an insurance limit. At December 31, 20182021 and 2017,2020, the Company had deposits of $77.3$59.7 million and $94.2$72.4 million, of which $58.9$46.2 million and $79.9$57.0 million, respectively, were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result.
Restricted Cash
Restricted cash generally consists of resident security depositsDeferred Financing and reserves related to real estate taxes, maintenance, structural improvements, and debt service.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

DeferredLeasing Costs, Net
Deferred costs, net, consists of deferred financing costs related to the Prior Credit Facility (as defined in Note 5),5 — Credit Facilities) Fannie Mae Master Credit Facilities (as defined in Note 5)5 — Credit Facilities), and deferred leasing costs. Deferred financing costs relating to the mortgage notes payable (see Note 4 — Mortgage Notes Payable, Net) are reflected net of the related financing on our balance sheet.
Deferred financing costs associated with the Credit Facility and Fannie Mae Master Credit Facilities and mortgage notes payable represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the term of the financing agreement using the Prioreffective interest method for the Credit Facility and Fannie Mae Master Credit Facilities. These costs are amortized over the terms of the respective financing agreementsFacilities and using the effective interest method and included in interest expense onover the accompanying consolidated statements of operations and comprehensive loss. expected term for the mortgage notes payable.
Unamortized deferred financing costs are expensed if the associated debt is refinanced or repaidpaid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close. As of December 31, 2018 and 2017, the Company had $8.6 million and $12.9 million of deferred financing costs, net of accumulated amortization of $17.4 million and $11.4 million, respectively.
Deferred leasing costs, consisting primarily of lease commissions and professional fees incurred in connection with new leases, are deferred and amortized over the term of the lease. As of December 31, 2018 and 2017, the Company had $3.1 million and $2.3 million in deferred leasing costs, net of accumulated amortization of $0.9 million and $0.5 million, respectively.
Revenue Recognition
The Company's rental income is primarily related to rent received from tenants in MOBs and triple-net leased healthcare facilities. Rent from tenants in the Company's MOB and triple-net leased healthcare facilities operating segments (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, GAAP requires the Company to record a receivable, and include in revenues 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. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation.
Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.
Resident services and fee income primarily relates to rent from residents in the Company's seniors housing — operating properties ("SHOPs") held using a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA") and to fees for ancillary services performed for SHOP residents. Rental income from residents in the Company's SHOP segment is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. Fees for ancillary services are recorded in the period in which the services are performed.
The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates.
The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the allowance for uncollectible accounts on the consolidated balance sheets or records a direct write-off of the receivable in the consolidated statements of operations.
Equity-Based Compensation
The Company has a stock-based incentive award planprogram for its directors, which is accounted for under the guidance of shareshare- based payments. The cost of services received in exchange for these stock awards is measured at the grant date fair value of the award and the expense for such awards is included in general and administrative expenses and is recognized over the vestingservice period (i.e., vesting) required or when the requirements for exercise of the award have been met (See Note 11Share-BasedEquity-Based Compensation).
Income Taxes
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986 (the "Code"“Code”), as amended, 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. federal corporate income tax to the extent it distributes all of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP) to its stockholders. REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal, state and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. The Company distributed to its stockholders 100% of its REIT taxable income for each of the years ended December 31, 2018, 20172021, 2020 and 2016.2019. Accordingly, no provision for U.S. federal or state income taxes related to such REIT taxable income was recorded in the Company'sCompany’s financial statements. Even if the Company continues to qualify for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and U.S. federal income and excise taxes on its undistributed income.
Certain limitations are imposed on REITs with respect to the ownership and operation of seniors housing properties.  Generally, to qualify as a REIT, the Company cannot directly or indirectly operate seniors housing properties. Instead, such facilities may be either leased to a third partythird-party operator or leased to a taxable REIT subsidiary (“TRS”)TRS and operated by a third party on behalf of the TRS.  Accordingly, the Company has formed a TRS entity underthat is wholly-owned by the OP to lease its SHOPs and the TRS has entered into management contracts with unaffiliated third party managersthird-party operators to operate the facilities on its behalf.
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December 31, 2021
As of December 31, 2018,2021, the Company, owned 54 seniors housing properties which are leased and operated through its TRS entity, owned 58 seniors housing properties.TRS. The TRS entity is a wholly-owned subsidiary of the OP. A TRS is subject to U.S. federal, state and local income taxes. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies (including modifying intercompany leases with the TRS) and recent financial operations. In the event the Company determines that it would not be able to realize the deferred income tax assets in the future in excess of the net recorded amount, the Company establishes a valuation allowance which offsets the previously recognized income tax benefit.asset. Deferred income taxes result from temporary differences between the carrying amounts of the TRS'sTRS’s assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes as well as net operating losses.loss carryforwards. Significant components of the deferred tax assets and liabilities as of December 31, 20182021 consisted of deferred rent and net operating losses.loss carryforwards. During the year ended December 31, 2020, the Company modified 25 intercompany leases with the TRS which abated intercompany rent due to the ongoing COVID-19 pandemic.
Because of the Company’s TRS's recent operating history of taxable losses and the on-going impacts of the COVID-19 pandemic on the results of operations of the Company’s SHOP assets, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus the Company has provided a 100% valuation allowance of $4.2 million as of December 31, 2021. If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive income (loss). As of December 31, 2021, the Company’s consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $13.3 million at December 31, 2021 (of which $7.6 million were incurred prior to January 1, 2018). Carryforwards from losses incurred prior to January 1, 2018, if unused, these will begin to expire in 2035. For net operating losses incurred subsequent to December 31, 2017, there is no expiration date. As of December 31, 2021, the Company had a deferred tax asset of $4.1$4.2 million with noa full valuation allowance. As of December 31, 2017,2020, the Company had a deferred tax asset of $4.4$4.6 million with noa full valuation allowance.
The following table details the composition of the Company'sCompany’s tax (expense) benefit for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, which includes U.S. federal and state income taxes incurred by the Company's TRS entity.Company’s TRS. The Company estimated its income tax (expense) benefit relating to its TRS entity using a combined federal and state rate of approximately 26.6%0.0%, (105.8)% and 40.1% 26.4%for the years ended December 31, 20182021, 2020 and 2017,2019, respectively. These income taxes are reflected in income tax (expense) benefit on the accompanying consolidated statements of operations and comprehensive loss.
 Year Ended December 31,Year Ended December 31,
 2018 2017 2016202120202019
(In thousands) Current Deferred Current Deferred Current Deferred(In thousands)CurrentDeferredCurrentDeferredCurrentDeferred
Federal (expense) benefit $(272) $399
 $811
 $(1,597) $2,103
 $(237)Federal (expense) benefit$— $(319)$726 $— $— $(155)
State (expense) benefit (353) 29
 (3) 142
 308
 (90)State (expense) benefit(203)(163)(196)50 (176)(68)
Total $(625) $428
 $808
 $(1,455) $2,411
 $(327)
Deferred tax asset valuation allowanceDeferred tax asset valuation allowance— 482 — (4,641)— — 
Total income tax benefit (expense)Total income tax benefit (expense)$(203)$— $530 $(4,591)$(176)$(223)
As of December 31, 20182021 and 2017,2020, the Company had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended December 31, 20132014 remain open to examination by the major taxing jurisdictions to which the Company is subject.
The amount of distributions payable to the Company's stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, financial condition, capital expenditure requirements, as applicable, and annual distribution requirements needed to qualify and maintain the Company's status as a REIT under the Code.
The following table details from a tax perspective the portion of distributions classified as a return of capital, capital gain dividend income and ordinary dividend income, per share per annum, for the years ended December 31, 2018, 2017 and 2016:

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

  Year Ended December 31,
  2018 2017 2016
Return of capital 100.0% $0.95
 99.7% $1.50
 86.8% $1.47
Capital gain dividend income % 
 0.3% 0.01
 0.5% 0.01
Ordinary dividend income % 
 % 
 12.7% 0.22
Total 100.0% $0.95
 100.0% $1.51
 100.0% $1.70
Per Share Data
Net income (loss) per basic share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares (retroactively adjusted for the Stock Dividends) of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period.
Reportable SegmentsCARES Act Grants
On March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic. Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19. The Company has determined that it has three reportable segments, with activitiesreceived
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
$3.6 million in these funds during the year ended December 31, 2020, related to investing4 of its SHOPs. During the year ended December 31, 2021, the Company received an additional $5.1 million in MOBs, triple-net leased healthcare facilities,funding from CARES Act grants. The Company considered the funds to be a grant contribution from the government and seniors housing properties. Management evaluates the full amounts received were recognized as a reduction of property operating performanceexpenses in the Company’s consolidated statement of operations for the Company's investments in real estate and seniors housing properties on an individual property level.year ended December 31, 2020. There can be no assurance that the program will be extended or any further amounts received.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2018
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as "ASC 606"). ASC 606 establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. The Company adopted this guidance effective January 1, 2018 under the modified retrospective approach and it did not have an impact on the Company's consolidated financial statements. See above for further information on the Company's Revenue Recognition Accounting Policies under ASC 606.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The revised guidance amends the recognition and measurement of financial instruments. The new guidance significantly revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The Company adopted this guidance effective January 1, 2018, using the modified retrospective transition method, and there was no impact to the Company's consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The Company adopted the new guidance on January 1, 2018 and it did not have an impact on its consolidated statement of cash flows.
In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Assets Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance related to partial sales of non-financial assets, eliminates rules specifically addressing the sales of real estate, clarifies the definition of in substance non-financial assets, removes the exception to the financial asset derecognition model and clarifies the accounting for contributions of non-financial assets to joint ventures. The Company adopted this guidance effective January 1, 2018 using the modified transition method and it did not have an impact on its financial statements. The Company expects that any future sales of real estate in which the Company retains a non-controlling interest in the property would result in the full gain amount being recognized at the time of the partial sale. Historically, the Company has not retained any interest in properties it has sold.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award, and the classification of the award as either equity or liability, all do not change as a result of the modification. The Company adopted this guidance effective January 1, 2018 using the modified retrospective transition method and it did not have an impact on its consolidated financial statements. The Company expects that any future modifications to the Company's issued share-based awards will be accounted for using modification accounting, unless the modification meets all of the exception criteria noted above. As a result, the modification would be treated as an exchange of the original award for a new award, with any incremental fair value being treated as additional compensation cost.
Pending Adoption as of December 31, 20182019
ASU No. 2016-02 - Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02"2016-02”). The most significant changes in ASU 2016-02 which provides guidance related to the accounting for leases, as well as the related disclosures. For lessors of real estate, leases are accounted for using an approach substantially the same as previous accounting guidance for operating leases and direct financing leases. For lessees, the new 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 recognitioneffectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use ("ROU"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.
Upon adoption, lessors were allowed a practical expedient, which the Company has elected, by class of underlying assets to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease liabilities by lesseescomponent as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for those leasesseparately, would be classified as an operating leases, with less significant changes for lessors. Also, beginning in the first quarter of 2019, thelease. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, requires additional disclosures that help enable users ofwhich is consistent with the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company elected theCompany’s existing policies. Also, upon adoption, companies were allowed a practical expedient package, which the Company has elected, that allowsallowed the Company: (a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain leases; (b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019;2019 (including assessing sale-leaseback transactions); and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019. In addition,As a result, all of the Company’s existing leases will continue to be classified as operating leases under the new standard. Further, any existing leases for which the property is the leased to a tenant in a transaction that at inception was a sale-leaseback transaction will continue to be treated (absent a modification) as operating leases. The Company elected todid not record on its consolidated balance sheetshave any leases whose term is less than 12 months at lease inception. ASU 2016-02 originally required a modified retrospective method of adoption, however, ASU 2018-11, Leases (Topic 842): Targeted Improvements ("ASU 2018-11"), provides companies with an additional transition option that would permit the application of ASU 2016-02be considered financing leases as of the adoption date rather than to all periods presented. January 1, 2019.
The Company assessed the impact of adoption from both a lessor and lessee perspective, which is discussed in more detail below, and adopted the new guidance prospectively on January 1, 2019, as allowedusing a prospective transition approach under ASU 2018-11.which the Company elected to apply the guidance effective January 1, 2019 and not adjust prior comparative reporting periods (except for the Company’s presentation of lease revenue discussed below).
Lessor Accounting
ASU 2016-02 originally stated that companies would beAs discussed above, the Company was not required to bifurcate certainre-assess the classification of its leases, which are considered operating leases under ASU 2016-02. The following is a summary of the most significant impacts to the Company of the new accounting guidance, as lessor:
Since the Company elected the practical expedient noted above to not separate non-lease component revenue from the associated lease revenues betweencomponent, the Company has aggregated revenue from its lease components and non-lease components however, ASU 2018-11 allows lessors a practical expedient, which the Company has elected, by class of underlying assets(tenant operating expense reimbursements) into one line. The prior periods have been conformed to account for lease and non-lease components as a single lease component if certain criteria are met. Resident leases within our SHOPs segment contain service elements. We expect to elect the practical expedient to account for our resident leases as a single lease component. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent withpresentation.
Changes in the Company’s existing policies.
Upon adoption,assessment of receivables that result in bad debt expense is now required to be recorded as an adjustment to revenue, rather than a charge to bad debt expense. This new classification applies for the first quarter of 2019 and reclassification of prior period amounts is not permitted. At transition on January 1, 2019, after assessing its reserve balances at December 31, 2018 under the new guidance, did not impact the Company's revenueCompany wrote off accounts receivable of $0.1 million and straight-line rents receivable of $0.1 million as an adjustment to the opening balance of accumulated deficit, and accordingly rent for these tenants is currently recorded on a cash basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. Under prior accounting guidance, the recognition pattern orwould have any other impacts on itsbeen deferred.
Lessee Accounting
    The Company was a lessee under leases in placefor 17 properties including capital leases of land and building as of January 1, 2019 in which it is the lessor.
Lessee Accounting
Under ASU 2016-02, companies are required to record a ROU asset and a lease liability for all leases with a term greater than 12 months equal to the present value of the remaining lease payments as of the adoption date of the new standard. Since our leases do not provide an implicit rate, the Company will use its incremental borrowing rate in determining the present value of lease payments. The new standard also requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively, as well as the balance sheet classification of the ROU asset. Leases with a term of 12 months or less will be accounted for similar to previous guidance for operating leases.
The Company is a lessee for 19 of its properties in which it has ground leases as of December 31, 2018. Sincebecause the Company has elected the practical expedients described above, it determined that 11 of these leases would continue to be classified as operating leases under the new standard. AsThe following is a result,summary of the most significant impacts to the Company expects to record aof the new accounting guidance, as lessee:
Upon adoption of the new standard, the Company recorded ROU assetassets and lease liability of approximately $9.0liabilities equal to $10.2 million to $11.0 million, which is equal tofor the present value of the remaining lease payments related to its ground leases. These amounts are included in operating lease right-of-use assets and operating lease liabilities on the Company’s consolidated balance sheet as of December 31, 2019.
The Company also reclassified $0.5 million related to amounts previously reported as a straight-line rent liability and $4.8 million, net related to amounts previously reported as above and below market ground lease intangibles to the ROU assets. For additional information and disclosures related to these operating leases, see Note 16 — Commitments and Contingencies.
Other Accounting Pronouncements
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, to better align cash flow and fair value hedge accounting with the corresponding risk management activities. Among other things, the amendments expand which hedging strategies are eligible for hedge accounting, align the timing of recognition of hedge results with the earnings effect of the hedged item and allow companies to include the change in fair value of the derivative in the same income statement line item as the earnings effect of the hedged item. Additionally, for cash flow hedges that are highly effective, the update allows for all changes in fair value of the derivative to be recorded in other comprehensive income. The Company has adopted ASU 2017-12 on January 1, 2019, as required under the guidance, using a modified retrospective transition method and the adoption did not have a material impact on its consolidated financial statements.
Adopted as of January 1, 2019. Future lease expense after adoption will continue2020:
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to be recordedthe Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a straight-line basis as required for operating leases.material impact on its consolidated financial statements.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Other Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the updateamended standard requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for reporting periodsthe Company beginning after December 15, 2019, with early adoption permitted for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-Controlling Interests with a Scope Exception guidance that changes the method to determine the classification of certain financial instruments with a down round feature as liabilities or equity instruments and clarify existing disclosure requirements for equity-classified instruments. A down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability, rather, an entity that presents earnings per share is required to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common stockholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2018. Adoption should be applied retrospectively to outstanding financial instruments with a down round feature with a cumulative-effect adjustment to the statement of financial position.on January 1, 2020. The Company adopted the new guidance on January 1, 20192020 and determined it did not have an impact on its consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815):Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The Company has adopted ASU 2017-12 on January 1, 2019, as required under the guidance, using a modified retrospective transition method and the adoption did not have a material impact on its consolidated financial statements.
Adopted as of January 1, 2021:
In July 2018,August 2020, the FASB issued ASU 2018-07, Compensation- Stock Compensation2020-06, Debt - Debt with Conversion and Other Options (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting as an amendment470) and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards,Derivatives and Hedging – Contracts in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis.Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The ASU is effective for the Company in annual periodsfiscal years beginning after December 15, 2018, and2021, including interim periods within those annual periods. Asfiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The standard allows for either modified or full retrospective transition methods. The Company adopted the new guidance on January 1, 2021 and determined it did not have a material impact on its consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Not yet Adopted as of December 31, 20182021
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the year ended December 31, 2020, the Company did not have any nonemployee awards outstandingelected to apply the hedge accounting expedients related to (i) the assertion that wouldour 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 impacted bybased matches the new guidance, howeverindex on the corresponding derivatives. Application of these expedients preserves the presentation of our derivatives, which will be consistent with our past presentation. The Company will continue to evaluate the impact of the guidance and may apply this new guidance prospectively to grants of nonemployee awards, if any. The Company has adopted ASU 2018-07 on January 1, 2019.other elections, as applicable, as additional changes in the market occur.
Note 3 — Real Estate Investments, Net
The Company owned 191 properties as of December 31, 2018. Property Acquisitions and Development Costs
The Company invests in healthcare-related facilities, primarily MOBs and seniors housing properties and other healthcare-related facilities primarily towhich expand and diversify its portfolio and revenue base. The Company owned 202 properties as of December 31, 2021. During the year ended December 31, 2021, the Company, through wholly-owned subsidiaries of the OP, completed its acquisitions of 5 multi-tenant MOBs and 12 single tenant MOBs for an aggregate contract purchase price of $160.2 million. All acquisitions in 2021, 2020 and 2019 were considered asset acquisitions for accounting purposes.
The following table presents the allocation of the assets acquired and liabilities assumed, as well as capitalized construction in progressdevelopment costs during the years ended December 31, 2018, 20172021, 2020 and 2016:2019:

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Year Ended December 31,
 Year Ended December 31,
(Dollar amounts in thousands) 2018 2017 2016
(In thousands)(In thousands)202120202019
Real estate investments, at cost:      Real estate investments, at cost:
Land $14,417
 $18,501
 $
Land$12,848 $7,665 $6,356 
Buildings, fixtures and improvements 98,236
 135,344
 
Buildings, fixtures and improvements121,376 90,699 68,903 
Construction in progress 8,591
 11,952
 38,746
Development costsDevelopment costs— — 5,721 
Total tangible assets 121,244
 165,797
 38,746
Total tangible assets134,224 98,364 80,980 
Intangible assets and liabilities:      
In-place leases (1)
 6,823
 21,546
 
Acquired intangibles:Acquired intangibles:
In-place leases and other intangible assets (1)
In-place leases and other intangible assets (1)
28,499 10,369 11,777 
Market lease and other intangible assets (1)
 275
 2,472
 
Market lease and other intangible assets (1)
794 496 724 
Market lease liabilities (1)
 (286) (888) 
Market lease liabilities (1)
(1,639)(362)(1,483)
Total intangible assets and liabilities 6,812
 23,130
 
Total intangible assets and liabilities27,654 10,503 11,018 
Mortgage notes payable, net 
 (4,897) 
Mortgage notes payable, net— (13,883)— 
Other liabilities assumed in the Asset Acquisition, net (2)
 
 (1,056) 
Consideration paid for acquired real estate investments $128,056
 $182,974
 $38,746
Issuance of Series A Preferred OP UnitsIssuance of Series A Preferred OP Units(2,578)— — 
Cash paid for real estate investments, including acquisitionsCash paid for real estate investments, including acquisitions$159,300 $94,984 $91,998 
Number of properties purchased 14
 23
 
Number of properties purchased17 
_______________
(1)
(1) Weighted-average remaining amortization periods for acquired intangible assets and liabilities for the year ended December 31, 2018 were 9.6 years, consisting of in-place leases, above-market leases which were 9.8 years, market lease and other intangible assets which were 9.0 years, and market lease liabilities which were 6.8 years.
(2) Includes liabilities of $0.8 million in accounts payable and accrued expenses, $0.5 million in non-controlling interests and $0.1 million in deferred rent and includes assets of $0.2 million in cash and $0.2 million in restricted cash related to the Company's acquisition from American Realty Capital Healthcare Trust III, Inc. ("HT III") of 19 properties comprising substantially all of HT III’s assets (the "Asset Purchase"), pursuant to a purchase agreement (the "Purchase Agreement"), dated as of June 16, 2017. HT III is sponsored and advised by an affiliate of the Advisor. See Note 9Related Party Transactions and Arrangements for additional information.
The following table presents future minimum base rental cash payments due to the Company over the next fivebelow market leases acquired were 11.2, 10.2 years and thereafter8.5 years, respectively, as of December 31, 2018. These amounts exclude contingent rent payments,2021. Weighted-average remaining amortization periods for in-place leases and above-market leases acquired were 1.7 years, 7.7 years and 7.4 years, respectively, as applicable, that may be collected from certain tenants based on provisions related to performance thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.of December 31, 2020.
(In thousands) Future Minimum
Base Rent Payments
2019 $96,178
2020 91,848
2021 85,563
2022 77,205
2023 65,504
Thereafter 284,929
Total $701,227
Significant Tenants
As of December 31, 2018, 20172021, 2020 and 2016,2019, 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 on a straight-line basis for the portfolio. 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 December 31, 2018, 20172021, 2020 and 2016:2019:

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

December 31,
State202120202019
Florida (1)
17.7%20.6%25.2%
Michigan (2)
**10.9%
Pennsylvania*10.4*
_______________
  December 31,
State 2018 2017 2016
Florida 16.6% 17.5% 19.3%
Georgia 10.1% 10.7% 10.2%
Iowa * * 10.5%
Michigan 13.1% 11.6% *
Pennsylvania 10.2% 10.8% 12.0%
*    State’s annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

(1)In May 2021, the Company’s skilled nursing facility in Wellington, Florida, and the Company’s development property in Jupiter, Florida were sold. In December 2020, the Company’s skilled nursing facility in Lutz, Florida was sold.
*State's annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.
(2)During the year ended December 31, 2020, the Company sold 11 SHOPs located in Michigan, 7 of which were transferred to the buyer during the fourth quarter of 2020 and 4 of which were transferred to the buyer during the first quarter of 2021.
Intangible Assets and Liabilities
Acquired intangible assets and liabilities consisted of the following as of the periods presented:
 December 31, 2018 December 31, 2017December 31, 2021December 31, 2020
(In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount(In thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Intangible assets:            Intangible assets:
In-place leases $214,953
 $144,669
 $70,284
 $215,453
 $130,749
 $84,704
In-place leases$264,741 $183,073 $81,668 $241,097 $172,648 $68,449 
Market lease assets 30,910
 9,970
 20,940
 30,636
 7,853
 22,783
Market lease assets14,164 11,212 2,952 14,116 10,845 3,271 
Other intangible assets 10,589
 1,103
 9,486
 10,589
 838
 9,751
Other intangible assets9,467 1,006 8,461 20,802 1,171 19,631 
Total acquired intangible assets $256,452
 $155,742
 $100,710
 $256,678
 $139,440
 $117,238
Total acquired intangible assets$288,372 $195,291 $93,081 $276,015 $184,664 $91,351 
Intangible liabilities:            Intangible liabilities:
Market lease liabilities $26,241
 $9,137
 $17,104
 $25,956
 $7,127
 $18,829
Market lease liabilities$23,472 $12,529 $10,943 $22,109 $11,306 $10,803 
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- andabove-and below-market lease assets and liabilities, net and the accretionamortization of above-marketabove-and below-market ground leases, for the periods presented:
Year Ended December 31,
(In thousands)202120202019
Amortization of in-place leases and other intangible assets (1)
$15,071 $15,121 $15,559 
Accretion of above-and below-market leases, net (2)
$(422)$(257)$(247)
Amortization of above-and below-market ground leases, net (3)
$214 $178 $86 
________
(1)    Reflected within depreciation and amortization expense.
(2)    Reflected within revenue from tenants.
(3)    Reflected within property operating and maintenance expense. Upon adoption of ASC 842 effective January 1, 2019, intangible balances related to ground leases were reclassified to be included as part of the Operating lease right-of-use assets presented on the consolidated balance sheet with no change to placement of the amortization expense of such balances. Refer to Note 2Summary of Significant Accounting Policies for additional details.
F-22

  Year Ended December 31,
(In thousands) 2018 2017 2016
Amortization of in-place leases and other intangible assets(1)
 $18,851
 $17,369
 $38,754
Accretion of above- and below-market leases, net(2)
 (39) (308) (209)
Amortization of above- and below-market ground leases, net(3)
 147
 172
 172
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_______________

(1)
Reflected within depreciation and amortization expense.
(2)
Reflected within rental income.
(3)
Reflected within property operating and maintenance expense.


HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

The following table provides the projected amortization and property operating and maintenance expense and adjustments to revenuesrevenue from tenants for the next five years:
(In thousands)20222023202420252026
In-place lease assets$14,324 $12,227 $10,691 $9,103 $8,052 
Other intangible assets10 10 10 10 10 
Total to be added to amortization expense$14,334 $12,237 $10,701 $9,113 $8,062 
Above-market lease assets$(814)$(468)$(389)$(336)$(302)
Below-market lease liabilities1,625 1,512 1,294 1,103 941 
Total to be added to revenue from tenants$811 $1,044 $905 $767 $639 
(In thousands) 2019 2020 2021 2022 2023
In-place lease assets $14,270
 $12,268
 $10,030
 $8,205
 $6,346
Other intangible assets 568
 414
 414
 414
 414
Total to be added to amortization expense $14,838
 $12,682
 $10,444
 $8,619
 $6,760
           
Above-market lease assets $(1,625) $(1,287) $(934) $(583) $(238)
Below-market lease liabilities 1,694
 1,537
 1,387
 1,347
 1,215
Total to be added to rental income $69
 $250
 $453
 $764
 $977
           
Below-market ground lease assets $222
 $222
 $214
 $212
 $212
Above-market ground lease liabilities (65) (65) (65) (63) (46)
Total to be added to property operating and maintenance expense $157
 $157
 $149
 $149
 $166
Transfer of Operations
On June 8, 2017, the Company's TRS acquired 12 operating entities that leased 12 healthcare facilities previously included in the Company's triple-net leased healthcare facilities segment. Concurrently with the acquisition of the 12 operating entities, the Company transitioned the management of the healthcare facilities to a third-party management company that manages other healthcare facilities in the Company's SHOP segment. As a part of the transition, the Company's subsidiary property companies executed leases with the acquired operating entities and the acquired operating entities executed management agreements with the management company under a structure permitted by the RIDEA. As part of the transition of operations, the Company now controls the operating entities that hold the operating licenses for the healthcare facilities. The Company determined the transition of operations to be an asset acquisition and accounted for such transfer accordingly.
At closing of the transfer of operations, the Company assumed the following assets and liabilities which are included in the consolidated balance sheet within the line items as shown below. The amounts below reflect the fair values of these assets and liabilities, as of the transfer closing date, to the appropriate financial statement line as shown below.
(In thousands) June 8, 2017
Buildings, fixtures and improvements $723
Cash and cash equivalents 865
Prepaid expenses and other assets 651
Total assets acquired $2,239
   
Accounts payable and accrued expenses $1,188
Deferred rent 744
Total liabilities acquired $1,932
   
Gain on acquisition $307

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Real Estate Sales
On November 6, 2018, the Company entered into the final amendment to its January 2017 agreement (as amended to date, the "Amended Missouri SNF PSA") to sell eight skilled nursing facility properties in Missouri (the "Missouri SNF Properties") that were previously classified as held-for-sale, for an aggregate contract purchase price of $27.5 million. In connection with the Amended Missouri SNF PSA, the Company recognized an impairment charge of approximately $11.9 million on the Missouri SNF Properties in the third quarter of 2018 which is included on the consolidated statement of operations and comprehensive loss. The sale of these properties pursuant to the Amended Missouri SNF PSA, which occurred in the fourth quarter of 2018, resulted in a loss of $0.1 million for the year ended December 31, 2018, which is reflected within (loss) gain on sale of real estate investment in the consolidated statements of operations and comprehensive loss.Dispositions
The following table summarizes the properties sold during the years ended December 31, 2018, 20172021, 2020 and 2016:2019:
(In thousands)Disposition DateContract Sale PriceGain (Loss)
on Sale, of Real Estate Investments
2021 Dispositions:
Hampton River Portfolio (2 properties)December 21, 2021$37,800 $1,323 
NuVista Jupiter (1)
May 14, 202165,000 2,383 
Wellington Green (2)
May 14, 202130,750 114 
Michigan SHOPs (4 properties) (3)
January 15, 2021— (172)
Totals$133,550 $3,648 
2020 Dispositions:
Lutz (4)
December 15, 2020$20,000 $3,832 
Michigan SHOPs (7 properties) (3)
November 2, 202011,750 (908)
Cape GirardeauMarch 19, 20208,600 2,306 
Totals$40,350 $5,230 
2019 Dispositions:
New York Six MOBs (1 property)August 22, 2019$13,600 $2,883 
Ocean Park (5)
August 1, 20193,600 (152)
New York Six MOBs (5 properties)February 6, 201945,000 6,059 
Totals$62,200 $8,790 
Property (In thousands)
 Disposition Date Contract Sale Price 
Gain
(Loss/Impairment)
on Sale, Net
Gregory Ridge Living Center - Kansas City, MO June 1, 2016 $4,300
 $(126)
Parkway Health Center Care Center - Kansas City, MO June 1, 2016 4,450
 (263)
Redwood Radiology and Outpatient Center - Santa Rosa, CA September 30, 2016 17,500
 1,330
Dental Arts Building - Peoria, AZ May 16, 2017 825
 438
Missouri SNF Properties December 5, 2018 27,500
 (11,989)
Total   $54,575
 $(10,610)
______
(1)Impairment charges of $14.6 million and $19.8 million were recorded during the years ended December 31, 2020 and 2019, respectively.
(2)Impairment charges of $0.9 million, $2.3 million and $9.9 million were recorded during the years ended December 31, 2021, 2020 and 2019, respectively.
(3)Impairment charges of $19.6 million and $22.6 million were recorded during the years ended December 31, 2020 and 2019, respectively. The contract sales price for all 11 properties was received in November of 2020. Loss on sale amounts relate to the properties transferred at the respective dates.
(4)Impairment charges of $3.6 million were recorded during the year ended December 31, 2019.
(5)Impairment charges of $19,000 were recorded during the year ended December 31, 2019.

The sales of Gregory Ridge Living Center, Parkway Health Center Care Center, Redwood Radiology and Outpatient Center, the Dental Arts Building and the Missouri SNF Propertiesproperties noted above did not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the results of operations of Gregory Ridge, Parkway, Redwood Radiology, the Dental Arts Building and the Missouri SNF Propertiesthese properties remain classified within continuing operations for all periods presented until the respective sale dates.
2021 Dispositions
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
During the fourth quarter of 2021, the Company sold 2 MOBs in Virginia for an aggregate contract purchase price of $37.8 million, which resulted in gains on sale of $1.3 million. These gains are included in the consolidated statement of operations for the year ended December 31, 2021. No impairments were previously recorded on these properties.
During the second quarter of 2021, the Company sold its skilled nursing facility in Wellington, Florida and its development property in Jupiter, Florida, which resulted in gains on sale of $0.1 million and $2.4 million, respectively. These gains are included in the consolidated statement of operations for the year ended December 31, 2021. The Company had previously recorded impairments on these properties (see dispositions table above).
During the first quarter of 2021, the Company transferred 4 SHOP properties located in Michigan to the buyer at a second closing, and $0.8 million held in escrow was released to the buyer. This amount had been placed in escrow at the first closing of the transaction during the year ended December 31, 2020 when the purchase price for all 11 properties sold in the transaction was received from the buyer. The Company recorded a loss on sale of $0.2 million related to this transaction in the year ended December 31, 2021. The Company had previously recorded impairments on these properties (see dispositions table above).
2020 Dispositions
On December 16 2020, the Company completed the sale of its skilled nursing facility in Lutz, Florida for a contract purchase price of $20.0 million, resulting in a gain on sale of real estate investments of $3.8 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. At closing, $17.6 million of net proceeds were used to repay amounts outstanding under the Revolving Credit Facility. The Company had previously recorded impairments on these properties (see dispositions table above).
On November 2, 2020 the initial closing under the PSA pursuant to which the Company had agreed to sell 11 Michigan SHOPs occurred. The contract purchase price for the 11 Michigan SHOPs was $11.8 million, resulting in a loss on sale of $0.9 million on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. At the initial closing, the Company received payment of the full $11.8 million sales price for all 11 of the Michigan SHOPs, less $0.8 million held in escrow, and transferred 7 of the properties to the buyer. The remaining 4 properties were transferred to the buyer a second closing separate closings in the first quarter of 2021 when the $0.8 million held in escrow was released to the buyer. Of the properties transferred at the initial closing, 4 had been part of the borrowing base under the Credit Facility, 1 was part of the collateral pool under the Fannie Mae Master Credit Facility with Capital One and 2 were unencumbered. Of the properties transferred at the second closing, 3 were part of the borrowing base under the Credit Facility until the initial closing and 1 was unencumbered. At the initial closing, $4.2 million of the net proceeds was used to repay amounts outstanding under the Fannie Mae Master Credit Facility with Capital One, $4.4 million of the net proceeds were used to repay amounts outstanding under the Revolving Credit Facility, with the remainder used for closing costs. For the avoidance of any doubt, all impairments related to the disposal of the 11 Michigan SHOP assets were recognized in the year ended December 31, 2020. The Company had previously recorded impairments on these properties (see dispositions table above).
On March 19, 2020 the Companydisposed of 1 MOB property for a contract purchase price of $8.6 million, resulting in a gain on sale of $2.3 million.
2019 Dispositions
On February 6, 2019, the Company sold 5 of the MOB properties within the State of New York (the “New York Six MOBs”) for a contract sales price of $45.0 million, resulting in a gain on sale of real estate investments of $6.1 million which is included on the Consolidated Statement of Operations for the year ended December 31, 2019. The Company had reconsidered the intended holding period for all six of the New York Six MOBs due to various market conditions and the potential to reinvest in properties generating a higher yield. On July 26, 2018, the Company had originally entered into a PSA for the sale of the New York Six MOBs, for an aggregate contract sale price of approximately $68.0 million and subsequently, on September 25, 2018, the Company further amended the PSA to decrease the aggregate contract sale price to $58.8 million. The 1 remaining New York Six MOB was sold for a contract sales price of $13.6 million on August 22, 2019, resulting in a gain on sale of real estate investments of $2.9 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2019. No impairments were previously recorded on these properties.
During the first quarter of 2019, the Company reconsidered the intended holding period for 1 of its SHOPs located in Brookings, OR (“Ocean Park”) due to various market conditions and the potential to reinvest in properties generating a higher yield. On March 21, 2019, the Company entered into a PSA for the sale of Ocean Park, for an aggregate contract sale price of approximately $3.6 million. On April 1, 2019, the Company amended the purchase and sale agreement to decrease the aggregate contract sale price to $3.5 million. In connection with this amendment, the Company recognized an impairment
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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
charge of approximately $19,000 on Ocean Park during the second quarter of 2019, which is included on the consolidated statement of operations and comprehensive loss. On August 1, 2019, the Company closed its disposition of Ocean Park resulting in a loss on sale of real estate investments of $0.2 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2019.
Impairments
The following is a summary of impairments taken during the years ended December 31, 2021, 2020 and 2019:
Year Ended December 31,
(In thousands)202120202019
Assets held for sale$— $19,570 $22,634 
Assets held for use40,951 16,876 33,335 
Total$40,951 $36,446 $55,969 
For additional information on impairments related to assets held for sale and assets held for use, see the “Assets Held for Sale and Related Impairments” and “Assets Held for Use and Related Impairments” sections below.
Assets Held For Sale and Related Impairments
When assets are identified by management as held for sale, the Company reflects them separately on its balance sheet and stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. 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'sCompany’s estimate of the net sales price of the assets.
During the third quarter of 2018, For held-for-sale properties, the Company reconsideredpredominately uses the intended holding period for six MOB properties within the state of New York (the "New York Six MOBs") due to various market conditions and the potential to reinvest in properties generating a higher yield. On July 26, 2018, the Company entered into a purchase and sale agreement for the sale of the New York Six MOBs, for an aggregate contract sale price as fair market value.
Balance Sheet Details - Assets Held for Sale
There were no properties classified as held for sale as of approximately $68.0 million. On September 25, 2018, the Company amended the purchase and sale agreement to decrease the aggregate contract sale price to $58.8 million. In connection with this amendment, the Company recognized an impairment charge of approximately $6.4 million on the New York Six MOBs during the third quarter of 2018, which is included on the consolidated statement of operations and comprehensive loss.
The disposition of five of the New York Six MOBs closed on February 6, 2019 for a contract sales price of $45.0 million. See Note 18 — Subsequent Events for more information. Although the Company believes the disposition of the remaining New York Six MOB is probable, there can be no assurance that the disposition will be consummated, on its current terms, or at all, or that the Company will be able to reinvest the net proceeds in an accretive manner.
December 31, 2021. The following table details the major classes of assets associated with the properties that have been classified as held for sale as of December 31, 2018:2020:
December 31,
(In thousands)
2020 (1)
   Land$145 
   Buildings, fixtures and improvements(55)
Assets held for sale$90 
_____
(1) Assets held for sale as of December 31, 2020 relates to 4 Michigan SHOPs.
In January 2020, the Company entered into a PSA for the sale of a portfolio of 14 SHOPs located in Michigan (the “Michigan SHOPs”) as a single portfolio for $71.8 million. Accordingly, all 14 of these SHOPs were classified as held for sale as of December 31, 2019.
During April, 2020, the PSA was amended so that only 11 of the Michigan SHOPs were to be sold pursuant to this PSA for $11.8 million. As a result of the amended PSA from April 2020, the 3 remaining Michigan SHOPs at that time no longer qualified as held for sale and were reclassified to assets held for use at their original carrying values as of March 31, 2020 and an additional $0.7 million in catch-up depreciation was recorded in the third quarter of 2020. In addition, the original deposit made by the buyer was reduced from $1.0 million to $0.3 million.
In October 2020, the PSA was amended to provide that the full $11.8 million sales price for all 11 Michigan SHOPs would be paid at an initial closing which occurred in November 2020, when 7 of the properties were transferred to the buyer with the remaining 4 properties scheduled to be transferred to the buyer at a second closing, which occurred in the first quarter of 2021. This amendment to the PSA also provided that $0.8 million of the sales price would be held in escrow and returned to the buyer at the second closing; provided that, if the PSA is terminated before the second closing closings due to a material default by the buyer, the Company will receive the escrowed amount. This amount was returned to the buyer at final closing.As a result, it represented an effective reduction in the sale price and the Company reflected an additional impairment loss to reflect this. The Company determined that the 4 Michigan SHOPs should be classified as held for sale as of December 31, 2020. As
F-25

  December 31,
(In thousands) 2018 2017
   Land $5,285
 $3,131
   Buildings, fixtures and improvements 47,112
 34,691
Assets held for sale $52,397
 $37,822
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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

of December 31, 2020, of the 4 Michigan SHOPs that were classified as held for sale, 3 Michigan SHOPs were part of the borrowing base of the Credit Facility and 1 was unencumbered.
Held for Sale Impairments - 2020
As a result of the amendment to the PSA in April 2020, in which the number of properties under sale was reduced from 14 to 11, and in which the total consideration was reduced from $71.8 million to $11.8 million, the Company recorded an additional impairment charge of $19.6 million for the year ended December 31, 2020 related to the Michigan SHOP assets held for sale.
Held for Sale Impairments - 2019
During the year ended December 31, 2019 the Company recorded an impairment charge of $22.6 million related to assets held for sale, representing the amount by which the carrying amount of the Michigan SHOPs exceeded the Company’s estimate, at that time, of the net sales price of the Michigan SHOPs.
Assets Held for Use and Related Impairments
When circumstances indicate the carrying value of a property classified as held for use may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single tenant properties or significant vacancy in the Company’s multi-tenant properties and (ii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. If a triggering event is identified, the Company considers the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of the properties based on the expected cash flows on an undiscounted basis over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. 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.
The Company also has liabilities associated with the held-for-sale New York Six MOBs of $3.5 million which is presented within Market lease intangible liabilities, net, and $0.5 million which is presented within Accounts Payable and Accrued Expenses on the Consolidated Balance Sheet as of December 31, 2018.
Impairment of Held for Use Real Estate Investments
As of December 31, 2018, the Company ownedowns held for use properties for which the Company had reconsideredmay from time to time reconsider the projected cash flows due to various performance indicators. As a result,indicators, and where appropriate, the Company evaluatedevaluates the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company primarily used an undiscounted cash flow approach to estimate the future cash flows expected to be generated. The Company mademakes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach. As these factors are difficult to predict and are subject to future events that may alter management'smanagement’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.
For oneAs of these held for use properties,December 31, 2019, the Company usedwas actively considering plans to sell 3 assets in Florida including the recently completed development project in Jupiter, Florida and the Company’s 2 skilled nursing facilities in Lutz, Florida and Wellington, Florida. The Company began marketing the properties in 2020 and, during the three months ended June 30, 2020, the Company received multiple bids and accepted a non-binding letter of intent from a prospective buyer to estimate future cash flows expected to be generated.purchase the completed development project in Jupiter, Florida for $65.0 million and the Company’s 2 skilled nursing facilities in Lutz, Florida and Wellington, Florida for $20.0 million and $33.0 million, respectively. During August 2020, the Company entered into PSAs with the buyer on the terms generally set forth in the letter of intent. The property in Lutz, Florida was sold in December 2020 (see “Dispositions” above) and the property in Jupiter, Florida and the property in Wellington, Florida were sold in May 2021. The Company made certain assumptions in this approach as well, mainly thatused the saleproceeds of the property would close atsales to repay amounts outstanding under its Revolving Credit Facility.
Held for Use Impairments — 2021
On April 30, 2021, the value derived fromCompany amended the non-binding letterPSA which reduced the sales price of intent and within a specified timethe skilled nursing facility in Wellington, Florida to $30.7 million. In connection with this amendment to the future. There can be no guarantee that the sale of this property would close under these terms, or at all. As a result of its consideration of impairment,PSA, the Company determined that the carryingfair value had declined as of March 31, 2021 and the held for use property noted above exceeded its estimated fair values andCompany recognized an aggregate impairment charge of $2.4$0.9 million during the first quarter of 2021, which is included in impairment charges on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2018.2021.
Illinois Skilled Nursing Facility Portfolio Leases
On November 1, 2017,During the second quarter of 2021, the Company through wholly owned subsidiaries of the OP, entered into separate triple-net leases for seven skilled nursing facilitiesbegan to actively consider plans to sell a property located in the state of Illinois. The operators under the new leases are affiliates of Aperion Care, Inc., an operator of over thirty skilled nursing, rehabilitation and long term care facilities located in the states of Illinois, Indiana, and Missouri. Six of the seven skilled nursing facilities had previously been under the possession and control of a receiver pursuant to a consensual order appointing receiver issued by the United States District Court for the Northern District of Illinois, Eastern Division on November 1, 2016.  On November 1, 2017, the Court ordered the termination of the receiver’s possession and control of the skilled nursing facilities and the transition of operations to the operators under the new leases. Each of the seven new leases have an initial term of ten years and are guaranteed by Aperion Care, Inc. and certain affiliated individuals and trusts.
In connection with the execution of the leases, the OP agreed to indemnify and hold harmless the tenants under the new leases with respect to all claims, demands, obligations, losses, liabilities, damages, recoveries, and deficiencies that such tenants may suffer asSun City, Arizona. As a result of the prior tenants’ failure to discharge certain tax liabilities or to pay certain assessments, recoupments, claims, fines or penalties accrued or payable with respectchanges to the facilities that accrued between December 31, 2014 and October 31, 2017.  The OP’s indemnity obligation is capped at $2.5 million and expires on the earlier of the date of termination of a lease or April 1, 2020.
The LaSalle Tenant
The Company is currently exploring options to replace tenants at four properties in Texas (collectively, the "LaSalle Tenant"). In January 2018,Company’s expected holding period, the Company entered into an agreement with the LaSalle Tenant in which the Company agreed to forbear from exercising legal remedies, including staying a lawsuit against the tenant, as long as the tenant pays the amounts due for rent and property taxes on an updated payment schedule pursuant to a forbearance agreement. The LaSalle Tenant is currently in defaultdetermined that projected cash flows,
F-26

Table of the forbearance agreement and owes the Company $4.2 million of rent, property taxes, late fees, and interest receivable thereunder. The Company has the entire receivable balance and related income from the LaSalle Tenant fully reserved as of December 31, 2018. The Company incurred $5.0 million of bad debt expense, including straight-line rent write-offs, related to the LaSalle Tenant during the year ended December 31, 2018, which is included in property operating and maintenance expense on the consolidated statement of operations.Contents
The NuVista Tenants
The Company had tenants and former tenants at two of its properties in Florida (collectively, the "NuVista Tenants") that have been in default under their leases since July 2017 and collectively owe the Company $9.4 million of rent, property taxes, late fees, and interest receivable under their leases as of December 31, 2018. There can be no guarantee on the collectibility of these receivables, and as such, the Company has the entire receivable balance and related income from the NuVista Tenants fully reserved as of December 31, 2018. The Company also incurred $6.0 million of bad debt expense related to the NuVista Tenants during the


HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

on an undiscounted basis over its intended holding period, did not recover the carrying value of the property. During July 2021, the Company entered into a non-binding letter of intent to sell the property and as a result, the Company determined that the fair market value of the property had declined and recorded an impairment charge of $6.1 million during the second quarter of 2021, which is included in the consolidated statement of operations and comprehensive loss for the year ended December 31, 20182021.
The LaSalle Tenant
On July 1, 2020, the Company transitioned 4 triple-net leased properties in Texas (collectively, the “LaSalle Properties”) from the former triple-net leased healthcare facilities segment to the SHOP segment, and incurred $5.3 millionthe LaSalle Properties are now leased to the Company’s TRS and operated and managed on the Company’s behalf by a third-party operator.
During 2019, The LaSalle Group Inc., a guarantor of bad debt expensecertain of the lease obligations of prior tenants (collectively, the “LaSalle Tenant”), filed for voluntarily relief under chapter 11 of the United States Bankruptcy Code. The Company has filed proofs of claims related to amounts previously awarded to it from the NuVista Tenantsbankruptcy proceeding, however, the Company has no amounts due from the LaSalle Tenant in its consolidated balance sheets as of December 31, 2021 and December 2020 as the Company does not believe recovery is likely against the LaSalle Tenant.
During the third quarter of 2021, the Company began to actively market the LaSalle Properties for sale, and a non-binding letter of intent was signed in the fourth quarter for an aggregate contract sales price of $12.4 million. As a result of changes to the Company’s expected holding period, the Company determined that projected cash flows, on an undiscounted basis over its intended holding period, did not recover the carrying value of the properties and concluded that the properties were impaired. The fair value measurement was determined by estimated discounted cash flows using three significant unobservable inputs, including the cash flow discount rate, terminal capitalization rate, and the estimated stabilized occupancy range. The Company recorded an impairment charge of $34.0 million during the year ended December 31, 2017, respectively2021 which areis included in property operating and maintenance expense on the consolidated statement of operations. The NuVista Tenants are related to Palm Health Partners, LLC ("Palm"), the developer of the Company's development property in Jupiter, Florida which is also currently in default to the Company (see Note 16 Commitmentsoperations and Contingencies for more information on the status of the relationship with Palm).
At one of the properties which is leased to the NuVista Tenants, located in Wellington, Florida, the Company filed litigation against the tenant pursuing eviction proceedings against the NuVista Tenant and appointed a court ordered receiver in order to replace the NuVista Tenant with a new tenant and operator at the property. During the pendency of the litigation, the Company and the tenant entered into an agreement (the “OTA”) pursuant to which the Company and the tenant agreed to cooperate in transitioning operations at the property to a third party operator selected by the Company. Following the tenant’s failure to cooperate in transitioning the operations in accordance with the OTA, the Company filed a motion in the existing litigation seeking to enforce the OTA. On February 19, 2019, the court entered an agreed order whereby the tenant agreed to cooperate in transitioning operations to a manager of the Company's choosing.comprehensive income. There can be no assurance as to when this transition will be completed, and even then, there can be no assurance it will be completed during that time period, or at all. The court also entered into a final judgment with respect to monetary damages in the amount of $8.8 million, although there can be no assurance that the Company will recover any such amount. The Company has fully reserved for these monetary damages.
The other property which was occupied by the NuVista Tenants, located in Lutz, Florida, transitioned to the SHOP segment as of January 1, 2018. In connection with this transition, the Company replaced the NuVista Tenant as a tenant with a TRS, and has engaged a third party to operate the property. This structure is permitted by RIDEA, under which a REIT may lease qualified healthcare properties on an arm's length basis to a TRS if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor. During the third quarter of 2018, the new operator obtained a Medicare license. Prior to the operator obtaining this Medicare license, the Company was unable to bill Medicare for services performed and accumulated receivables. The Company was able to bill and collect the majoritysale of these receivables duringproperties will close on the terms contained in the purchase and sale agreement, if at all.
Held for Use Impairments — 2020
During the year ended December 31, 2018; however, $0.72020, as a result of the Company’s marketing efforts during the COVID-19 pandemic which concluded with a PSA in August 2020, the Company recorded an additional impairment charge of $16.9 million on its completed development project in Jupiter, Florida and its skilled nursing facility in Wellington, Florida. The impairment charge represents the amount by which the carrying amount of these receivables are not collectible. The Company has reservedthe properties exceeded the Company’s estimate of the net sales price set forth in the PSA described above.
Held for the uncollectible receivables, resulting in bad debt expense duringUse Impairments — 2019
During the year ended December 31, 2018, which is included2019, the Company began to evaluate the properties in Lutz, Florida, Wellington, Florida and its completed development property operating and maintenance expense on the consolidated statement of operations. There can be no assurance as to the collectibilityin Jupiter, Florida for potential sales. As a result of these Medicare receivables.potential changes in plans, the Company concluded these held for use assets were impaired and recognized impairment charges in the aggregate of $33.3 million to reduce their carrying value to estimated fair value. The Company obtained third-party appraisals of all three properties (Lutz, Wellington, and Jupiter) which estimated fair value primarily applying an income approach using stabilized cash flows and capitalization rates of 9.0%, 9.0% and 7.0%, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

Note 4 — Mortgage Notes Payable, Net
The following table reflects the Company'sCompany’s mortgage notes payable as of December 31, 20182021 and 2017:2020:
PortfolioEncumbered PropertiesOutstanding Loan Amount as of December 31,
Effective Interest Rate (1) as of December 31,
Interest Rate
2021202020212020Maturity
(In thousands)(In thousands)
Palm Valley Medical Plaza - Goodyear, AZ1$2,879 $2,998 4.15 %4.15%FixedJun. 2023
Medical Center V - Peoria, AZ12,684 2,786 4.75 %4.75%FixedSep. 2023
Fox Ridge Bryant - Bryant, AR16,977 7,133 3.98 %3.98%FixedMay 2047
Fox Ridge Chenal - Little Rock, AR116,024 16,390 2.95 %3.98%FixedMay 2049
Fox Ridge North Little Rock - North Little Rock, AR19,943 10,170 2.95 %3.98%FixedMay 2049
Capital One MOB Loan41378,500 378,500 3.71 %3.71%Fixed(2)Dec. 2026
Multi-Property CMBS Loan21118,700 118,700 4.60 %4.60%FixedMay 2028
Shiloh - Illinois (3)
113,384 13,684 4.34 %4.34%FixedMarch 2026
BMO CMBS942,750 — 2.89 %—%FixedDec. 2031
Gross mortgage notes payable77591,841 550,361 3.82 %3.94%
Deferred financing costs, net of accumulated amortization (4)
(6,186)(6,191)
Mortgage premiums and discounts, net(1,416)(1,472)
Mortgage notes payable, net$584,239 $542,698 
__________
Portfolio 
Encumbered Properties (1)
 Outstanding Loan Amount as of December 31, Effective Interest Rate as of December 31, Interest Rate  
  2018 2017 2018 2017  Maturity
    (In thousands) (In thousands)        
Countryside Medical Arts - Safety Harbor, FL 1 $5,690
 $5,773
 6.20% 4.98% Variable Apr. 2019
St. Andrews Medical Park - Venice, FL 3 6,289
 6,381
 6.20% 4.98% Variable Apr. 2019
Palm Valley Medical Plaza - Goodyear, AZ 1 3,222
 3,327
 4.15% 4.15% Fixed Jun. 2023
Medical Center V - Peoria, AZ 1 2,977
 3,066
 4.75% 4.75% Fixed Sep. 2023
Courtyard Fountains - Gresham, OR 1 23,905
 24,372
 3.87% 3.87% Fixed Jan. 2020
Fox Ridge Bryant - Bryant, AR 1 7,427
 7,565
 3.98% 3.98% Fixed May 2047
Fox Ridge Chenal - Little Rock, AR 1 16,988
 17,270
 3.98% 3.98% Fixed May 2049
Fox Ridge North Little Rock - North Little Rock, AR 1 10,541
 10,716
 3.98% 3.98% Fixed May 2049
Philip Professional Center - Lawrenceville, GA 2 4,793
 4,895
 4.00% 4.00% Fixed Oct. 2019
Capital One MOB Loan 32 250,000
 250,000
 4.44% 4.44% Fixed
(3) 
Jun. 2022
Bridge Loan 16 20,271
 82,000
 4.87% 4.13% Variable Dec. 2019
Multi-Property CMBS Loan 21 118,700
 
 4.60% —% Fixed May 2028
Gross mortgage notes payable 81 470,803
 415,365
 4.48% 4.31%
(2) 
   
Deferred financing costs, net of accumulated amortization (4)
   (6,591) (7,625)        
Mortgage premiums and discounts, net   (1,373) (1,110)        
Mortgage notes payable, net   $462,839
 $406,630
        
_______________
(1) Does    Calculated on a weighted average basis for all mortgages outstanding as of December 31, 2021 and December 31, 2020. For the LIBOR based loans, LIBOR in effect at the balance sheet date was utilized. For the Capital One MOB Loan, the effective rate does not include real estate assets mortgagedthe effect of amortizing the amount paid to secure advances underterminate the Fannie Mae Master Credit Facilities (as defined below) or eligible unencumbered real estate assets comprising the borrowing base of the Prior Credit Facility (as defined in previous pay-fixed swap. See Note 5 7 Credit Facilities). The equity interests Derivatives and related rightsHedging Activities for additional details.
(2) Variable rate loan, based on 30-day LIBOR, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements. In connection with the amendment to this loan in December 2019 (see additional details below), the Company's wholly owned subsidiaries that directly own or leaseCompany terminated the real estate assets comprising the borrowing base have been pledged for the benefit of the lenders thereunderprevious interest rate swap agreements and entered into new interest rate swap agreements (see Note 57Credit FacilitiesDerivatives and Hedging Activities for additional details).
(2)
Calculated on a weighted average basis for all mortgages outstanding as of December 31, 2018.
(3)
Variable rate loan which is fixed as a result of entering into interest rate swap agreements (see Note 7 — Derivatives and Hedging Activities for additional details).
(3)    The Company assumed this fixed rate mortgage when it acquired a property during the year ended December 31, 2020.
(4)Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

As of December 31, 2018,2021, the Company had pledged $1.0 billion$925.3 million in real estate investments, at cost, as collateral for theseits $591.8 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. 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'sCompany’s mortgage note agreements require the compliance with certain property-level financial covenants including debt service coverage ratios. As of December 31, 2018,2021, the Company was in compliance with these financial covenants.
See Note 5Credit Facilities for additional details - Future Principal Payment and LIBOR Transition for schedule of principal payment requirements of the Company’s Mortgage Notes and Credit Facilities and discussion of the expected cessation of LIBOR publication.
BMO MOB Loan
On November 15, 2021, the Company, entered into a $42.8 million loan agreement (the “BMO MOB Loan”) with Bank of Montreal (“BMO”).
The BMO MOB Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The BMO MOB Loan permits BMO to securitize the entire BMO MOB Loan or any portion thereof.
At the closing of the BMO MOB Loan, the net proceeds after accrued interest and closing costs were used to (i) repay approximately $37.0 million of indebtedness under the Revolving Credit Facility, under which 9 of the properties were
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December 31, 2021
included as part of the borrowing base prior to the BMO MOB Loan, (ii) fund approximately $2.5 million in deposits required to be made at closing into reserve accounts required under the loan agreement. The remaining $2.4 million net proceeds available to the Company are to be used for general corporate purposes, including future acquisitions.
Fox Ridge Refinancing
On January 29, 2021, the Company entered into interest rate reduction modifications (the “Fox Ridge Modifications”) for 2 of its mortgages secured by the Fox Ridge Chenal and Fox Ridge North Little Rock properties which reduced the interest rate on both mortgages. Prior to the Fox Ridge Modifications, the mortgages bore interest at an effective rate of 3.98% per annum which was reduced to an effective rate of 2.95% per annum.
Capital One MOB LoanDerivative Instruments
On June 30, 2017, Capital One, National Association ("Capital One, NA"), as administrative agent and lender, and certain other lenders (collectively,The Company may use derivative financial instruments to hedge all or a portion of the "MOB Lenders"), made a loaninterest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the aggregate amountmarket value of $250.0 million (the “MOB Loan”)assets that result from general trends in debt markets. The principal objective of such agreements is to certain subsidiariesminimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions.
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the OP. In connectionderivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the MOB Loan,recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.  The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any change in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the accompanying consolidated statements of operations and comprehensive loss prior to the adoption of ASU 2017-2 on January 1, 2019. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective, with any ineffective portion of a derivative’s change in fair value immediately recognized in earnings. After the adoption of ASU 2017-2, if the derivative qualifies for hedge accounting, all of the change in value is recorded in other comprehensive income (loss).
Non-controlling Interests
The non-controlling interests represent the portion of the common and preferred equity in the OP entered into a Guaranty of Recourse Obligations (the “Guaranty”) and a Hazardous Materials Indemnity Agreement (the “Environmental Indemnity”)that is not owned by the Company as well as certain investment arrangements with other unaffiliated third parties whereby such investors receive an ownership interest in favor of Capital One, NA and the MOB Lenders. Pursuant to the Guaranty, the OP has guaranteed, among other things, specified losses arising from certain actions of any of the OP'sCompany’s property-owning subsidiaries including fraud, willful misrepresentation, certain intentional acts, misapplicationand are entitled to receive a proportionate share of funds, physical waste, and failure to pay taxes. The Guaranty requires the Company to maintainnet operating cash flow derived from the subsidiaries’ property. Non-controlling interests are presented as a certain minimumseparate component of shareholders’ equity on itsthe consolidated balance sheet. Pursuantsheets and presented as net loss attributable to non-controlling interests on the Environmental Indemnity, the OPconsolidated statements of operations and the Company's subsidiaries that directly owncomprehensive loss. Non-controlling interests are allocated a share of net income or loss based on their share of equity ownership, including any preferential amounts. See Note 13 — Non-Controlling Interests for additional information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

Cash and Cash Equivalents
lease the mortgaged propertiesCash and cash equivalents includes cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less. The Company did not have indemnified the MOB Lenders against losses, costsany cash invested in money market funds at December 31, 2021 or liabilities related to certain environmental matters.
The MOB Loan bears interest at a variable rate equal to LIBOR plus 2.5% and requires the Company to pay interest on a monthly basis with the principal balance due on the maturity date of June 30, 2022. In connection with the closing of the MOB Loan, the OP executed two interest rate swaps on the full amount of the MOB Loan, fixing the interest rate exposure at 4.38%. See Note 7 — Derivatives and Hedging Activities for additional information on the Company's outstanding derivatives.2020.
The Company may pre-paydeposits cash with high quality financial institutions. These deposits are guaranteed by the MOB Loan,Federal Deposit Insurance Company (“FDIC”) up to an insurance limit. At December 31, 2021 and 2020, the Company had deposits of $59.7 million and $72.4 million, of which $46.2 million and $57.0 million, respectively, were in whole or in part, at any time, with payment of a prepayment premium equal to (a) 2.0% of principal outstanding if prepayment is made during the first 12 monthsexcess of the MOB Loan and (b) 1.0%amount insured by the FDIC. Although the Company bears risk to amounts in excess of principal outstanding if prepayment is made duringthose insured by the second 12 months of the MOB Loan. Thereafter, no prepayment premium is applicable.
Bridge Loan
On December 28, 2017, 23 wholly owned subsidiaries (the “Borrowers”) of the OP entered into a loan agreement (the “Loan Agreement”) with Capital One, National Association (“Capital One”), as administrative agent and lender.
The Loan Agreement provides for a $82.0 million (the “Loan”) with a floating interest rate equal to one-month LIBOR plus 2.5% per annum and a maturity date of December 28, 2019. Subject to meeting certain conditions, including a minimum debt yield and debt service coverage ratio, the Borrowers have the right to extend the maturity date for one year.
The Loan may be prepaid atFDIC, it does not anticipate any time in whole or in part, subject to certain conditions and limitations. Upon repayment of all or any part of the principal of the Loan, whetherlosses as a prepayment or as a repayment at maturity, the Borrowers are obligated to pay to an exit fee of: (i) 2.0%result.
Deferred Financing and Leasing Costs, Net
Deferred costs, net, consists of the principal amount with respectdeferred financing costs related to the aggregate of approximately $63.0 million principal amount allocated under the Loan to the seven mortgaged properties that have been identified for refinancing through Fannie Mae or Freddie Mac, and (ii) 1.0% of the principal amount with respect to the aggregate of approximately $19 million principal amount allocated under the Loan to the other sixteen mortgaged properties. No exit fee will be due or payable: (i) with respect to any portion of the Loan refinanced through Fannie Mae’s Multifamily MBS program with Capital One or one of its affiliates acting as agent, originator or seller, (ii) with respect to any portion of the Loan that is not refinanced through Fannie Mae’s Multifamily MBS program due to the program no longer being available under applicable law or because the applicable mortgaged property being refinanced does not qualify for financing through the program, or (iii) with respect to any prepayment in connection with a casualty or a condemnation.
At the closing of the Loan, the net proceeds were primarily used to repay $35.0 million outstanding under the Prior Credit Facility (as defined in Note 5)5 — Credit Facilities) Fannie Mae Master Credit Facilities (as defined in Note 5 — Credit Facilities), and deferred leasing costs. Deferred financing costs relating to the mortgage notes payable (see Note 4 — Mortgage Notes Payable, Net) are reflected net of the related financing on our balance sheet.
Deferred financing costs associated with the Credit Facility and Fannie Mae Master Credit Facilities and mortgage notes payable represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the term of the financing agreement using the effective interest method for the Credit Facility and Fannie Mae Master Credit Facilities and using the effective interest method over the expected term for the mortgage notes payable.
Unamortized deferred financing costs are expensed if the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
Deferred leasing costs, consisting primarily of lease commissions and professional fees incurred in connection with new leases, are deferred and amortized over the term of the lease.
Equity-Based Compensation
The Company has a stock-based incentive award program for its directors, which is accounted for under the guidance of share- based payments. The cost of services received in exchange for these stock awards is measured at the grant date fair value of the award and the expense for such awards is included in general and administrative expenses and is recognized over the service period (i.e., vesting) required or when the requirements for exercise of the award have been met (See Note 11Equity-Based Compensation).
Income Taxes
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), as amended, commencing with the taxable year ended December 31, 2013. If the Company continues to qualify for taxation as a REIT, it generally will not be subject to U.S. federal corporate income tax to the extent it distributes all of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP) to its stockholders. REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders.
If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal, state and income taxes at regular corporate rates beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. The Company distributed to its stockholders 100% of its REIT taxable income for each of the years ended December 31, 2021, 2020 and 2019. Accordingly, no provision for U.S. federal or state income taxes related to 12such REIT taxable income was recorded in the Company’s financial statements. Even if the Company continues to qualify as a REIT, it may be subject to certain state and local taxes on its income and property, and U.S. federal income and excise taxes on its undistributed income.
Certain limitations are imposed on REITs with respect to the ownership and operation of seniors housing properties.  Generally, to qualify as a REIT, the Company cannot directly or indirectly operate seniors housing properties. Instead, such facilities may be either leased to a third-party operator or leased to a TRS and operated by a third party on behalf of the mortgagedTRS.  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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
As of December 31, 2021, the Company, owned 54 seniors housing properties which are leased and operated through its TRS. The TRS is a wholly-owned subsidiary of the OP. A TRS is subject to U.S. federal, state and local income taxes. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies (including modifying intercompany leases with the TRS) and recent financial operations. In the event the Company determines that it would not be able to realize the deferred income tax assets in the future in excess of the net recorded amount, the Company establishes a valuation allowance which offsets the previously recognized income tax asset. 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 December 31, 2021 consisted of deferred rent and net operating loss carryforwards. During the year ended December 31, 2020, the Company modified 25 intercompany leases with the TRS which abated intercompany rent due to the ongoing COVID-19 pandemic.
Because of the Company’s TRS's recent operating history of taxable losses and the on-going impacts of the COVID-19 pandemic on the results of operations of the Company’s SHOP assets, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus the Company has provided a 100% valuation allowance of $4.2 million as of December 31, 2021. If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive income (loss). As of December 31, 2021, the Company’s consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $13.3 million at December 31, 2021 (of which $7.6 million were incurred prior to January 1, 2018). Carryforwards from losses incurred prior to January 1, 2018, if unused, these will begin to expire in 2035. For net operating losses incurred subsequent to December 31, 2017, there is no expiration date. As of December 31, 2021, the Company had a deferred tax asset of $4.2 million with a full valuation allowance. As of December 31, 2020, the Company had a deferred tax asset of $4.6 million with a full valuation allowance.
The following table details the composition of the Company’s tax (expense) benefit for the years ended December 31, 2021, 2020 and 2019, which includes U.S. federal and state income taxes incurred by the Company’s TRS. The Company estimated its income tax (expense) benefit relating to its TRS using a combined federal and state rate of approximately 0.0%, (105.8)% and 26.4%for the years ended December 31, 2021, 2020 and 2019, respectively. These income taxes are reflected in income tax (expense) benefit on the accompanying consolidated statements of operations and comprehensive loss.
Year Ended December 31,
202120202019
(In thousands)CurrentDeferredCurrentDeferredCurrentDeferred
Federal (expense) benefit$— $(319)$726 $— $— $(155)
State (expense) benefit(203)(163)(196)50 (176)(68)
Deferred tax asset valuation allowance— 482 — (4,641)— — 
Total income tax benefit (expense)$(203)$— $530 $(4,591)$(176)$(223)
As of December 31, 2021 and 2020, the Company had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended December 31, 2014 remain open to examination by the major taxing jurisdictions to which the Company is subject.
Per Share Data
Net income (loss) per basic share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares (retroactively adjusted for the Stock Dividends) of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period.
CARES Act Grants
On March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic. Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19. The Company received
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December 31, 2021
$3.6 million in these funds during the year ended December 31, 2020, related to 4 of its SHOPs. During the year ended December 31, 2021, the Company received an additional $5.1 million in funding from CARES Act grants. The Company considered the funds to be a grant contribution from the government and the full amounts received were recognized as a reduction of property operating expenses in the Company’s consolidated statement of operations for the year ended December 31, 2020. There can be no assurance that the program will be extended or any further amounts received.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2019
ASU No. 2016-02 - Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) which provides guidance related to the accounting for leases, as well as the related disclosures. For lessors of real estate, leases are accounted for using an approach substantially the same as previous accounting guidance for operating leases and direct financing leases. For lessees, the new standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. 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.
Upon adoption, lessors were allowed a practical expedient, which the Company has elected, by class of underlying assets to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. Also, upon adoption, companies were allowed a practical expedient package, which the Company has elected, that allowed the Company: (a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain leases; (b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019 (including assessing sale-leaseback transactions); and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019. As a result, all of the Company’s existing leases will continue to be classified as operating leases under the new standard. Further, any existing leases for which the property is the leased to a tenant in a transaction that at inception was a sale-leaseback transaction will continue to be treated (absent a modification) as operating leases. The Company did not have any leases that would be considered financing leases as of January 1, 2019.
The Company assessed the impact of adoption from both a lessor and lessee perspective, which is discussed in more detail below, and adopted the new guidance prospectively on January 1, 2019, using a prospective transition approach under which the Company elected to apply the guidance effective January 1, 2019 and not adjust prior comparative reporting periods (except for the Company’s presentation of lease revenue discussed below).
Lessor Accounting
As discussed above, the Company was not required to re-assess the classification of its leases, which are considered operating leases under ASU 2016-02. The following is a summary of the most significant impacts to the Company of the new accounting guidance, as lessor:
Since the Company elected the practical expedient noted above to not separate non-lease component revenue from the associated lease component, the Company has aggregated revenue from its lease components and non-lease components (tenant operating expense reimbursements) into one line. The prior periods have been conformed to this new presentation.
Changes in the Company’s assessment of receivables that result in bad debt expense is now required to be recorded as an adjustment to revenue, rather than a charge to bad debt expense. This new classification applies for the first quarter of 2019 and reclassification of prior period amounts is not permitted. At transition on January 1, 2019, after assessing its reserve balances at December 31, 2018 under the new guidance, the Company wrote off accounts receivable of $0.1 million and straight-line rents receivable of $0.1 million as an adjustment to the opening balance of accumulated deficit, and accordingly rent for these tenants is currently recorded on a cash basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. Under prior accounting guidance, the recognition would have been deferred.
Lessee Accounting
    The Company was a lessee under leases for 17 properties including capital leases of land and building as of January 1, 2019 and because the Company has elected the practical expedients described above, it determined that 11 of these leases would continue to be classified as operating leases under the new standard. The following is a summary of the most significant impacts to the Company of the new accounting guidance, as lessee:
Upon adoption of the new standard, the Company recorded ROU assets and lease liabilities equal to $10.2 million for the present value of the lease payments related to its ground leases. These amounts are included in operating lease right-of-use assets and operating lease liabilities on the Company’s consolidated balance sheet as of December 31, 2019.
The Company also reclassified $0.5 million related to amounts previously reported as a straight-line rent liability and $4.8 million, net related to amounts previously reported as above and below market ground lease intangibles to the ROU assets. For additional information and disclosures related to these operating leases, see Note 16 — Commitments and Contingencies.
Other Accounting Pronouncements
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, to better align cash flow and fair value hedge accounting with the corresponding risk management activities. Among other things, the amendments expand which hedging strategies are eligible for hedge accounting, align the timing of recognition of hedge results with the earnings effect of the hedged item and allow companies to include the change in fair value of the derivative in the same income statement line item as the earnings effect of the hedged item. Additionally, for cash flow hedges that are highly effective, the update allows for all changes in fair value of the derivative to be recorded in other comprehensive income. The Company has adopted ASU 2017-12 on January 1, 2019, as required under the guidance, using a modified retrospective transition method and the adoption did not have a material impact on its consolidated financial statements.
Adopted as of January 1, 2020:
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the amended standard requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
Adopted as of January 1, 2021:
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The standard allows for either modified or full retrospective transition methods. The Company adopted the new guidance on January 1, 2021 and determined it did not have a material impact on its consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Not yet Adopted as of December 31, 2021
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that our 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 our derivatives, which will be consistent with our 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.
Note 3 — Real Estate Investments, Net
Property Acquisitions and Development Costs
The Company invests in healthcare-related facilities, primarily MOBs and seniors housing properties which expand and diversify its portfolio and revenue base. The Company owned 202 properties as of December 31, 2021. During the year ended December 31, 2021, the Company, through wholly-owned subsidiaries of the OP, completed its acquisitions of 5 multi-tenant MOBs and 12 single tenant MOBs for an aggregate contract purchase price of $160.2 million. All acquisitions in 2021, 2020 and 2019 were considered asset acquisitions for accounting purposes.
The following table presents the allocation of the assets acquired and liabilities assumed, as well as development costs during the years ended December 31, 2021, 2020 and 2019:
Year Ended December 31,
(In thousands)202120202019
Real estate investments, at cost:
Land$12,848 $7,665 $6,356 
Buildings, fixtures and improvements121,376 90,699 68,903 
Development costs— — 5,721 
Total tangible assets134,224 98,364 80,980 
Acquired intangibles:
In-place leases and other intangible assets (1)
28,499 10,369 11,777 
Market lease and other intangible assets (1)
794 496 724 
Market lease liabilities (1)
(1,639)(362)(1,483)
Total intangible assets and liabilities27,654 10,503 11,018 
Mortgage notes payable, net— (13,883)— 
Issuance of Series A Preferred OP Units(2,578)— — 
Cash paid for real estate investments, including acquisitions$159,300 $94,984 $91,998 
Number of properties purchased17 
_______________
(1) Weighted-average remaining amortization periods for in-place leases, above-market leases and below market leases acquired were 11.2, 10.2 years and 8.5 years, respectively, as of December 31, 2021. Weighted-average remaining amortization periods for in-place leases and above-market leases acquired were 1.7 years, 7.7 years and 7.4 years, respectively, as of December 31, 2020.
Significant Tenants
As of December 31, 2021, 2020 and 2019, 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 on a straight-line basis for the portfolio. 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 December 31, 2021, 2020 and 2019:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
December 31,
State202120202019
Florida (1)
17.7%20.6%25.2%
Michigan (2)
**10.9%
Pennsylvania*10.4*
_______________
*    State’s annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.
(1)In May 2021, the Company’s skilled nursing facility in Wellington, Florida, and the Company’s development property in Jupiter, Florida were sold. In December 2020, the Company’s skilled nursing facility in Lutz, Florida was sold.
(2)During the year ended December 31, 2020, the Company sold 11 SHOPs located in Michigan, 7 of which were transferred to the buyer during the fourth quarter of 2020 and 4 of which were transferred to the buyer during the first quarter of 2021.
Intangible Assets and Liabilities
Acquired intangible assets and liabilities consisted of the following as of the periods presented:
December 31, 2021December 31, 2020
(In thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Intangible assets:
In-place leases$264,741 $183,073 $81,668 $241,097 $172,648 $68,449 
Market lease assets14,164 11,212 2,952 14,116 10,845 3,271 
Other intangible assets9,467 1,006 8,461 20,802 1,171 19,631 
Total acquired intangible assets$288,372 $195,291 $93,081 $276,015 $184,664 $91,351 
Intangible liabilities:
Market lease liabilities$23,472 $12,529 $10,943 $22,109 $11,306 $10,803 
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 of above-and below-market ground leases, for the periods presented:
Year Ended December 31,
(In thousands)202120202019
Amortization of in-place leases and other intangible assets (1)
$15,071 $15,121 $15,559 
Accretion of above-and below-market leases, net (2)
$(422)$(257)$(247)
Amortization of above-and below-market ground leases, net (3)
$214 $178 $86 
________
(1)    Reflected within depreciation and amortization expense.
(2)    Reflected within revenue from tenants.
(3)    Reflected within property operating and maintenance expense. Upon adoption of ASC 842 effective January 1, 2019, intangible balances related to ground leases were reclassified to be included as part of the Operating lease right-of-use assets presented on the consolidated balance sheet with no change to placement of the amortization expense of such balances. Refer to Note 2Summary of Significant Accounting Policies for additional details.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
The following table provides the projected amortization and adjustments to revenue from tenants for the next five years:
(In thousands)20222023202420252026
In-place lease assets$14,324 $12,227 $10,691 $9,103 $8,052 
Other intangible assets10 10 10 10 10 
Total to be added to amortization expense$14,334 $12,237 $10,701 $9,113 $8,062 
Above-market lease assets$(814)$(468)$(389)$(336)$(302)
Below-market lease liabilities1,625 1,512 1,294 1,103 941 
Total to be added to revenue from tenants$811 $1,044 $905 $767 $639 
Dispositions
The following table summarizes the properties sold during the years ended December 31, 2021, 2020 and 2019:
(In thousands)Disposition DateContract Sale PriceGain (Loss)
on Sale, of Real Estate Investments
2021 Dispositions:
Hampton River Portfolio (2 properties)December 21, 2021$37,800 $1,323 
NuVista Jupiter (1)
May 14, 202165,000 2,383 
Wellington Green (2)
May 14, 202130,750 114 
Michigan SHOPs (4 properties) (3)
January 15, 2021— (172)
Totals$133,550 $3,648 
2020 Dispositions:
Lutz (4)
December 15, 2020$20,000 $3,832 
Michigan SHOPs (7 properties) (3)
November 2, 202011,750 (908)
Cape GirardeauMarch 19, 20208,600 2,306 
Totals$40,350 $5,230 
2019 Dispositions:
New York Six MOBs (1 property)August 22, 2019$13,600 $2,883 
Ocean Park (5)
August 1, 20193,600 (152)
New York Six MOBs (5 properties)February 6, 201945,000 6,059 
Totals$62,200 $8,790 
______
(1)Impairment charges of $14.6 million and $19.8 million were recorded during the years ended December 31, 2020 and 2019, respectively.
(2)Impairment charges of $0.9 million, $2.3 million and $9.9 million were recorded during the years ended December 31, 2021, 2020 and 2019, respectively.
(3)Impairment charges of $19.6 million and $22.6 million were recorded during the years ended December 31, 2020 and 2019, respectively. The contract sales price for all 11 properties was received in November of 2020. Loss on sale amounts relate to the properties transferred at the respective dates.
(4)Impairment charges of $3.6 million were recorded during the year ended December 31, 2019.
(5)Impairment charges of $19,000 were recorded during the year ended December 31, 2019.

The sales of the properties noted above did not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the results of operations of these properties remain classified within continuing operations for all periods presented until the respective sale dates.
2021 Dispositions
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
During the fourth quarter of 2021, the Company sold 2 MOBs in Virginia for an aggregate contract purchase price of $37.8 million, which resulted in gains on sale of $1.3 million. These gains are included in the poolconsolidated statement of eligible unencumberedoperations for the year ended December 31, 2021. No impairments were previously recorded on these properties.
During the second quarter of 2021, the Company sold its skilled nursing facility in Wellington, Florida and its development property in Jupiter, Florida, which resulted in gains on sale of $0.1 million and $2.4 million, respectively. These gains are included in the consolidated statement of operations for the year ended December 31, 2021. The Company had previously recorded impairments on these properties (see dispositions table above).
During the first quarter of 2021, the Company transferred 4 SHOP properties located in Michigan to the buyer at a second closing, and $0.8 million held in escrow was released to the buyer. This amount had been placed in escrow at the first closing of the transaction during the year ended December 31, 2020 when the purchase price for all 11 properties sold in the transaction was received from the buyer. The Company recorded a loss on sale of $0.2 million related to this transaction in the year ended December 31, 2021. The Company had previously recorded impairments on these properties (see dispositions table above).
2020 Dispositions
On December 16 2020, the Company completed the sale of its skilled nursing facility in Lutz, Florida for a contract purchase price of $20.0 million, resulting in a gain on sale of real estate assets comprisinginvestments of $3.8 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. At closing, $17.6 million of net proceeds were used to repay amounts outstanding under the Revolving Credit Facility. The Company had previously recorded impairments on these properties (see dispositions table above).
On November 2, 2020 the initial closing under the PSA pursuant to which the Company had agreed to sell 11 Michigan SHOPs occurred. The contract purchase price for the 11 Michigan SHOPs was $11.8 million, resulting in a loss on sale of $0.9 million on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. At the initial closing, the Company received payment of the full $11.8 million sales price for all 11 of the Michigan SHOPs, less $0.8 million held in escrow, and transferred 7 of the properties to the buyer. The remaining 4 properties were transferred to the buyer a second closing separate closings in the first quarter of 2021 when the $0.8 million held in escrow was released to the buyer. Of the properties transferred at the initial closing, 4 had been part of the borrowing base under the Revolver, withCredit Facility, 1 was part of the balance available for general corporate purposes.
On March 2, 2018,collateral pool under the Company used $64.2 million of advances under a Fannie Mae Master Credit Facility with Capital One National Association ("Capital One") to prepay a portionand 2 were unencumbered. Of the properties transferred at the second closing, 3 were part of the Bridge Loan (see Note 5borrowing base under the Credit Facilities for more information). Concurrent with this prepayment,Facility until the seven mortgaged properties that were identified for refinancing atinitial closing and 1 was unencumbered. At the timeinitial closing, $4.2 million of the Bridge Loannet proceeds was entered into, were addedused to the collateral pool securingrepay amounts outstanding under the Fannie Mae Master Credit Facility with Capital One.One, $4.4 million of the net proceeds were used to repay amounts outstanding under the Revolving Credit Facility, with the remainder used for closing costs. For the avoidance of any doubt, all impairments related to the disposal of the 11 Michigan SHOP assets were recognized in the year ended December 31, 2020. The Company had previously recorded impairments on these properties (see dispositions table above).
Multi-Property CMBS LoanOn March 19, 2020 the Companydisposed of 1 MOB property for a contract purchase price of $8.6 million, resulting in a gain on sale of $2.3 million.
2019 Dispositions
On February 6, 2019, the Company sold 5 of the MOB properties within the State of New York (the “New York Six MOBs”) for a contract sales price of $45.0 million, resulting in a gain on sale of real estate investments of $6.1 million which is included on the Consolidated Statement of Operations for the year ended December 31, 2019. The Company had reconsidered the intended holding period for all six of the New York Six MOBs due to various market conditions and the potential to reinvest in properties generating a higher yield. On April 10,July 26, 2018, the Company had originally entered into a PSA for the sale of the New York Six MOBs, for an aggregate contract sale price of approximately $68.0 million and subsequently, on September 25, 2018, the Company further amended the PSA to decrease the aggregate contract sale price to $58.8 million. The 1 remaining New York Six MOB was sold for a contract sales price of $13.6 million on August 22, 2019, resulting in a gain on sale of real estate investments of $2.9 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2019. No impairments were previously recorded on these properties.
During the first quarter of 2019, the Company reconsidered the intended holding period for 1 of its SHOPs located in Brookings, OR (“Ocean Park”) due to various market conditions and the potential to reinvest in properties generating a higher yield. On March 21, 2019, the Company entered into a $118.7PSA for the sale of Ocean Park, for an aggregate contract sale price of approximately $3.6 million. On April 1, 2019, the Company amended the purchase and sale agreement to decrease the aggregate contract sale price to $3.5 million. In connection with this amendment, the Company recognized an impairment
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
charge of approximately $19,000 on Ocean Park during the second quarter of 2019, which is included on the consolidated statement of operations and comprehensive loss. On August 1, 2019, the Company closed its disposition of Ocean Park resulting in a loss on sale of real estate investments of $0.2 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2019.
Impairments
The following is a summary of impairments taken during the years ended December 31, 2021, 2020 and 2019:
Year Ended December 31,
(In thousands)202120202019
Assets held for sale$— $19,570 $22,634 
Assets held for use40,951 16,876 33,335 
Total$40,951 $36,446 $55,969 
For additional information on impairments related to assets held for sale and assets held for use, see the “Assets Held for Sale and Related Impairments” and “Assets Held for Use and Related Impairments” sections below.
Assets Held For Sale and Related Impairments
When assets are identified by management as held for sale, the Company reflects them separately on its balance sheet and stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. 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.
Balance Sheet Details - Assets Held for Sale
There were no properties classified as held for sale as of December 31, 2021. The following table details the major classes of assets associated with the properties that have been classified as held for sale as of December 31, 2020:
December 31,
(In thousands)
2020 (1)
   Land$145 
   Buildings, fixtures and improvements(55)
Assets held for sale$90 
_____
(1) Assets held for sale as of December 31, 2020 relates to 4 Michigan SHOPs.
In January 2020, the Company entered into a PSA for the sale of a portfolio of 14 SHOPs located in Michigan (the “Michigan SHOPs”) as a single portfolio for $71.8 million. Accordingly, all 14 of these SHOPs were classified as held for sale as of December 31, 2019.
During April, 2020, the PSA was amended so that only 11 of the Michigan SHOPs were to be sold pursuant to this PSA for $11.8 million. As a result of the amended PSA from April 2020, the 3 remaining Michigan SHOPs at that time no longer qualified as held for sale and were reclassified to assets held for use at their original carrying values as of March 31, 2020 and an additional $0.7 million in catch-up depreciation was recorded in the third quarter of 2020. In addition, the original deposit made by the buyer was reduced from $1.0 million to $0.3 million.
In October 2020, the PSA was amended to provide that the full $11.8 million sales price for all 11 Michigan SHOPs would be paid at an initial closing which occurred in November 2020, when 7 of the properties were transferred to the buyer with the remaining 4 properties scheduled to be transferred to the buyer at a second closing, which occurred in the first quarter of 2021. This amendment to the PSA also provided that $0.8 million of the sales price would be held in escrow and returned to the buyer at the second closing; provided that, if the PSA is terminated before the second closing closings due to a material default by the buyer, the Company will receive the escrowed amount. This amount was returned to the buyer at final closing.As a result, it represented an effective reduction in the sale price and the Company reflected an additional impairment loss to reflect this. The Company determined that the 4 Michigan SHOPs should be classified as held for sale as of December 31, 2020. As
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
of December 31, 2020, of the 4 Michigan SHOPs that were classified as held for sale, 3 Michigan SHOPs were part of the borrowing base of the Credit Facility and 1 was unencumbered.
Held for Sale Impairments - 2020
As a result of the amendment to the PSA in April 2020, in which the number of properties under sale was reduced from 14 to 11, and in which the total consideration was reduced from $71.8 million to $11.8 million, the Company recorded an additional impairment charge of $19.6 million for the year ended December 31, 2020 related to the Michigan SHOP assets held for sale.
Held for Sale Impairments - 2019
During the year ended December 31, 2019 the Company recorded an impairment charge of $22.6 million related to assets held for sale, representing the amount by which the carrying amount of the Michigan SHOPs exceeded the Company’s estimate, at that time, of the net sales price of the Michigan SHOPs.
Assets Held for Use and Related Impairments
When circumstances indicate the carrying value of a property classified as held for use may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single tenant properties or significant vacancy in the Company’s multi-tenant properties and (ii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. If a triggering event is identified, the Company considers the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of the properties based on the expected cash flows on an undiscounted basis over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. 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.
The Company owns held for use properties for which the Company may from time to time reconsider the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach. 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.
As of December 31, 2019, the Company was actively considering plans to sell 3 assets in Florida including the recently completed development project in Jupiter, Florida and the Company’s 2 skilled nursing facilities in Lutz, Florida and Wellington, Florida. The Company began marketing the properties in 2020 and, during the three months ended June 30, 2020, the Company received multiple bids and accepted a non-binding letter of intent from a prospective buyer to purchase the completed development project in Jupiter, Florida for $65.0 million and the Company’s 2 skilled nursing facilities in Lutz, Florida and Wellington, Florida for $20.0 million and $33.0 million, respectively. During August 2020, the Company entered into PSAs with the buyer on the terms generally set forth in the letter of intent. The property in Lutz, Florida was sold in December 2020 (see “Dispositions” above) and the property in Jupiter, Florida and the property in Wellington, Florida were sold in May 2021. The Company used the proceeds of the sales to repay amounts outstanding under its Revolving Credit Facility.
Held for Use Impairments — 2021
On April 30, 2021, the Company amended the PSA which reduced the sales price of the skilled nursing facility in Wellington, Florida to $30.7 million. In connection with this amendment to the PSA, the Company determined that the fair value had declined as of March 31, 2021 and the Company recognized an impairment charge of $0.9 million during the first quarter of 2021, which is included in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021.
During the second quarter of 2021, the Company began to actively consider plans to sell a property located in Sun City, Arizona. As a result of changes to the Company’s expected holding period, the Company determined that projected cash flows,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
on an undiscounted basis over its intended holding period, did not recover the carrying value of the property. During July 2021, the Company entered into a non-binding letter of intent to sell the property and as a result, the Company determined that the fair market value of the property had declined and recorded an impairment charge of $6.1 million during the second quarter of 2021, which is included in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021.
The LaSalle Tenant
On July 1, 2020, the Company transitioned 4 triple-net leased properties in Texas (collectively, the “LaSalle Properties”) from the former triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties are now leased to the Company’s TRS and operated and managed on the Company’s behalf by a third-party operator.
During 2019, The LaSalle Group Inc., a guarantor of certain of the lease obligations of prior tenants (collectively, the “LaSalle Tenant”), filed for voluntarily relief under chapter 11 of the United States Bankruptcy Code. The Company has filed proofs of claims related to amounts previously awarded to it from the bankruptcy proceeding, however, the Company has no amounts due from the LaSalle Tenant in its consolidated balance sheets as of December 31, 2021 and December 2020 as the Company does not believe recovery is likely against the LaSalle Tenant.
During the third quarter of 2021, the Company began to actively market the LaSalle Properties for sale, and a non-binding letter of intent was signed in the fourth quarter for an aggregate contract sales price of $12.4 million. As a result of changes to the Company’s expected holding period, the Company determined that projected cash flows, on an undiscounted basis over its intended holding period, did not recover the carrying value of the properties and concluded that the properties were impaired. The fair value measurement was determined by estimated discounted cash flows using three significant unobservable inputs, including the cash flow discount rate, terminal capitalization rate, and the estimated stabilized occupancy range. The Company recorded an impairment charge of $34.0 million during the year ended December 31, 2021 which is included in the consolidated statement of operations and comprehensive income. There can be no assurance that the sale of these properties will close on the terms contained in the purchase and sale agreement, if at all.
Held for Use Impairments — 2020
During the year ended December 31, 2020, as a result of the Company’s marketing efforts during the COVID-19 pandemic which concluded with a PSA in August 2020, the Company recorded an additional impairment charge of $16.9 million on its completed development project in Jupiter, Florida and its skilled nursing facility in Wellington, Florida. The impairment charge represents the amount by which the carrying amount of the properties exceeded the Company’s estimate of the net sales price set forth in the PSA described above.
Held for Use Impairments — 2019
During the year ended December 31, 2019, the Company began to evaluate the properties in Lutz, Florida, Wellington, Florida and its completed development property in Jupiter, Florida for potential sales. As a result of these potential changes in plans, the Company concluded these held for use assets were impaired and recognized impairment charges in the aggregate of $33.3 million to reduce their carrying value to estimated fair value. The Company obtained third-party appraisals of all three properties (Lutz, Wellington, and Jupiter) which estimated fair value primarily applying an income approach using stabilized cash flows and capitalization rates of 9.0%, 9.0% and 7.0%, respectively.
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December 31, 2021
Note 4 — Mortgage Notes Payable, Net
The following table reflects the Company’s mortgage notes payable as of December 31, 2021 and 2020:
PortfolioEncumbered PropertiesOutstanding Loan Amount as of December 31,
Effective Interest Rate (1) as of December 31,
Interest Rate
2021202020212020Maturity
(In thousands)(In thousands)
Palm Valley Medical Plaza - Goodyear, AZ1$2,879 $2,998 4.15 %4.15%FixedJun. 2023
Medical Center V - Peoria, AZ12,684 2,786 4.75 %4.75%FixedSep. 2023
Fox Ridge Bryant - Bryant, AR16,977 7,133 3.98 %3.98%FixedMay 2047
Fox Ridge Chenal - Little Rock, AR116,024 16,390 2.95 %3.98%FixedMay 2049
Fox Ridge North Little Rock - North Little Rock, AR19,943 10,170 2.95 %3.98%FixedMay 2049
Capital One MOB Loan41378,500 378,500 3.71 %3.71%Fixed(2)Dec. 2026
Multi-Property CMBS Loan21118,700 118,700 4.60 %4.60%FixedMay 2028
Shiloh - Illinois (3)
113,384 13,684 4.34 %4.34%FixedMarch 2026
BMO CMBS942,750 — 2.89 %—%FixedDec. 2031
Gross mortgage notes payable77591,841 550,361 3.82 %3.94%
Deferred financing costs, net of accumulated amortization (4)
(6,186)(6,191)
Mortgage premiums and discounts, net(1,416)(1,472)
Mortgage notes payable, net$584,239 $542,698 
__________
(1)    Calculated on a weighted average basis for all mortgages outstanding as of December 31, 2021 and December 31, 2020. For the LIBOR based loans, LIBOR in effect at the balance sheet date was utilized. For the Capital One MOB Loan, the effective rate does not include the effect of amortizing the amount paid to terminate the previous pay-fixed swap. See Note 7 — Derivatives and Hedging Activities for additional details.
(2) Variable rate loan, based on 30-day LIBOR, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements. In connection with the amendment to this loan in December 2019 (see additional details below), the Company terminated the previous interest rate swap agreements and entered into new interest rate swap agreements (see Note 7Derivatives and Hedging Activities for additional details).
(3)    The Company assumed this fixed rate mortgage when it acquired a property during the year ended December 31, 2020.
(4)    Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

As of December 31, 2021, the Company had pledged $925.3 million in real estate investments, at cost, as collateral for its $591.8 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. 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. As of December 31, 2021, the Company was in compliance with these financial covenants.
See Note 5Credit Facilities for additional details - Future Principal Payment and LIBOR Transition for schedule of principal payment requirements of the Company’s Mortgage Notes and Credit Facilities and discussion of the expected cessation of LIBOR publication.
BMO MOB Loan
On November 15, 2021, the Company, entered into a $42.8 million loan agreement (the “Multi-Property CMBS“BMO MOB Loan”) with KeyBank National Association ("KeyBank"Bank of Montreal (“BMO”).
The Multi-Property CMBSBMO MOB Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The Multi-Property CMBSBMO MOB Loan permits KeyBankBMO to securitize the entire Multi-Property CMBSBMO MOB Loan or any portion thereof.
At the closing of the Multi-Property CMBSBMO MOB Loan, the net proceeds after accrued interest and closing costs were used to (i) repay approximately $80.0$37.0 million of indebtedness under the Revolving Credit Facility, under which 149 of the properties were
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December 31, 2021
included as part of the borrowing base prior to the Multi-Property CMBSBMO MOB Loan, (ii) fund approximately $3.8$2.5 million in deposits required to be made at closing into reserve accounts required under the loan agreement. The remaining $33.0$2.4 million net proceeds available to the Company are to be used for general corporate purposes, including future acquisitions.

Fox Ridge Refinancing
HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Future Principal Payments
The following table summarizes the scheduled aggregate principal payments on mortgage notes payable for the five years subsequent to December 31, 2018:
(In thousands) 
Future Principal
Payments
2019 $38,348
2020 24,279
2021 892
2022 250,929
2023 6,056
Thereafter 150,299
Total $470,803
Note 5 — Credit Facilities
The Company had the following credit facilities outstanding as of December 31, 2018 and 2017:
    Outstanding Facility Amount as of Effective Interest Rate    
Credit Facility 
Encumbered Properties(1)
 December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 Interest Rate Maturity
    (In thousands) (In thousands)        
Prior Credit Facility 69
(2) 
$243,300
 $239,700
 4.62% 3.33% Variable Mar. 2019
Fannie Mae Master Credit Facilities:              
Capital One Facility 12
(3) 
216,614
 152,461
 4.83% 3.88% Variable
(6) 
Nov. 2026
KeyBank Facility 10
(4) 
142,708
 142,708
 4.88% 3.89% Variable
(6) 
Nov. 2026
Total Fannie Mae Master Credit Facilities   359,322
 295,169
        
Total Credit Facilities 91
 $602,622
 $534,869
 4.76%
(5) 
3.63%
(5) 
   
(1)
Encumbered as of December 31, 2018.
(2)
The equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Prior Credit Facility have been pledged for the benefit of the lenders thereunder.
(3)
Secured by first-priority mortgages on 12 of the Company’s seniors housing properties located in Florida, Georgia, Iowa and Michigan as of December 31, 2018.
(4)
Secured by first-priority mortgages on 10 of the Company’s seniors housing properties located in Michigan, Missouri, Kansas, California, Florida, Georgia and Iowa as of December 31, 2018.
(5)
Calculated on a weighted average basis for all amounts outstanding as of December 31, 2018 and 2017.
(6)
Variable rate loan which is capped as a result of entering into interest rate cap agreements (see Note 7 — Derivatives and Hedging Activities for additional details).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Credit Facility
On March 21, 2014,January 29, 2021, the Company entered into a senior secured revolving credit facility (as amended from time to time, the “Prior Credit Facility”). On March 13, 2019, the Company entered into a new senior secured credit facilityinterest rate reduction modifications (the ‘‘New Credit Facility’’) by amending and restating the Prior Credit Facility prior to its maturity on March 21, 2019. See Note 18 — Subsequent Events for further details.
The Prior Credit Facility was secured by a pledged pool of the equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease eligible unencumbered real estate assets comprising the borrowing base thereunder.
The Prior Credit Facility allowed for committed borrowings of up to $565.0 million. The Prior Credit Facility also contained a sub-facility for letters of credit of up to $25.0 million and an "accordion" feature to allow the Company, under certain circumstances and at the discretion of the participating lenders, to increase the aggregate borrowings under the Revolving Credit Facility to a maximum of $750.0 million.
The Company had the option to have the Prior Credit Facility priced at either: (a) LIBOR, plus an applicable margin that ranges, depending on the Company's leverage, from 1.60% to 2.20%; or (b) the Base Rate (as defined in the Prior Credit Facility), plus an applicable margin that ranges, depending on the Company's leverage, from 0.35% to 0.95%. The Base Rate is defined in the Prior Credit Facility as the greater of (i) the fluctuating annual rate of interest announced from time to time by the lender as its “prime rate,” (ii) 0.5% above the federal funds effective rate or (iii) the applicable one-month LIBOR plus 1.0%.
At the closing of the Multi-Property CMBS Loan (see Note 4 — Mortgage Notes Payable, Net), the net proceeds after accrued interest and closing costs were used primarily to repay approximately $80.0 million of indebtedness under the Prior Credit Facility, under which 14 of the properties were included as part of the borrowing base prior to the Multi-Property CMBS Loan.
During May, September and November of 2018, the Company added 10, five and 13 properties to the borrowing base of the Prior Credit Facility, respectively.
The Company's unused borrowing capacity was $17.8 million, based on assets assigned to the Prior Credit Facility as of December 31, 2018. Availability of borrowings is based on a pool of eligible unencumbered real estate assets.
The Prior Credit Facility required the Company to meet certain financial covenants. As of December 31, 2018, the Company was in compliance with the financial covenants under the Prior Credit Facility.
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 (the “KeyBank Credit Agreement”) relating to a secured credit facility (the "KeyBank Facility") with KeyBank and a master credit facility agreement with Capital One (the “Capital One Credit Agreement” and, together with the KeyBank Credit Agreement, the “Fannie Mae Master Credit Agreements”“Fox Ridge Modifications”) for a secured credit facility (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") with Capital One Multifamily Finance, LLC (an affiliate2 of Capital One). Advances made under the Fannie Mae Master Credit Agreements are assigned by Capital One and KeyBank to Fannie Mae at closing for inclusion in Fannie Mae’s Multifamily MBS program.
Effective October 31, 2016, in conjunction with the execution of the Fannie Mae Master Credit Facilities, the OP entered into two interest rate cap agreements with an unrelated third party, which caps interest paid on amounts outstanding under the Fannie Mae Master Credit Facilities at a maximum of 3.5% (see Note 7 — Derivatives and Hedging Activities for additional disclosure regarding the Company's derivatives).
The Company may request future advances under the Fannie Mae Master Credit Facilities by borrowing against the value of the initial mortgaged properties, as described below, or 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. During the year ended December 31, 2017, the Company increased its advances under the Capital One Facility and the KeyBank Facility to $152.5 million and $142.7 million, respectively. On March 2, 2018, the Company increased its advances under the Capital One Facility by $64.2 million. The advance wasmortgages secured by the addition of seven mortgagedFox Ridge Chenal and Fox Ridge North Little Rock properties subjectwhich reduced the interest rate on both mortgages. Prior to the Capital One Facility. AllFox Ridge Modifications, the mortgages bore interest at an effective rate of the $61.7 million3.98% per annum which was reduced to an effective rate of net proceeds, after closing costs, of the advance was used by the Company to prepay a portion of the Bridge Loan (see Note 4 —Mortgage Notes Payable, Net).2.95% per annum.
Note 6 — Fair Value of Financial Instruments
GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 — Unobservable inputs that reflect the entity's own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.
Derivative Instruments
The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions.
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.  The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any change in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the accompanying consolidated statements of operations and comprehensive loss prior to the adoption of ASU 2017-2 on January 1, 2019. If the derivative is designated and qualifies for hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective, with any ineffective portion of a derivative’s change in fair value immediately recognized in earnings. After the adoption of ASU 2017-2, if the derivative qualifies for hedge accounting, all of the change in value is recorded in other comprehensive income (loss).
Non-controlling Interests
The non-controlling interests represent the portion of the common and preferred equity in the OP that is not owned by the Company as well as certain investment arrangements with other unaffiliated third parties whereby such investors receive an ownership interest in certain of the Company’s property-owning subsidiaries and are entitled to receive a proportionate share of the net operating cash flow derived from the subsidiaries’ property. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and presented as net loss attributable to non-controlling interests on the consolidated statements of operations and comprehensive loss. Non-controlling interests are allocated a share of net income or loss based on their share of equity ownership, including any preferential amounts. See Note 13 — Non-Controlling Interests for additional information.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Cash and Cash Equivalents
Cash and cash equivalents includes cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less. The Company did not have any cash invested in money market funds at December 31, 2021 or 2020.
The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit. At December 31, 2021 and 2020, the Company had deposits of $59.7 million and $72.4 million, of which $46.2 million and $57.0 million, respectively, were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result.
Deferred Financing and Leasing Costs, Net
Deferred costs, net, consists of deferred financing costs related to the Credit Facility (as defined in Note 5 — Credit Facilities) Fannie Mae Master Credit Facilities (as defined in Note 5 — Credit Facilities), and deferred leasing costs. Deferred financing costs relating to the mortgage notes payable (see Note 4 — Mortgage Notes Payable, Net) are reflected net of the related financing on our balance sheet.
Deferred financing costs associated with the Credit Facility and Fannie Mae Master Credit Facilities and mortgage notes payable represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the term of the financing agreement using the effective interest method for the Credit Facility and Fannie Mae Master Credit Facilities and using the effective interest method over the expected term for the mortgage notes payable.
Unamortized deferred financing costs are expensed if the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
Deferred leasing costs, consisting primarily of lease commissions and professional fees incurred in connection with new leases, are deferred and amortized over the term of the lease.
Equity-Based Compensation
The Company has a stock-based incentive award program for its directors, which is accounted for under the guidance of share- based payments. The cost of services received in exchange for these stock awards is measured at the grant date fair value of the award and the expense for such awards is included in general and administrative expenses and is recognized over the service period (i.e., vesting) required or when the requirements for exercise of the award have been met (See Note 11Equity-Based Compensation).
Income Taxes
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), as amended, commencing with the taxable year ended December 31, 2013. If the Company continues to qualify for taxation as a REIT, it generally will not be subject to U.S. federal corporate income tax to the extent it distributes all of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP) to its stockholders. REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders.
If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal, state and income taxes at regular corporate rates beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. The Company distributed to its stockholders 100% of its REIT taxable income for each of the years ended December 31, 2021, 2020 and 2019. Accordingly, no provision for U.S. federal or state income taxes related to such REIT taxable income was recorded in the Company’s financial statements. Even if the Company continues to qualify as a REIT, it may be subject to certain state and local taxes on its income and property, and U.S. federal income and excise taxes on its undistributed income.
Certain limitations are imposed on REITs with respect to the ownership and operation of seniors housing properties.  Generally, to qualify as a REIT, the Company cannot directly or indirectly operate seniors housing properties. Instead, such facilities may be either leased to a third-party operator or leased to a TRS and operated by a third party on behalf of the TRS.  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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
As of December 31, 2021, the Company, owned 54 seniors housing properties which are leased and operated through its TRS. The TRS is a wholly-owned subsidiary of the OP. A TRS is subject to U.S. federal, state and local income taxes. The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies (including modifying intercompany leases with the TRS) and recent financial operations. In the event the Company determines that it would not be able to realize the deferred income tax assets in the future in excess of the net recorded amount, the Company establishes a valuation allowance which offsets the previously recognized income tax asset. 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 December 31, 2021 consisted of deferred rent and net operating loss carryforwards. During the year ended December 31, 2020, the Company modified 25 intercompany leases with the TRS which abated intercompany rent due to the ongoing COVID-19 pandemic.
Because of the Company’s TRS's recent operating history of taxable losses and the on-going impacts of the COVID-19 pandemic on the results of operations of the Company’s SHOP assets, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus the Company has provided a 100% valuation allowance of $4.2 million as of December 31, 2021. If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive income (loss). As of December 31, 2021, the Company’s consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $13.3 million at December 31, 2021 (of which $7.6 million were incurred prior to January 1, 2018). Carryforwards from losses incurred prior to January 1, 2018, if unused, these will begin to expire in 2035. For net operating losses incurred subsequent to December 31, 2017, there is no expiration date. As of December 31, 2021, the Company had a deferred tax asset of $4.2 million with a full valuation allowance. As of December 31, 2020, the Company had a deferred tax asset of $4.6 million with a full valuation allowance.
The following table details the composition of the Company’s tax (expense) benefit for the years ended December 31, 2021, 2020 and 2019, which includes U.S. federal and state income taxes incurred by the Company’s TRS. The Company estimated its income tax (expense) benefit relating to its TRS using a combined federal and state rate of approximately 0.0%, (105.8)% and 26.4%for the years ended December 31, 2021, 2020 and 2019, respectively. These income taxes are reflected in income tax (expense) benefit on the accompanying consolidated statements of operations and comprehensive loss.
Year Ended December 31,
202120202019
(In thousands)CurrentDeferredCurrentDeferredCurrentDeferred
Federal (expense) benefit$— $(319)$726 $— $— $(155)
State (expense) benefit(203)(163)(196)50 (176)(68)
Deferred tax asset valuation allowance— 482 — (4,641)— — 
Total income tax benefit (expense)$(203)$— $530 $(4,591)$(176)$(223)
As of December 31, 2021 and 2020, the Company had no material uncertain income tax positions. The tax years subsequent to and including the fiscal year ended December 31, 2014 remain open to examination by the major taxing jurisdictions to which the Company is subject.
Per Share Data
Net income (loss) per basic share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares (retroactively adjusted for the Stock Dividends) of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period.
CARES Act Grants
On March 27, 2020, Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic. Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19. The Company received
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December 31, 2021
$3.6 million in these funds during the year ended December 31, 2020, related to 4 of its SHOPs. During the year ended December 31, 2021, the Company received an additional $5.1 million in funding from CARES Act grants. The Company considered the funds to be a grant contribution from the government and the full amounts received were recognized as a reduction of property operating expenses in the Company’s consolidated statement of operations for the year ended December 31, 2020. There can be no assurance that the program will be extended or any further amounts received.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2019
ASU No. 2016-02 - Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) which provides guidance related to the accounting for leases, as well as the related disclosures. For lessors of real estate, leases are accounted for using an approach substantially the same as previous accounting guidance for operating leases and direct financing leases. For lessees, the new standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. 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.
Upon adoption, lessors were allowed a practical expedient, which the Company has elected, by class of underlying assets to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. Also, upon adoption, companies were allowed a practical expedient package, which the Company has elected, that allowed the Company: (a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain leases; (b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019 (including assessing sale-leaseback transactions); and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019. As a result, all of the Company’s existing leases will continue to be classified as operating leases under the new standard. Further, any existing leases for which the property is the leased to a tenant in a transaction that at inception was a sale-leaseback transaction will continue to be treated (absent a modification) as operating leases. The Company did not have any leases that would be considered financing leases as of January 1, 2019.
The Company assessed the impact of adoption from both a lessor and lessee perspective, which is discussed in more detail below, and adopted the new guidance prospectively on January 1, 2019, using a prospective transition approach under which the Company elected to apply the guidance effective January 1, 2019 and not adjust prior comparative reporting periods (except for the Company’s presentation of lease revenue discussed below).
Lessor Accounting
As discussed above, the Company was not required to re-assess the classification of its leases, which are considered operating leases under ASU 2016-02. The following is a summary of the most significant impacts to the Company of the new accounting guidance, as lessor:
Since the Company elected the practical expedient noted above to not separate non-lease component revenue from the associated lease component, the Company has aggregated revenue from its lease components and non-lease components (tenant operating expense reimbursements) into one line. The prior periods have been conformed to this new presentation.
Changes in the Company’s assessment of receivables that result in bad debt expense is now required to be recorded as an adjustment to revenue, rather than a charge to bad debt expense. This new classification applies for the first quarter of 2019 and reclassification of prior period amounts is not permitted. At transition on January 1, 2019, after assessing its reserve balances at December 31, 2018 under the new guidance, the Company wrote off accounts receivable of $0.1 million and straight-line rents receivable of $0.1 million as an adjustment to the opening balance of accumulated deficit, and accordingly rent for these tenants is currently recorded on a cash basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. Under prior accounting guidance, the recognition would have been deferred.
Lessee Accounting
    The Company was a lessee under leases for 17 properties including capital leases of land and building as of January 1, 2019 and because the Company has elected the practical expedients described above, it determined that 11 of these leases would continue to be classified as operating leases under the new standard. The following is a summary of the most significant impacts to the Company of the new accounting guidance, as lessee:
Upon adoption of the new standard, the Company recorded ROU assets and lease liabilities equal to $10.2 million for the present value of the lease payments related to its ground leases. These amounts are included in operating lease right-of-use assets and operating lease liabilities on the Company’s consolidated balance sheet as of December 31, 2019.
The Company also reclassified $0.5 million related to amounts previously reported as a straight-line rent liability and $4.8 million, net related to amounts previously reported as above and below market ground lease intangibles to the ROU assets. For additional information and disclosures related to these operating leases, see Note 16 — Commitments and Contingencies.
Other Accounting Pronouncements
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, to better align cash flow and fair value hedge accounting with the corresponding risk management activities. Among other things, the amendments expand which hedging strategies are eligible for hedge accounting, align the timing of recognition of hedge results with the earnings effect of the hedged item and allow companies to include the change in fair value of the derivative in the same income statement line item as the earnings effect of the hedged item. Additionally, for cash flow hedges that are highly effective, the update allows for all changes in fair value of the derivative to be recorded in other comprehensive income. The Company has adopted ASU 2017-12 on January 1, 2019, as required under the guidance, using a modified retrospective transition method and the adoption did not have a material impact on its consolidated financial statements.
Adopted as of January 1, 2020:
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the amended standard requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. The new guidance is effective for the Company beginning on January 1, 2020. The Company adopted the new guidance on January 1, 2020 and determined it did not have a material impact on its consolidated financial statements.
Adopted as of January 1, 2021:
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The standard allows for either modified or full retrospective transition methods. The Company adopted the new guidance on January 1, 2021 and determined it did not have a material impact on its consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Not yet Adopted as of December 31, 2021
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that our 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 our derivatives, which will be consistent with our 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.
Note 3 — Real Estate Investments, Net
Property Acquisitions and Development Costs
The Company invests in healthcare-related facilities, primarily MOBs and seniors housing properties which expand and diversify its portfolio and revenue base. The Company owned 202 properties as of December 31, 2021. During the year ended December 31, 2021, the Company, through wholly-owned subsidiaries of the OP, completed its acquisitions of 5 multi-tenant MOBs and 12 single tenant MOBs for an aggregate contract purchase price of $160.2 million. All acquisitions in 2021, 2020 and 2019 were considered asset acquisitions for accounting purposes.
The following table presents the allocation of the assets acquired and liabilities assumed, as well as development costs during the years ended December 31, 2021, 2020 and 2019:
Year Ended December 31,
(In thousands)202120202019
Real estate investments, at cost:
Land$12,848 $7,665 $6,356 
Buildings, fixtures and improvements121,376 90,699 68,903 
Development costs— — 5,721 
Total tangible assets134,224 98,364 80,980 
Acquired intangibles:
In-place leases and other intangible assets (1)
28,499 10,369 11,777 
Market lease and other intangible assets (1)
794 496 724 
Market lease liabilities (1)
(1,639)(362)(1,483)
Total intangible assets and liabilities27,654 10,503 11,018 
Mortgage notes payable, net— (13,883)— 
Issuance of Series A Preferred OP Units(2,578)— — 
Cash paid for real estate investments, including acquisitions$159,300 $94,984 $91,998 
Number of properties purchased17 
_______________
(1) Weighted-average remaining amortization periods for in-place leases, above-market leases and below market leases acquired were 11.2, 10.2 years and 8.5 years, respectively, as of December 31, 2021. Weighted-average remaining amortization periods for in-place leases and above-market leases acquired were 1.7 years, 7.7 years and 7.4 years, respectively, as of December 31, 2020.
Significant Tenants
As of December 31, 2021, 2020 and 2019, 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 on a straight-line basis for the portfolio. 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 December 31, 2021, 2020 and 2019:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
December 31,
State202120202019
Florida (1)
17.7%20.6%25.2%
Michigan (2)
**10.9%
Pennsylvania*10.4*
_______________
*    State’s annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.
(1)In May 2021, the Company’s skilled nursing facility in Wellington, Florida, and the Company’s development property in Jupiter, Florida were sold. In December 2020, the Company’s skilled nursing facility in Lutz, Florida was sold.
(2)During the year ended December 31, 2020, the Company sold 11 SHOPs located in Michigan, 7 of which were transferred to the buyer during the fourth quarter of 2020 and 4 of which were transferred to the buyer during the first quarter of 2021.
Intangible Assets and Liabilities
Acquired intangible assets and liabilities consisted of the following as of the periods presented:
December 31, 2021December 31, 2020
(In thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Intangible assets:
In-place leases$264,741 $183,073 $81,668 $241,097 $172,648 $68,449 
Market lease assets14,164 11,212 2,952 14,116 10,845 3,271 
Other intangible assets9,467 1,006 8,461 20,802 1,171 19,631 
Total acquired intangible assets$288,372 $195,291 $93,081 $276,015 $184,664 $91,351 
Intangible liabilities:
Market lease liabilities$23,472 $12,529 $10,943 $22,109 $11,306 $10,803 
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 of above-and below-market ground leases, for the periods presented:
Year Ended December 31,
(In thousands)202120202019
Amortization of in-place leases and other intangible assets (1)
$15,071 $15,121 $15,559 
Accretion of above-and below-market leases, net (2)
$(422)$(257)$(247)
Amortization of above-and below-market ground leases, net (3)
$214 $178 $86 
________
(1)    Reflected within depreciation and amortization expense.
(2)    Reflected within revenue from tenants.
(3)    Reflected within property operating and maintenance expense. Upon adoption of ASC 842 effective January 1, 2019, intangible balances related to ground leases were reclassified to be included as part of the Operating lease right-of-use assets presented on the consolidated balance sheet with no change to placement of the amortization expense of such balances. Refer to Note 2Summary of Significant Accounting Policies for additional details.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
The following table provides the projected amortization and adjustments to revenue from tenants for the next five years:
(In thousands)20222023202420252026
In-place lease assets$14,324 $12,227 $10,691 $9,103 $8,052 
Other intangible assets10 10 10 10 10 
Total to be added to amortization expense$14,334 $12,237 $10,701 $9,113 $8,062 
Above-market lease assets$(814)$(468)$(389)$(336)$(302)
Below-market lease liabilities1,625 1,512 1,294 1,103 941 
Total to be added to revenue from tenants$811 $1,044 $905 $767 $639 
Dispositions
The following table summarizes the properties sold during the years ended December 31, 2021, 2020 and 2019:
(In thousands)Disposition DateContract Sale PriceGain (Loss)
on Sale, of Real Estate Investments
2021 Dispositions:
Hampton River Portfolio (2 properties)December 21, 2021$37,800 $1,323 
NuVista Jupiter (1)
May 14, 202165,000 2,383 
Wellington Green (2)
May 14, 202130,750 114 
Michigan SHOPs (4 properties) (3)
January 15, 2021— (172)
Totals$133,550 $3,648 
2020 Dispositions:
Lutz (4)
December 15, 2020$20,000 $3,832 
Michigan SHOPs (7 properties) (3)
November 2, 202011,750 (908)
Cape GirardeauMarch 19, 20208,600 2,306 
Totals$40,350 $5,230 
2019 Dispositions:
New York Six MOBs (1 property)August 22, 2019$13,600 $2,883 
Ocean Park (5)
August 1, 20193,600 (152)
New York Six MOBs (5 properties)February 6, 201945,000 6,059 
Totals$62,200 $8,790 
______
(1)Impairment charges of $14.6 million and $19.8 million were recorded during the years ended December 31, 2020 and 2019, respectively.
(2)Impairment charges of $0.9 million, $2.3 million and $9.9 million were recorded during the years ended December 31, 2021, 2020 and 2019, respectively.
(3)Impairment charges of $19.6 million and $22.6 million were recorded during the years ended December 31, 2020 and 2019, respectively. The contract sales price for all 11 properties was received in November of 2020. Loss on sale amounts relate to the properties transferred at the respective dates.
(4)Impairment charges of $3.6 million were recorded during the year ended December 31, 2019.
(5)Impairment charges of $19,000 were recorded during the year ended December 31, 2019.

The sales of the properties noted above did not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the results of operations of these properties remain classified within continuing operations for all periods presented until the respective sale dates.
2021 Dispositions
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
During the fourth quarter of 2021, the Company sold 2 MOBs in Virginia for an aggregate contract purchase price of $37.8 million, which resulted in gains on sale of $1.3 million. These gains are included in the consolidated statement of operations for the year ended December 31, 2021. No impairments were previously recorded on these properties.
During the second quarter of 2021, the Company sold its skilled nursing facility in Wellington, Florida and its development property in Jupiter, Florida, which resulted in gains on sale of $0.1 million and $2.4 million, respectively. These gains are included in the consolidated statement of operations for the year ended December 31, 2021. The Company had previously recorded impairments on these properties (see dispositions table above).
During the first quarter of 2021, the Company transferred 4 SHOP properties located in Michigan to the buyer at a second closing, and $0.8 million held in escrow was released to the buyer. This amount had been placed in escrow at the first closing of the transaction during the year ended December 31, 2020 when the purchase price for all 11 properties sold in the transaction was received from the buyer. The Company recorded a loss on sale of $0.2 million related to this transaction in the year ended December 31, 2021. The Company had previously recorded impairments on these properties (see dispositions table above).
2020 Dispositions
On December 16 2020, the Company completed the sale of its skilled nursing facility in Lutz, Florida for a contract purchase price of $20.0 million, resulting in a gain on sale of real estate investments of $3.8 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. At closing, $17.6 million of net proceeds were used to repay amounts outstanding under the Revolving Credit Facility. The Company had previously recorded impairments on these properties (see dispositions table above).
On November 2, 2020 the initial closing under the PSA pursuant to which the Company had agreed to sell 11 Michigan SHOPs occurred. The contract purchase price for the 11 Michigan SHOPs was $11.8 million, resulting in a loss on sale of $0.9 million on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. At the initial closing, the Company received payment of the full $11.8 million sales price for all 11 of the Michigan SHOPs, less $0.8 million held in escrow, and transferred 7 of the properties to the buyer. The remaining 4 properties were transferred to the buyer a second closing separate closings in the first quarter of 2021 when the $0.8 million held in escrow was released to the buyer. Of the properties transferred at the initial closing, 4 had been part of the borrowing base under the Credit Facility, 1 was part of the collateral pool under the Fannie Mae Master Credit Facility with Capital One and 2 were unencumbered. Of the properties transferred at the second closing, 3 were part of the borrowing base under the Credit Facility until the initial closing and 1 was unencumbered. At the initial closing, $4.2 million of the net proceeds was used to repay amounts outstanding under the Fannie Mae Master Credit Facility with Capital One, $4.4 million of the net proceeds were used to repay amounts outstanding under the Revolving Credit Facility, with the remainder used for closing costs. For the avoidance of any doubt, all impairments related to the disposal of the 11 Michigan SHOP assets were recognized in the year ended December 31, 2020. The Company had previously recorded impairments on these properties (see dispositions table above).
On March 19, 2020 the Companydisposed of 1 MOB property for a contract purchase price of $8.6 million, resulting in a gain on sale of $2.3 million.
2019 Dispositions
On February 6, 2019, the Company sold 5 of the MOB properties within the State of New York (the “New York Six MOBs”) for a contract sales price of $45.0 million, resulting in a gain on sale of real estate investments of $6.1 million which is included on the Consolidated Statement of Operations for the year ended December 31, 2019. The Company had reconsidered the intended holding period for all six of the New York Six MOBs due to various market conditions and the potential to reinvest in properties generating a higher yield. On July 26, 2018, the Company had originally entered into a PSA for the sale of the New York Six MOBs, for an aggregate contract sale price of approximately $68.0 million and subsequently, on September 25, 2018, the Company further amended the PSA to decrease the aggregate contract sale price to $58.8 million. The 1 remaining New York Six MOB was sold for a contract sales price of $13.6 million on August 22, 2019, resulting in a gain on sale of real estate investments of $2.9 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2019. No impairments were previously recorded on these properties.
During the first quarter of 2019, the Company reconsidered the intended holding period for 1 of its SHOPs located in Brookings, OR (“Ocean Park”) due to various market conditions and the potential to reinvest in properties generating a higher yield. On March 21, 2019, the Company entered into a PSA for the sale of Ocean Park, for an aggregate contract sale price of approximately $3.6 million. On April 1, 2019, the Company amended the purchase and sale agreement to decrease the aggregate contract sale price to $3.5 million. In connection with this amendment, the Company recognized an impairment
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
charge of approximately $19,000 on Ocean Park during the second quarter of 2019, which is included on the consolidated statement of operations and comprehensive loss. On August 1, 2019, the Company closed its disposition of Ocean Park resulting in a loss on sale of real estate investments of $0.2 million recorded in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2019.
Impairments
The following is a summary of impairments taken during the years ended December 31, 2021, 2020 and 2019:
Year Ended December 31,
(In thousands)202120202019
Assets held for sale$— $19,570 $22,634 
Assets held for use40,951 16,876 33,335 
Total$40,951 $36,446 $55,969 
For additional information on impairments related to assets held for sale and assets held for use, see the “Assets Held for Sale and Related Impairments” and “Assets Held for Use and Related Impairments” sections below.
Assets Held For Sale and Related Impairments
When assets are identified by management as held for sale, the Company reflects them separately on its balance sheet and stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. 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.
Balance Sheet Details - Assets Held for Sale
There were no properties classified as held for sale as of December 31, 2021. The following table details the major classes of assets associated with the properties that have been classified as held for sale as of December 31, 2020:
December 31,
(In thousands)
2020 (1)
   Land$145 
   Buildings, fixtures and improvements(55)
Assets held for sale$90 
_____
(1) Assets held for sale as of December 31, 2020 relates to 4 Michigan SHOPs.
In January 2020, the Company entered into a PSA for the sale of a portfolio of 14 SHOPs located in Michigan (the “Michigan SHOPs”) as a single portfolio for $71.8 million. Accordingly, all 14 of these SHOPs were classified as held for sale as of December 31, 2019.
During April, 2020, the PSA was amended so that only 11 of the Michigan SHOPs were to be sold pursuant to this PSA for $11.8 million. As a result of the amended PSA from April 2020, the 3 remaining Michigan SHOPs at that time no longer qualified as held for sale and were reclassified to assets held for use at their original carrying values as of March 31, 2020 and an additional $0.7 million in catch-up depreciation was recorded in the third quarter of 2020. In addition, the original deposit made by the buyer was reduced from $1.0 million to $0.3 million.
In October 2020, the PSA was amended to provide that the full $11.8 million sales price for all 11 Michigan SHOPs would be paid at an initial closing which occurred in November 2020, when 7 of the properties were transferred to the buyer with the remaining 4 properties scheduled to be transferred to the buyer at a second closing, which occurred in the first quarter of 2021. This amendment to the PSA also provided that $0.8 million of the sales price would be held in escrow and returned to the buyer at the second closing; provided that, if the PSA is terminated before the second closing closings due to a material default by the buyer, the Company will receive the escrowed amount. This amount was returned to the buyer at final closing.As a result, it represented an effective reduction in the sale price and the Company reflected an additional impairment loss to reflect this. The Company determined that the 4 Michigan SHOPs should be classified as held for sale as of December 31, 2020. As
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
of December 31, 2020, of the 4 Michigan SHOPs that were classified as held for sale, 3 Michigan SHOPs were part of the borrowing base of the Credit Facility and 1 was unencumbered.
Held for Sale Impairments - 2020
As a result of the amendment to the PSA in April 2020, in which the number of properties under sale was reduced from 14 to 11, and in which the total consideration was reduced from $71.8 million to $11.8 million, the Company recorded an additional impairment charge of $19.6 million for the year ended December 31, 2020 related to the Michigan SHOP assets held for sale.
Held for Sale Impairments - 2019
During the year ended December 31, 2019 the Company recorded an impairment charge of $22.6 million related to assets held for sale, representing the amount by which the carrying amount of the Michigan SHOPs exceeded the Company’s estimate, at that time, of the net sales price of the Michigan SHOPs.
Assets Held for Use and Related Impairments
When circumstances indicate the carrying value of a property classified as held for use may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single tenant properties or significant vacancy in the Company’s multi-tenant properties and (ii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. If a triggering event is identified, the Company considers the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of the properties based on the expected cash flows on an undiscounted basis over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. 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.
The Company owns held for use properties for which the Company may from time to time reconsider the projected cash flows due to various performance indicators, and where appropriate, the Company evaluates the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values. Where more than one possible scenario exists, the Company uses a probability weighted approach. 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.
As of December 31, 2019, the Company was actively considering plans to sell 3 assets in Florida including the recently completed development project in Jupiter, Florida and the Company’s 2 skilled nursing facilities in Lutz, Florida and Wellington, Florida. The Company began marketing the properties in 2020 and, during the three months ended June 30, 2020, the Company received multiple bids and accepted a non-binding letter of intent from a prospective buyer to purchase the completed development project in Jupiter, Florida for $65.0 million and the Company’s 2 skilled nursing facilities in Lutz, Florida and Wellington, Florida for $20.0 million and $33.0 million, respectively. During August 2020, the Company entered into PSAs with the buyer on the terms generally set forth in the letter of intent. The property in Lutz, Florida was sold in December 2020 (see “Dispositions” above) and the property in Jupiter, Florida and the property in Wellington, Florida were sold in May 2021. The Company used the proceeds of the sales to repay amounts outstanding under its Revolving Credit Facility.
Held for Use Impairments — 2021
On April 30, 2021, the Company amended the PSA which reduced the sales price of the skilled nursing facility in Wellington, Florida to $30.7 million. In connection with this amendment to the PSA, the Company determined that the fair value had declined as of March 31, 2021 and the Company recognized an impairment charge of $0.9 million during the first quarter of 2021, which is included in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021.
During the second quarter of 2021, the Company began to actively consider plans to sell a property located in Sun City, Arizona. As a result of changes to the Company’s expected holding period, the Company determined that projected cash flows,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
on an undiscounted basis over its intended holding period, did not recover the carrying value of the property. During July 2021, the Company entered into a non-binding letter of intent to sell the property and as a result, the Company determined that the fair market value of the property had declined and recorded an impairment charge of $6.1 million during the second quarter of 2021, which is included in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021.
The LaSalle Tenant
On July 1, 2020, the Company transitioned 4 triple-net leased properties in Texas (collectively, the “LaSalle Properties”) from the former triple-net leased healthcare facilities segment to the SHOP segment, and the LaSalle Properties are now leased to the Company’s TRS and operated and managed on the Company’s behalf by a third-party operator.
During 2019, The LaSalle Group Inc., a guarantor of certain of the lease obligations of prior tenants (collectively, the “LaSalle Tenant”), filed for voluntarily relief under chapter 11 of the United States Bankruptcy Code. The Company has filed proofs of claims related to amounts previously awarded to it from the bankruptcy proceeding, however, the Company has no amounts due from the LaSalle Tenant in its consolidated balance sheets as of December 31, 2021 and December 2020 as the Company does not believe recovery is likely against the LaSalle Tenant.
During the third quarter of 2021, the Company began to actively market the LaSalle Properties for sale, and a non-binding letter of intent was signed in the fourth quarter for an aggregate contract sales price of $12.4 million. As a result of changes to the Company’s expected holding period, the Company determined that projected cash flows, on an undiscounted basis over its intended holding period, did not recover the carrying value of the properties and concluded that the properties were impaired. The fair value measurement was determined by estimated discounted cash flows using three significant unobservable inputs, including the cash flow discount rate, terminal capitalization rate, and the estimated stabilized occupancy range. The Company recorded an impairment charge of $34.0 million during the year ended December 31, 2021 which is included in the consolidated statement of operations and comprehensive income. There can be no assurance that the sale of these properties will close on the terms contained in the purchase and sale agreement, if at all.
Held for Use Impairments — 2020
During the year ended December 31, 2020, as a result of the Company’s marketing efforts during the COVID-19 pandemic which concluded with a PSA in August 2020, the Company recorded an additional impairment charge of $16.9 million on its completed development project in Jupiter, Florida and its skilled nursing facility in Wellington, Florida. The impairment charge represents the amount by which the carrying amount of the properties exceeded the Company’s estimate of the net sales price set forth in the PSA described above.
Held for Use Impairments — 2019
During the year ended December 31, 2019, the Company began to evaluate the properties in Lutz, Florida, Wellington, Florida and its completed development property in Jupiter, Florida for potential sales. As a result of these potential changes in plans, the Company concluded these held for use assets were impaired and recognized impairment charges in the aggregate of $33.3 million to reduce their carrying value to estimated fair value. The Company obtained third-party appraisals of all three properties (Lutz, Wellington, and Jupiter) which estimated fair value primarily applying an income approach using stabilized cash flows and capitalization rates of 9.0%, 9.0% and 7.0%, respectively.
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December 31, 2021
Note 4 — Mortgage Notes Payable, Net
The following table reflects the Company’s mortgage notes payable as of December 31, 2021 and 2020:
PortfolioEncumbered PropertiesOutstanding Loan Amount as of December 31,
Effective Interest Rate (1) as of December 31,
Interest Rate
2021202020212020Maturity
(In thousands)(In thousands)
Palm Valley Medical Plaza - Goodyear, AZ1$2,879 $2,998 4.15 %4.15%FixedJun. 2023
Medical Center V - Peoria, AZ12,684 2,786 4.75 %4.75%FixedSep. 2023
Fox Ridge Bryant - Bryant, AR16,977 7,133 3.98 %3.98%FixedMay 2047
Fox Ridge Chenal - Little Rock, AR116,024 16,390 2.95 %3.98%FixedMay 2049
Fox Ridge North Little Rock - North Little Rock, AR19,943 10,170 2.95 %3.98%FixedMay 2049
Capital One MOB Loan41378,500 378,500 3.71 %3.71%Fixed(2)Dec. 2026
Multi-Property CMBS Loan21118,700 118,700 4.60 %4.60%FixedMay 2028
Shiloh - Illinois (3)
113,384 13,684 4.34 %4.34%FixedMarch 2026
BMO CMBS942,750 — 2.89 %—%FixedDec. 2031
Gross mortgage notes payable77591,841 550,361 3.82 %3.94%
Deferred financing costs, net of accumulated amortization (4)
(6,186)(6,191)
Mortgage premiums and discounts, net(1,416)(1,472)
Mortgage notes payable, net$584,239 $542,698 
__________
(1)    Calculated on a weighted average basis for all mortgages outstanding as of December 31, 2021 and December 31, 2020. For the LIBOR based loans, LIBOR in effect at the balance sheet date was utilized. For the Capital One MOB Loan, the effective rate does not include the effect of amortizing the amount paid to terminate the previous pay-fixed swap. See Note 7 — Derivatives and Hedging Activities for additional details.
(2) Variable rate loan, based on 30-day LIBOR, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements. In connection with the amendment to this loan in December 2019 (see additional details below), the Company terminated the previous interest rate swap agreements and entered into new interest rate swap agreements (see Note 7Derivatives and Hedging Activities for additional details).
(3)    The Company assumed this fixed rate mortgage when it acquired a property during the year ended December 31, 2020.
(4)    Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.

As of December 31, 2021, the Company had pledged $925.3 million in real estate investments, at cost, as collateral for its $591.8 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. 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. As of December 31, 2021, the Company was in compliance with these financial covenants.
See Note 5Credit Facilities for additional details - Future Principal Payment and LIBOR Transition for schedule of principal payment requirements of the Company’s Mortgage Notes and Credit Facilities and discussion of the expected cessation of LIBOR publication.
BMO MOB Loan
On November 15, 2021, the Company, entered into a $42.8 million loan agreement (the “BMO MOB Loan”) with Bank of Montreal (“BMO”).
The BMO MOB Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The BMO MOB Loan permits BMO to securitize the entire BMO MOB Loan or any portion thereof.
At the closing of the BMO MOB Loan, the net proceeds after accrued interest and closing costs were used to (i) repay approximately $37.0 million of indebtedness under the Revolving Credit Facility, under which 9 of the properties were
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December 31, 2021
included as part of the borrowing base prior to the BMO MOB Loan, (ii) fund approximately $2.5 million in deposits required to be made at closing into reserve accounts required under the loan agreement. The remaining $2.4 million net proceeds available to the Company are to be used for general corporate purposes, including future acquisitions.
Fox Ridge Refinancing
On January 29, 2021, the Company entered into interest rate reduction modifications (the “Fox Ridge Modifications”) for 2 of its mortgages secured by the Fox Ridge Chenal and Fox Ridge North Little Rock properties which reduced the interest rate on both mortgages. Prior to the Fox Ridge Modifications, the mortgages bore interest at an effective rate of 3.98% per annum which was reduced to an effective rate of 2.95% per annum.
Capital One MOB Loan
On June 30, 2017, Capital One, National Association (“Capital One”), as administrative agent and lender, and certain other lenders (collectively, the “MOB Lenders”), made a loan in the aggregate amount of $250.0 million (the “MOB Loan”) to certain subsidiaries of the OP. On December 20, 2019, the Company, through certain subsidiaries of the OP, entered into an amendment and restatement of the MOB Loan originally dated as of June 30, 2017 among the OP’s subsidiaries and Capital One, as administrative agent and lender, and certain other lenders. As a result, the principal amount outstanding increased from approximately $242.0 million to $378.5 million the number of properties mortgaged as collateral for the loan increased from 31 properties (all medical office buildings) to 41 properties (29 medical office buildings that continued to serve as collateral for the loan as well as an additional 10 medical office buildings and 2 triple net leased hospitals).
At the closing of the amendment and restatement of the MOB Loan, after payment of closing costs and swap termination fees, the Company received $127.7 million in net refinancing proceeds in excess of the approximately $242.0 million principal amount outstanding prior to the closing. Of these excess proceeds, approximately $63.5 million were used to repay amounts outstanding under the Revolving Credit Facility (as defined below) in order to obtain a release of 12 of the mortgaged properties from the borrowing base thereunder, and approximately $61.5 million of the remaining proceeds were used to repay additional amounts outstanding under the Revolving Credit Facility.
Prior to the amendment and restatement of the MOB Loan, the MOB Loan bore interest at a variable rate equal to LIBOR plus 2.5% per annum. Subsequent to the amendment and restatement of the MOB Loan, the MOB Loan bears interest at a variable rate equal to LIBOR plus 2.0% per annum. The MOB Loan requires the Company to pay interest on a monthly basis with the principal balance due on the maturity date which was extended from June 30, 2022 to December 20, 2026 after the amendment and restatement of the MOB Loan. In connection with the amendment and restatement of the MOB Loan, the OP terminated 2 interest rate swaps and executed 1 interest rate swap on the new amount of the MOB Loan, fixing the interest rate exposure at 3.66%. See Note 7 — Derivatives and Hedging Activities for additional information on the Company’s outstanding derivatives.
The Company may pre-pay the MOB Loan, in whole or in part, at any time, with payment of a prepayment premium equal to (a) 3.0% for prepayments made prior to December 31, 2020, (b) 2.0% for prepayments made between January 1, 2021 and December 31, 2021, and (c) 1.0% for prepayments made between January 1, 2022 and December 31, 2022. Thereafter, no prepayment premium is required.
In addition, mortgaged properties may be released or replaced subject to certain conditions and limitations, including prepayment of not more than 110% of the principal amount allocated to the property together with any applicable prepayment premium and maintenance, giving effect to the release or replacement, of a minimum of either 25 mortgaged properties or $283.9 million principal amount outstanding, a minimum debt yield and a minimum debt service coverage ratio.
In connection with the amendment to the MOB Loan, the OP entered into an amended and restated guaranty of recourse obligations (the “Guaranty”) and an amended and restated hazardous materials indemnity agreement (the “Environmental Indemnity”) for the benefit of Capital One as administrative agent for the lenders on substantially identical terms to the guaranty and environmental indemnity entered into in connection with the original loan agreement entered into in June 2017. Pursuant to the Guaranty, the OP has guaranteed, among other things, specified losses arising from certain actions of any of the OP’s subsidiaries, including fraud, willful misrepresentation, certain intentional acts, misapplication of funds, physical waste, and failure to pay taxes. The Guaranty requires the Company to maintain a certain minimum of shareholders’ equity on its balance sheet. Pursuant to the Environmental Indemnity, the OP and the Company’s subsidiaries that directly own or lease the mortgaged properties have indemnified the MOB Lenders against losses, costs or liabilities related to certain environmental matters.
The amendment and restatement of the MOB Loan was considered an extinguishment of the old loan and a new loan agreement. Accordingly, fees and expense for the new loan have been capitalized and the unamortized fees relating to the old
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December 31, 2021
loan of approximately $3.0 million were written off as a charge to interest expense in the statement of operations for the year ended December 31, 2019.
Multi-Property CMBS Loan
On April 10, 2018, the Company, entered into a $118.7 million loan agreement (the “Multi-Property CMBS Loan”) with KeyBank National Association (“KeyBank”).
The Multi-Property CMBS Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The Multi-Property CMBS Loan permits KeyBank to securitize the entire Multi-Property CMBS Loan or any portion thereof.
At the closing of the Multi-Property CMBS Loan, the net proceeds after accrued interest and closing costs were used to (i) repay approximately $80.0 million of indebtedness under the Revolving Credit Facility, under which 14 of the properties were included as part of the borrowing base prior to the Multi-Property CMBS Loan, (ii) fund approximately $3.8 million in deposits required to be made at closing into reserve accounts required under the loan agreement. The remaining $33.0 million net proceeds available to the Company to be used for general corporate purposes, including future acquisitions.

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December 31, 2021
Note 5 — Credit Facilities, Net
The Company had the following credit facilities outstanding as of December 31, 2021 and 2020:
Outstanding Facility Amount as of December 31,
Effective Interest Rate as of December 31,(9)(10)
Credit Facility
Encumbered Properties(1)
2021202020212020Interest RateMaturity
(In thousands)(In thousands)
Credit Facility:
Revolving Credit Facility$— $173,674 — %3.21 %VariableMar. 2023(8)
Term Loan150,000 150,000 4.11 %4.95 %Variable(6)Mar. 2024
Deferred financing costs(2,994)(4,298)
Term Loan, net147,006 145,702 
Total Credit Facility92(2)$147,006 $319,376 
Fannie Mae Master Credit Facilities:
Capital One Facility11(3)$212,417 $212,467 2.51 %2.60 %Variable(7)Nov. 2026
KeyBank Facility10(4)142,628 142,708 2.56 %2.65 %Variable(7)Nov. 2026
Total Fannie Mae Master Credit Facilities21$355,045 $355,175 
Total Credit Facilities113$502,051 $674,551 3.00 %(5)3.29 %(5)
_______
(1)Encumbered properties are as of December 31, 2021.
(2)The equity interests and related rights in the Company’s wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Credit Facility (as defined below) have been pledged for the benefit of the lenders thereunder.
(3)Secured by first-priority mortgages on 11 of the Company’s seniors housing properties located in Florida, Georgia, Iowa and Michigan as of December 31, 2021 with a carrying value of $346.2 million.
(4)Secured by first-priority mortgages on 10 of the Company’s seniors housing properties located in, Missouri, Kansas, California, Florida, Georgia and Iowa as of December 31, 2021 with carrying value of $255.0 million.
(5)Calculated on a weighted average basis for all credit facilities outstanding as of December 31, 2021 and 2020, respectively. For the LIBOR based loans that have not been fixed, the LIBOR rate in effect at the balance sheet date was utilized. For LIBOR based loans that have been fixed, the effective rate after consideration of the interest rate swap was utilized. See Note 7 — Derivatives and Hedging Activities for additional details.
(6)Variable rate loan, based on LIBOR, all of which was fixed as a result of entering into “pay-fixed” interest rate swap agreements (see Note 7 — Derivatives and Hedging Activities for additional details).
(7)Variable rate loan which is capped as a result of entering into interest rate cap agreements (see Note 7 — Derivatives and Hedging Activities for additional details).
(8)The company has the option to extend maturity one year to March 2024 subject to certain conditions.
(9)Effective interest rate below for variable rate debt gives effect to any “Pay-fixed” swap entered into by the Company allocated to the loan for presentation purposes. If no “Pay-fixed” swaps are allocated, the effective interest rate below represents the variable rate (or contractual floor if appropriate) and the applicable margin in effect as of December 31, 2021 and 2020. Interest rate caps are not considered unless the cap is currently in effect.
(10)The Company has interest “Pay-fixed” swaps which are designated as cash flow hedges on outstanding combined borrowings. To present average rates in the table above, the Company historically allocated the $50.0 million notional amount of a “Pay-fixed” swap to its Revolving Credit Facility with any remaining notional amounts applied to its Capital One Fannie Mae Facility. As of December 31, 2021, all $50.0 million of the “Pay-fixed” swap was allocated to the Capital One Fannie Mae Facility because there were no outstanding borrowings under the Revolving Credit Facility. As of December 31, 2020, all $50.0 million of the ‘Pay-fixed” swap was allocated to the Revolving Credit Facility. All other “Pay-fixed” swaps were allocated to the Capital One MOB mortgage loan and the Term Loan consistently for both December 31, 2021 and 2020.
As of December 31, 2021, the carrying value of our real estate investments, at cost was $2.6 billion, with $0.9 billion of this amount pledged as collateral for mortgage notes payable, $0.6 billion of this amount pledged to secure advances under the Fannie Mae Master Credit Facilities and $1.0 billion of this amount comprising the borrowing base of the Credit Facility. These real estate assets are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, unless, as applicable, the existing indebtedness associated with the property is satisfied or the property is removed from the borrowing base of the Credit Facility, which would impact availability thereunder.
Unencumbered real estate investments, at cost as of December 31, 2021 was $110.4 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
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December 31, 2021
collateral for mortgage loans or adding them to the borrowing base of our Credit Facility. Pursuant to the August 10, 2020 amendment to the Credit Facility, any acquired properties must be added to the borrowing base of the Credit Facility, and any net proceeds from the dispositions of any unencumbered properties must be used to repay amounts outstanding under the Revolving Credit Facility.
Credit Facility
On March 13, 2019, the Company entered into an amended and restated senior secured credit facility (the “Credit Facility”), which consists of two components, a revolving credit facility (the “Revolving Credit Facility”) and a term loan (the “Term Loan”). In both March and August 2020, the Credit Facility was further amended, and the terms of the Credit Facility giving effect to those amendments are generally described below.
The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to a one-year extension at the Company’s option. The Term Loan is interest-only and matures on March 13, 2024. The total commitments under the Credit Facility are $630.0 million, including $480.0 million under the Revolving Credit Facility. The Credit Facility includes an uncommitted “accordion feature” that may be used to increase the commitments under either component of the Credit Facility by up to an additional $370.0 million to a total of $1.0 billion.
The amount available for future borrowings under the Revolving Credit Facility is based on either the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, or satisfying a minimum debt service coverage ratio with respect to the borrowing base. The equity interests and related rights in the Company’s wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility have been pledged for the benefit of the lenders thereunder.
As of December 31, 2021, $150.0 million was outstanding under the Term Loan, and no amounts were outstanding under the Revolving Credit Facility. The unused borrowing availability under the Revolving Credit Facility was $236.6 million.
The Company is required to maintain a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $50.0 million. Pursuant to the terms of the Company’s amended Credit Facility certain other restrictions and conditions described below will no longer apply starting in a quarter in which the Company makes an election and, as of the day prior to the commencement of the applicable quarter, the Company has a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least $100.0 million, giving effect to the aggregate amount of distributions projected to be paid by the Company during the applicable quarter, and the Company’s ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5% and the Covenant Relief Period has terminated (the “Commencement Quarter”). The fiscal quarter ended June 30, 2021 was the first quarter that could have been the Commencement Quarter. The Company satisfied the conditions during the quarter ended December 31, 2021 in order to elect the quarter ending March 31, 2022 as the Commencement Quarter, but chose not to do so.
During the period from August 10, 2020 until the first day of the Commencement Quarter, the Company must use all the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility. The Company may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met.
In addition, commencing on August 10, 2020 and until the Commencement Quarter, the Company has the option to have amounts outstanding under the Revolving Credit Facility bear interest at an annual rate equal to either: (i) LIBOR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.85% to 2.60%; or (ii) the Base Rate (as defined in the Credit Facility), plus an applicable margin that ranges, depending on the Company’s leverage, from 0.60% to 1.35%. Commencing on the first day of the Commencement Quarter, the Company will have the option to have amounts outstanding under the Revolving Credit Facility bear interest at an annual rate equal to either: (a) LIBOR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.60% to 2.35%; or (b) the Base Rate, plus an applicable margin that ranges, depending on the Company’s leverage, from 0.35% to 1.10%. As of December 31, 2021 the Company had elected to use the LIBOR option for all of our borrowings under the Credit Facility.
Further, commencing on August 10, 2020 and until the Commencement Quarter, the Company has the option to have amounts outstanding under the Term Loan bear interest at an annual rate equal to either: (i) LIBOR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.80% to 2.55%; or (ii) the Base Rate, plus an applicable margin that ranges, depending on the Company’s leverage, from 0.55% to 1.30%. Commencing on the first day of the Commencement Quarter, the Company will have the option to have amounts outstanding under the Term Loan bear interest at an annual rate equal to either: (a) LIBOR, plus an applicable margin that ranges, depending on the Company’s leverage, from 1.55% to 2.30%;
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December 31, 2021
or (b) the Base Rate, plus an applicable margin that ranges, depending on the Company’s leverage, from 0.30% to 1.05%. Pursuant to the amendment to the Credit Facility in August 2020, the “floor” on LIBOR was increased from 0.00% to 0.25%.     
As of December 31, 2021, the Revolving Credit Facility and the Term Loan had an effective interest rate per annum equal to 0% and 4.11%, respectively.
Until the Commencement Quarter, the Company may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company’s common stock), subject to certain exceptions. These exceptions include paying dividends on the 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”), the 7.125% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”) or any other preferred stock the Company may issue and paying any cash distributions necessary to maintain its status as a REIT. The Company may not pay any cash distributions (including dividends on Series A Preferred Stock or Series B Preferred Stock) if a default or event of default exists or would result therefrom. Beginning in the Commencement Quarter, the Company will be able to pay cash distributions to holders of common stock, subject to the restrictions described below. The Company may pay cash distributions beginning in the Commencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock or Series B Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after the Commencement Quarter. In addition, beginning in the Commencement Quarter, the Company will be permitted to repurchase up to $50.0 million of shares of its common stock (including amounts previously repurchased during the term of the Revolving Credit Facility) if, after giving effect to the repurchases, the Company maintains cash and cash equivalents of at least $30.0 million and the Company’s ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 55.0%.
The Credit Facility prohibits the Company from exceeding a maximum ratio of consolidated total indebtedness to consolidated total asset value, and requires the Company to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges and a minimum consolidated tangible net worth. The maximum ratio of consolidated total indebtedness to consolidated total asset value was 67.5% for the period from July 1, 2020 through June 30, 2021 and is 65% thereafter unless and until the Commencement Quarter, following which that ratio will be 62.5%. The minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges (the “Fixed Charge Coverage Ratio”) was 1.50 to 1.00 for the period from July 1, 2020 through March 31, 2021, 1.55 to 1.00 for the period from April 1, 2021 through June 30, 2021, and 1.60 to 1.00 thereafter, provided that from November 12, 2021 until the earlier of December 31, 2022 and such earlier date as the Company elects to terminate this relief (such period, the “Covenant Relief Period”), the Fixed Charge Coverage Ratio that the Company must satisfy based on the four most recently ended fiscal quarters will be reduced to 1.50 to 1.00 (see below for waiver issued on November 12, 2021). The minimum consolidated tangible net worth is the sum of (i) $1.2 million, plus (ii) 75% of any net offering proceeds (as defined in the Credit Facility) since the Credit Facility closed in March 2019. As of December 31, 2021, the Company had a minimum consolidated tangible net worth of $1.6 million.
The Company would have been in default of the Fixed Charge Coverage Ratio for the four fiscal quarter period ended September 30, 2021. Pursuant to the terms of the third amendment entered into on November 12, 2021 by the Company, the agent and the requisite lenders under the Credit Facility, the lenders waived any defaults or event of defaults under the covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.60 to 1.00 for the quarter ended September 30, 2021 and any further defaults of Events of Default (as described in the Credit Facility) resulting from the breach of the Fixed Charge Coverage Ratio covenant. In addition, as described above, the Fixed Charge Coverage Ratio the Company is required to maintain was amended from 1.60 to 1.00 to 1.50 to 1.00 for the Covenant Relief Period. There can be no assurance the Company’s lenders will consent to any amendments or waivers that may become necessary to comply with the terms of the Credit Facility in the future. Based upon the Company’s current expectations, the Company believes it will be able to comply with these covenants during the next 12 months.
As of December 31, 2021, the Company was in compliance with the financial covenants under the Credit Facility. Based upon the Company’s current expectations, the Company believes its operating results during the next 12 months will allow it to comply with these covenants.
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December 31, 2021
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 Credit Facility”; the Capital One Facility and the KeyBank Facility are referred to herein individually a “Fannie Mae Master Credit Facility” and together as the “Fannie Mae Master Credit Facilities”). Advances made under these agreements are assigned by Capital One and KeyBank to Fannie Mae at closing for inclusion in Fannie Mae’s Multifamily MBS program.
Effective October 31, 2016, in conjunction with the execution of the Fannie Mae Master Credit Facilities, the OP entered into 2 interest rate cap agreements with an unrelated third party, which caps LIBOR interest paid (not giving effect to the applicable margin) on amounts outstanding under the Fannie Mae Master Credit Facilities at a maximum of 3.5%. On October 2019, the Company replaced 2 maturing interest rate cap agreements, effective November 1, 2019 for a total notional amount of $88.7 million. The 2 interest rate caps agreements extend three existing interest rate caps set to mature on the same date and are not designated as hedges (seeNote 7 — Derivatives and Hedging Activities for additional disclosure regarding the Company’s derivatives).
In November 2020, in conjunction with the sale and transfer of 4 of the Michigan SHOPs, one of which was encumbered under the Fannie Mae Master Credit Facility with Capital One, $4.2 million was repaid to Capitol One upon the release of the property.
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.
Future Principal Payments
The following table summarizes the scheduled aggregate principal payments for the five years subsequent to December 31, 2021 and thereafter, on all of the Company’s outstanding debt (mortgage notes payable and credit facilities):
Future Principal
Payments
(In thousands)Mortgage Notes PayableCredit FacilitiesTotal
2022$1,331 $2,820 $4,151 
20236,469 4,497 10,966 
20241,178 4,497 5,675 
20251,221 4,497 5,718 
2026391,442 154,122 545,564 
Thereafter190,200 334,612 524,812 
Total$591,841 $505,045 $1,096,886 
LIBOR Transition
In July 2017, the Financial Conduct Authority (which regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline announcing that it will cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021. The remaining USD LIBOR settings will continue to be published through June 30, 2023. The Company is not able to predict when there will be sufficient liquidity in the SOFR market. The Company is monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. While the Company currently expects LIBOR to be available in substantially its current form until at least through June 30, 2023 for the USD LIBOR rates currently relevant to the Company, it is possible that LIBOR will become unavailable prior to that time. This could occur, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator. To transition from LIBOR under the Credit Facility, the Company will either utilize
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
the Base Rate (as defined in the Credit Facility), a SOFR-based rate as a benchmark rate as determined by the Agent in accordance with the terms of the Credit Facility, or an alternative benchmark otherwise established by the agent in accordance with the terms of the Credit Facility, which will be determined with due consideration to any evolving or then prevailing market practices for determining and implementing a rate of interest for U.S. dollar-denominated syndicated credit facilities. The Company has mortgages, credit facilities and derivative agreements that have terms that are based on LIBOR. Certain of those agreements have alternative rates already contained in the agreements while others do not. The Company anticipates that it will either utilize the alternative rates contained in the agreements or negotiate a replacement reference rates for LIBOR with the lenders and derivative counterparties.
Note 6 — Fair Value of Financial Instruments
GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 — Unobservable inputs that reflect the entity’s own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.
Financial Instruments Measured at Fair Value on a Recurring Basis
Derivative Instruments
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 December 31, 20182021 and 2017,2020, 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'sCompany’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.
The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments, are incorporated into the fair values to account for the Company'sCompany’s potential nonperformance risk and the performance risk of the counterparties.
Real Estate Investments - Held for Use
The Company also had impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheet as of December 31, 2018. As of December 31, 2018, the Company owned held for use properties for which the Company had reconsidered the projected cash flows due to various performance indicators. As a result, the Company evaluated the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. As a result of this evaluation and its consideration of impairment, the Company determined that the carrying value of one held for use property exceeded its estimated undiscounted cash flows. The Company primarily used a non-binding letter of intent to estimate the undiscounted cash flows expected to be generated for this one held for use property, which is an observable input. As a result, the impaired property that the Company evaluated using this approach is classified in Level 2 of the fair value hierarchy.
Real Estate Investments - Held for Sale
The Company has impaired real estate investments held for sale, which are carried at fair value on a non-recurring basis on the consolidated balance sheets as of December 31, 2018 and 2017. Impaired real estate investments held for sale were valued using the sale price from the applicable PSA less costs to sell, which is an observable input. As a result, the Company’s impaired real estate investments held for sale are classified in Level 2 of the fair value hierarchy.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

The following table presents information about the Company'sCompany’s assets and liabilities measured at fair value on a recurring basis as of December 31, 20182021 and 2017,2020, aggregated by the level in the fair value hierarchy within which those instruments fall.
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December 31, 2021
(In thousands) Basis of Measurement Quoted Prices in Active Markets
Level 1
 
Significant Other Observable Inputs
Level 2
 
Significant Unobservable Inputs
Level 3
 Total
December 31, 2018          
Derivative assets, at fair value Recurring $
 $4,633
 $
 $4,633
Impaired real estate investments held for use Non-recurring 
 3,341
 
 3,341
Impaired real estate investments held for sale Non-recurring 
 4,611
 
 4,611
Total   $
 $12,585
 $
 $12,585
December 31, 2017          
Derivative assets, at fair value Recurring $
 $2,550
 $
 $2,550
Impaired real estate investments held for sale Non-recurring 
 1,323
 
 1,323
    $
 $3,873
 $
 $3,873
(In thousands)Quoted Prices in Active Markets
Level 1
Significant
Other Observable Inputs
Level 2
Significant Unobservable Inputs
Level 3
Total
December 31, 2021
Derivative assets, at fair value$— $174 $— $174 
Derivative liabilities, at fair value— (13,903)— (13,903)
Total$— $(13,729)$— $(13,729)
December 31, 2020
Derivative assets, at fair value$— $13 $— $13 
Derivative liabilities, at fair value0(38,389)0(38,389)
Total$— $(38,376)$— $(38,376)
A review of the fair value hierarchy classification is conducted on a quarterly basis. 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 year ended December 31, 20182021.
Real Estate Investments Measured at Fair Value on a Non-Recurring Basis
Real Estate Investments — Held for Use
The Company also had impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheet as of December 31, 2021 and 2017.2020. As of December 31, 2021, the Company owned 4 held for use properties in Texas for which the Company had reconsidered its expected holding period and which are marketed for sale. As a result, the Company evaluated the impact on its ability to recover the carrying value of the properties and recorded impairment charges to write these properties down to their estimated fair values. The Company had also previously written down other held for use properties which have subsequently been sold.
During the year ended December 31, 2021, the Company evaluated 4 of its properties in Texas formerly leased to the LaSalle tenant and a property located in Sun City, Arizona and concluded, based on expected undiscounted cash flows, that the carrying value on these properties was not recoverable and the properties were impaired. Accordingly, the Company recorded impairment charges to reduce the carrying value of these properties to their estimated fair values based on estimated sales prices. Subsequent to December 31, 2021, the Company has entered into a purchase and sale agreement to dispose of the 4 LaSalle properties. Impaired real estate investments held for use are generally classified in Level 3 of the fair value hierarchy. See Note 3 — Real Estate investments, Net - “Assets Held for Use and Related Impairments” for additional details.
Real Estate Investments — Held for Sale
The Company has impaired real estate investments held for sale, which are carried at net realizable value on a non-recurring basis on the consolidated balance sheets as of December 31, 2020. Impaired real estate investments held for sale are generally classified in Level 3 of the fair value hierarchy. See Note 3 — Real Estate investments, Net - “Assets Held for Sale and Related Impairments” for additional details.
Financial Instruments Not Measured at Fair Value
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.
The fair values of the Company'sCompany’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported below:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
 December 31, 2018 December 31, 2017December 31, 2021December 31, 2020
(In thousands) Level 
Carrying Amount (1) 
 Fair Value at 
Carrying Amount (1) 
 Fair Value at(In thousands)Level
Carrying Amount 
Fair Value
Carrying Amount 
Fair Value
Gross mortgage notes payable and mortgage premium and discounts, net 3 $469,430
 $472,585
 $414,255
 $411,749
Gross mortgage notes payable and mortgage
premium and discounts, net
3$590,425 $594,348 $548,889 $549,553 
Prior Credit Facility 3 $243,300
 $243,300
 $239,700
 $239,700
Credit FacilityCredit Facility3$150,000 $148,817 $323,674 $319,558 
Fannie Mae Master Credit Facilities 3 $359,322
 $360,675
 $295,169
 $296,151
Fannie Mae Master Credit Facilities3$355,045 $350,710 $355,175 $354,073 

(1)Carrying value includes mortgage notes payable of $470.8 million and $415.4 million and mortgage premiums and discounts, net of $1.4 million and $1.1 million as of December 31, 2018 and 2017, respectively.
The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis, based on the Advisor'sAdvisor’s experience with similar types of borrowing arrangements. Advances underarrangements, excluding the Priorvalue of derivatives. At December 31, 2021 and 2020, respectively, the carrying values of the Credit Facility and the Fannie Mae Master Credit Facilities are considereddo not approximate their fair values due to be reported at fair value, because their interest rates vary with changes in LIBOR and there has not been a significant change inthe widening of credit risk ofspreads since the Company or credit markets since origination.loans were originated.
Note 7 — Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, collars, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company'sCompany’s operating and financial structure as well as to hedge specific anticipated transactions. Additionally, in using interest rate derivatives, the Company aims to add stability to interest expense and to manage its exposure to interest rate movements. The Company does not intend to utilize derivatives for speculative purposes or purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company, and its affiliates, may also have other financial relationships. The Company does not anticipate that any of theits 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 December 31, 20182021 and 2017:2020:
December 31,
(In thousands) Balance Sheet Location December 31, 2018 December 31, 2017(In thousands)Balance Sheet Location20212020
Derivatives designated as hedging instruments:    Derivatives designated as hedging instruments:
Interest rate swaps Derivative assets, at fair value $4,582
 $2,473
Interest rate “pay-fixed” swapsInterest rate “pay-fixed” swapsDerivative liabilities, at fair value$13,903 $38,389 
Derivatives not designated as hedging instruments:    Derivatives not designated as hedging instruments:
Interest rate caps Derivative assets, at fair value $51
 $77
Interest rate capsDerivative assets, at fair value$174 $13 
Cash Flow Hedges of Interest Rate Risk
The Company currently has two9 interest rate swaps that are designated as cash flow hedges. The interest rate swaps are used as part of the Company'sCompany’s interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 20182021 and 2017,2020, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive (loss) income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2018 and 2017, such derivatives were used to hedge
In connection with the variable cash flows associated with variable-rate debt. The ineffective portionrefinancing of the changeMOB Loan during the fourth quarter of 2019, the Company terminated 2 interest rate swaps with an aggregate notional amount of $250.0 million for a payment of approximately $2.2 million. Following these terminations, $2.2 million was recorded in fair valueAOCI and is being recorded as an adjustment to interest expense over the term of the derivatives, if any, would be recognized directly2 terminated swaps and the MOB Loan prior to its refinancing. Of the amount recorded in earnings.AOCI following these terminations, $0.9 million and $0.9 million was recorded as an increase to interest expense for the years ended December 31, 2021 and 2020, respectively, and approximately $0.4 million remained in AOCI as of December 31, 2021.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Amounts reported in accumulated other comprehensive loss(loss) income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the period,next 12 months, from January 1, 20192022 through December 31, 2019,2022, the Company estimates that $1.6$8.4 million will be reclassified from other comprehensive loss as a decreasean increase to interest expense.
As of December 31, 20182021 and 2017,2020, the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:
  December 31, 2018 December 31, 2017
Interest Rate Derivative Number of Instruments Notional Amount Number of Instruments Notional Amount
    (In thousands)   (In thousands)
Interest rate swaps 2
 $250,000
 2
 $250,000








HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

December 31, 2021December 31, 2020
Interest Rate DerivativeNumber of InstrumentsNotional AmountNumber of InstrumentsNotional Amount
(In thousands)(In thousands)
Interest rate “pay-fixed” swaps$578,500 $578,500 
The table below details the location in the financial statements of the loss recognized on interest rate derivatives designated as cash flow hedges for the 12 monthsperiods ended December 31, 20182021 and 2017:2020:
  Year Ended December 31,
(In thousands) 2018 2017
Amount of gain recognized in accumulated other comprehensive income on interest rate derivatives (effective portion) $2,367
 $1,674
Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense (effective portion) $258
 $(799)
Year Ended December 31,
(In thousands)202120202019
Amount of gain (loss) recognized in accumulated other comprehensive (loss) income on interest rate derivatives$14,322 $(40,614)$(10,753)
Amount of (loss) gain reclassified from accumulated other comprehensive income into income as interest expense$(11,010)$(7,999)$872 
Total amount of interest expense presented in the
consolidated statements of operations and comprehensive loss
$47,900 $51,519 $56,059 
Non-Designated Derivatives
These derivatives are used to manage the Company'sCompany’s exposure to interest rate movements, but do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net income (loss) and were a lossgain of $0.2 million,$37,000, a loss of $0.2$0.1 million and a gainloss of $31,000$0.1 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
The Company had the following outstanding interest rate derivatives that were not designated as a hedges in qualifying hedging relationships as of as of December 31, 20182021 and 2017:2020:
 December 31, 2018 December 31, 2017December 31, 2021December 31, 2020
Interest Rate Derivatives Number of Instruments Notional Amount Number of Instruments Notional AmountInterest Rate DerivativesNumber of InstrumentsNotional AmountNumber of InstrumentsNotional Amount
   (In thousands)   (In thousands)(In thousands)(In thousands)
Interest rate caps 7
 $359,322
 6
 $295,169
Interest rate caps$355,175 $359,322 
Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 20182021 and 2017.2020. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheet.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
          Gross Amounts Not Offset in the Consolidated Balance Sheet  
(In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets presented in the Consolidated Balance Sheet Financial Instruments Cash Collateral Received Net Amount
December 31, 2018 $4,633
 
 
 $4,633
 
 
 $4,633
December 31, 2017 $2,550
 
 
 $2,550
 
 
 $2,550
Gross Amounts Not Offset in the Consolidated Balance Sheet
(In thousands)Gross Amounts of Recognized AssetsGross Amounts of Recognized (Liabilities)Gross Amounts Offset in the Consolidated Balance SheetNet Amounts of Assets presented in the Consolidated Balance SheetFinancial InstrumentsCash Collateral ReceivedNet Amount
December 31, 2021$174 — — $174 — — $174 
December 31, 2021$— (13,903)— $(13,903)— — $(13,903)
December 31, 2020$13 — — $13 — — $13 
December 31, 2020$— (38,389)— $(38,389)— — $(38,389)
Credit-risk-related Contingent Features
The Company has agreements in place with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of December 31, 2018, there were no2021 the fair value of derivatives in a net liability position.position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $13.9 million. As a result, there is no termination value associated with the settlement of the Company’s obligations under the agreement, andDecember 31, 2021, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the agreement.Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $13.9 million at December 31, 2021.
Note 8 — Stockholders’ Equity
Common Stock
As of December 31, 20182021 and 2017,2020, the Company had 92.0 million99,281,754 and 91.0 million93,775,746 shares of common stock outstanding, respectively, including unvested restricted shares and shares issued pursuant to the DRIP,Company’s distribution reinvestment plan (“DRIP”), net of share repurchases. These include shares issued as Stock Dividends during 2020 and 2021. References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive income have been retroactively adjusted to reflect the increase of 0.08871 shares for every outstanding share outstanding due to the Stock Dividends (including the January 2022 Stock Dividend), and are noted as such throughout the accompanying financial statements and notes. See Note 1 — Organization for additional information.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

InOn April 2013, the Company's board of directors (the "Board") authorized, and1, 2021, the Company began paying distributions onpublished a monthly basis at a rate equivalent to $1.70 per annum, per sharenew estimate of common stock, which began in May 2013. In March 2017, the Board authorized a decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of April 1, 2017, to a rate equivalent to $1.45 per annum per share of common stock. On February 20, 2018, the Board authorized a further decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of March 1, 2018, to a rate equivalent to $0.85 per annum per share of common stock.
Distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The Board may further reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.
On March 29, 2018, the Board approved an per-share net asset value (“Estimated Per-Share NAVNAV”) as of December 31, 2017,2020, which was publishedapproved by the Board on April 4, 2018.March 31, 2021. The Company intends to publish an updated Estimated Per-Share NAV as of December 31, 2018 shortly following the filing of this Annual Report on Form 10-K and, thereafter, periodically at the discretion of the Board, provided that such estimates will be made at least once annually. Pursuant
Tender Offers
On January 9, 2020, the Company announced a tender offer (the “2020 Tender Offer”) to the DRIP, the Company's stockholders can electpurchase up to reinvest distributions by purchasing200,000 shares of the Company'sits common stock for cash at a purchase price equal to $8.50 per share with the then-current Estimated Per-Share NAV approved byproration period and withdrawal rights expiring February 7, 2020. The Company made the Board.2020 Tender Offer in response to an unsolicited offer to stockholders commenced on December 31, 2019. The 2020 Tender Offer expired in accordance with the terms on February 7, 2020. In accordance with the 2020 Tender Offer, the Company accepted for purchase 200,000 shares for a total cost of approximately $1.7 million, which was funded with available cash.
Share Repurchase Program
Under the SRP,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 the significant conditions and limitations described below.
Beginning on April 7, 2016 (the "Original NAV Pricing Date"), the price per share that the Company will pay to repurchase its shares would have been prior to amendment and restatement of the SRP effective in July 2017 as described below, equal to its Estimated Per-Share NAV multiplied by a percentage equal to:
92.5%, if the person seeking repurchase has held his or her shares for a period greater than one year and less than two years;
95.0%, if the person seeking repurchase has held his or her shares for a period greater than two years and less than three years;
97.5%, if the person seeking repurchase has held his or her shares for a period greater than three years and less than four years; or
100.0%, if the person seeking repurchase has held his or her shares for a period greater than four years.
In cases of requests for death and disability, the repurchase price is equal to Estimated Per-Share NAV at the time of repurchase.
limitations. Repurchases of shares of the Company'sCompany’s common stock, when requested, are at the sole discretion of the Board. Until the First SRP Amendment (as defined below), the Company limited the number of shares repurchased during any calendar year to 5% of the weighted average number of shares of common stock outstanding on December 31st of the previous calendar year. In addition, the Company was only authorized to repurchase shares in a given quarter up to the amount of proceeds received from its DRIP in that same quarter.
On January 26, 2016, the Board approved and amended the SRP (the "First SRP Amendment") to supersede and replace the existing SRP. Under the First SRP Amendment, repurchases of shares of the Company's common stock, when requested, are at the sole discretion of the Board and generally will be made semiannually (each six-month period ending June 30 or December 31, a “fiscal semester”). Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year (the "Prior Year Outstanding Shares"), with a maximum for any fiscal year of 5.0% of the Prior Year Outstanding Shares. In addition, the Company is only authorized to repurchase shares in a given fiscal semester up to the amount of proceeds received from its DRIP in that same fiscal semester. If an updated Estimated Per Share NAV is published during any fiscal semester, any repurchase requests received during such fiscal semester will be paid at the applicable Estimated Per-Share NAV then in effect.
On June 14, 2017, the Board approved and adopted an amended and restated SRP that superseded and replaced the existing SRP, effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of the Company'sCompany’s common stock or received their shares from the Company (directly or indirectly) through one or more non-cash transactions would beare considered for repurchase. Other terms and provisionsAdditionally, pursuant to the SRP, the
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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

repurchase price per share equals 100% of the Estimated Per-Share NAV in effect on the last day of the fiscal semester, or the six-month period ending June 30 or December 31.
On March 13, 2018,October 30, 2019 the Company announced a tender offer (the "Tender Offer") to purchase up to 2.0 millionrepurchased 446,830 shares of the Company's common stock for cashapproximately $7.8 million, at a purchasean average price equal to $13.15 per share withof $17.50 pursuant to the proration period and withdrawal rights expiring on April 12, 2018.SRP. The Company suspended the SRP during the pendency of the Tender Offer. On June 29, 2018, the Company announced that the Board unanimously determined to reactivate the SRP, effective June 30, 2018. In connection with reactivating the SRP, the Board approvedrepurchases reflect all repurchase requests receivedmade in good order following the death or qualifying disability of stockholders during the period fromcommencing January 1, 2018 through the suspension of the SRP on March 13, 2018 (see table below for additional details).2019 up to and including June 30, 2019.
On January 29, 2019,February 26, 2020, the Company announced thatrepurchased 505,101 shares of common stock for approximately $8.8 million, at an average price per share of $17.50 pursuant to the Board approved an amendmentSRP. The repurchases reflect all repurchase requests made in good order following the death or qualifying disability of stockholders during the period commencing July 1, 2019 up to and including December 31, 2019.
Pursuant to the SRP, changing the date on which any repurchases arewere to be made in respect of requests made during the periods when the SRP was active during the active periods under the SRP during the six months ending June 30, 2020 - the period from January 1, 2020 to January 8, 2020 and the period from February 26, 2020 up to and including June 30, 2020 - no later than July 31, 2020.
On February 26, 2020, the Company repurchased 505,101 shares of common stock for approximately $8.8 million, at an average price per share of $17.50 pursuant to the SRP. The repurchases reflect all repurchase requests made in good order following the death or qualifying disability of stockholders during the period commencing March 13, 2018July 1, 2019 up to and including December 31, 20182019.
Pursuant to the SRP, repurchases were to be made in respect of requests made during the periods when the SRP was active during the active periods under the SRP during the six months ending June 30, 2020 - the period from January 1, 2020 to January 8, 2020 and the period from February 26, 2020 up to and including June 30, 2020 - no later than MarchJuly 31, 2019, rather2020.
On August 13, 2020, in order to strategically maintain the Company’s liquidity in light of the continued impact of COVID-19 pandemic and to comply with an amendment to the Credit Facility described in Note 5, which restricts the Company from repurchasing shares until no earlier than the quarter ending June 30, 2021, on or beforeAugust 6, 2020, the 31st day following December 31, 2018. This SRP amendment becameBoard determined that, effective on August 12, 2020, repurchases under the SRP would be suspended. The Board has also rejected all repurchase requests made during the period from January 30, 2019 (see Note 18 — Subsequent Events for more information).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. No assurances can be made as to when or if the SRP will be reactivated.
When a stockholder requests redemption and redemption is approved by the Board, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares repurchased under the SRP have the status of authorized but unissued shares.
The following table below reflects the number of shares repurchased and the average price per share (retroactively adjusted for the Stock Dividends), under the SRP and does not include any repurchases under tender offers (see above), cumulatively through December 31, 2018:2021:
Number of Shares RepurchasedAverage Price per Share
Cumulative repurchases as of December 31, 20204,896,620 $20.60 
Year ended December 31, 2021— — 
Cumulative repurchases as of December 31, 20214,896,620 20.60 
  Number of Shares Repurchased Average Price per Share
Cumulative repurchases as of December 31, 2017 (1)
 2,529,798
 $22.43
Year ended December 31, 2018 (2)
 758,458
 18.73
Cumulative repurchases as of December 31, 2018 3,288,256
 21.56
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(1) Includes 1,554,768 shares repurchased during the year ended HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017 for approximately $33.6 million at a weighted average price per share of $21.61. Excludes rejected repurchases received during 2016 with respect to 2.3 million shares for $48.7 million at a weighted average price per share of $21.27. In July 2017, following the effectiveness of the amendment and restatement of the SRP, the Board approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to September 30, 2017, which was equal to 267,723 shares repurchased for approximately $5.7 million at an average price per share of $21.47. No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.2021
(2) Includes (i) 373,967 shares repurchased during January 2018 with respect to requests received following the death or qualifying disability of stockholders during the six months ended December 31, 2017 for approximately $8.0 million at a weighted average price per share of $21.45, and (ii) 155,904 shares that were repurchased for $3.2 million at an average price per share of $20.25 on July 31, 2018, representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. No repurchase requests received during the SRP suspension were accepted.
Tender Offer
On March 13, 2018, the Company announced the Tender Offer to purchase up to 2.0 million shares of the Company’s common stock for cash at a purchase price equal to $13.15 per share with the proration period and withdrawal rights expiring on April 12, 2018. The Company made the Tender Offer in response to an unsolicited offer to stockholders commenced on February 27, 2018. On April 4, 2018 and April 16, 2018, the Tender Offer was amended to reduce the number of shares the Company was offering to purchase to 230,000 shares and extend the expiration date to May 1, 2018. The Tender Offer expired in accordance with its terms on May 1, 2018. During May 2018, in accordance with the terms of the Tender Offer, the Company accepted for purchase 229,999 shares for a total cost of approximately $3.0 million.
Distribution Reinvestment Plan
Pursuant to the DRIP, stockholders may elect to reinvest distributions paid in cash by purchasingthe Company into shares of common stock in lieu of receiving cash.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'days’ notice to participants. Shares issued under the DRIP are recorded as equity in the accompanying consolidated balance sheet in the period distributions are declared. During the year ended December 31, 2021, the Company did not issue any shares of common stock pursuant to the DRIP. During the years ended December 31, 20182020 and 2017,2019, the Company issued 1.70.9 million and 2.81.5 million shares of common stock pursuant to the DRIP, generating aggregate proceeds of $35.7$14.6 million and $61.2$27.2 million, respectively. 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.

Stockholder Rights Plan
In May 2020, the Company announced that the Board had approved a stockholder rights plan. In December 2020, the Company issued a dividend of 1 common share purchase right for each share of its common stock outstanding as authorized by its board of directors in its discretion.
Preferred Stock
The Company is authorized to issue up to 50,000,000 shares of preferred stock. In connection with an underwritten offering in December 2019 (see details below), the Company classified and designated 1,610,000 shares of its authorized preferred stock as authorized shares of its Series A Preferred Stock as of December 31, 2021. 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 Equity Line (as defined below) and in May 2021, the Board authorized the classification of 2,530,000 additional shares of the Company’s preferred stock as Series A Preferred Stock in connection with the offering in May 2021 (described below). The Company had 3,977,144 and 1,610,000 shares of Series A Preferred Stock issued and outstanding, as of December 31, 2021 and 2020, respectively.
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 7.125% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”). As a result of an underwritten offering in October 2021, the Company had 3,630,000 shares issued and outstanding as of December 31, 2021.
Series A Preferred Stock
Series A Preferred Stock — Terms
Holders of Series A Preferred Stock are entitled to cumulative dividends in the amount of $1.84375 per share each year, which is equivalent to the rate of 7.375% of the $25.00 liquidation preference per share per annum. The Series A Preferred Stock has no stated maturity and will remain outstanding indefinitely unless redeemed, converted or otherwise repurchased. On and after December 11, 2024, at any time and from time to time, the Series A Preferred Stock will be redeemable in whole or in part, at the Company’s option, at a cash redemption price of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date. In addition, upon the occurrence of a Delisting Event or a Change of Control (each as defined in the articles supplementary governing the terms of the Series A Preferred Stock (the “Series A Articles Supplementary”)), the Company may, subject to certain conditions, at its option, redeem the Series A Preferred Stock, in whole or in part, after the first date on which the Delisting Event occurred or within 120 days after the first date on which the Change of Control occurred, as applicable, by paying the liquidation preference of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date. Upon the occurrence of a Change of Control during a continuing Delisting Event, unless the Company has elected to exercise its redemption right, holders of the Series A Preferred Stock will have certain rights to convert Series A Preferred Stock into shares of Company’s common stock. In addition, upon the occurrence of a Delisting Event, the dividend rate will be increased on the day after the occurrence of the Delisting Event by 2.00% per annum to the rate of 9.375% of the $25.00 liquidation preference per share per annum (equivalent to $2.34375 per share each year) from and after the date of the Delisting Event. Following the cure of such Delisting Event, the dividend rate will revert to the rate of 7.375% of the $25.00 liquidation preference per share per annum. The necessary conditions to convert the Series A Preferred Stock into
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December 31, 20182021

common stock have not been met as of December 31, 2021. Therefore, Series A Preferred Stock did not impact Company’s earnings per share calculations for the year ended December 31, 2021.
The Series A Preferred Stock ranks senior to common stock, with respect to dividend rights and rights upon the Company’s voluntary or involuntary liquidation, dissolution or winding up.
Voting rights for holders of Series A Preferred Stock exist primarily with respect to the ability to elect two additional directors to the board of directors if six or more quarterly dividends (whether or not authorized or declared or consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s charter (which includes the Series A Articles Supplementary) that materially and adversely affect the rights of the Series A Preferred Stock or create additional classes or series of shares of the Company’s capital stock that are senior to the Series A Preferred Stock. Other than the limited circumstances described above and in the Series A Articles Supplementary, holders of Series A Preferred Stock do not have any voting rights.
Series A Preferred Stock Add-On Offering
On May 11, 2021, the Company completed an underwritten public offering of 2,352,144 shares (which includes 152,144 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of its Series A Preferred Stock for net proceeds of $56.0 million after deducting the underwriters’ discount, structuring fee and other offering costs aggregating to $2.9 million. Pursuant to the terms of the Credit Facility, all proceeds were used to repay amounts outstanding under the Credit Facility.
Series A Preferred Units
In September 2021, the Company partially funded the purchase of an MOB from an unaffiliated third party by causing the OP to issue 100,000 partnership units in the OP designated as “Series A Preferred Units”. These were recorded at fair value on the date of the acquisition at $2.6 million and were included as part of the consideration paid for the acquisition. Additionally, these are considered a non-controlling interest for the Company and were recorded as an increase in non-controlling interests on the consolidated balance sheet (see Note 13 — Non-controlling Interests for additional information).
Preferred Stock Equity Line with B. Riley Principal Capital, LLC
On September 15, 2020, the Company entered into a preferred stock purchase agreement and registration rights agreement with B. Riley Principal Capital, LLC (“B. Riley”), pursuant to which the Company has the right from time to time to sell up to an aggregate of $15 million of shares of its Series A Preferred Stock to B. Riley until December 31, 2023, on the terms and subject to the conditions set forth in the purchase agreement. This arrangement is also referred to as the “Preferred Stock Equity Line.” The Company controls the timing and amount of any sales to B. Riley under the Preferred Stock Equity Line, and B. Riley is obligated to make purchases of up to 3,500 shares of Series A Preferred Stock each time (as may be increased by mutual agreement by the parties) in accordance with the purchase agreement, upon certain terms and conditions being met. The Company sold 15,000 shares under the Preferred Stock Equity Line during the year ended December 31, 2021, resulting in gross proceeds of $0.4 million and net proceeds of $0.3 million after fees and commissions.
In total, the Company incurred $1.2 million in costs related to establishing the Preferred Stock Equity Line which were all initially recorded in prepaid expenses and other assets on our consolidated balance sheet. Upon receiving proceeds under the Preferred Stock Equity Line in the third quarter of 2021, the Company reclassified $30,000 of these prepaid costs to additional paid in capital in the Company’s consolidated statement of changes in equity as a reduction of the gross proceeds received under the Preferred Stock Equity Line.
In the fourth quarter of 2021, the Company determined that it was not probable that additional proceeds would be received from the Preferred Stock Equity Line and later terminated the Preferred Stock Equity Line. As a result, the Company expensed the remaining balance of prepaid costs, which totaled $1.2 million, within acquisition and transaction related costs on the consolidated statement of operations and comprehensive income during the year ended December 31, 2021.
The Company did not sell any Series A Preferred Stock under the Preferred Stock Equity Line during the year ended December 31, 2020.
Series B Preferred Stock
Series B Preferred Stock — Terms
Holders of Series B Preferred Stock are entitled to cumulative dividends in the amount of $1.78125 per share each year, which is equivalent to the rate of 7.125% of the $25.00 liquidation preference per share per annum. The Series B Preferred Stock has no stated maturity and will remain outstanding indefinitely unless redeemed, converted or otherwise repurchased. On
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and after October 6, 2026, at any time and from time to time, the Series B Preferred Stock will be redeemable in whole or in part, at the Company’s option, at a cash redemption price of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date. In addition, upon the occurrence of a Delisting Event or a Change of Control (each as defined in the articles supplementary governing the terms of the Series B Preferred Stock (the “Series B Articles Supplementary”)), the Company may, subject to certain conditions, at its option, redeem the Series B Preferred Stock, in whole or in part, after the first date on which the Delisting Event occurred or within 120 days after the first date on which the Change of Control occurred, as applicable, by paying the liquidation preference of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date. Upon the occurrence of a Change of Control during a continuing Delisting Event, unless the Company has elected to exercise its redemption right, holders of the Series B Preferred Stock will have certain rights to convert Series B Preferred Stock into shares of Company’s common stock. In addition, upon the occurrence of a Delisting Event, the dividend rate will be increased on the day after the occurrence of the Delisting Event by 2.00% per annum to the rate of 9.125% of the $25.00 liquidation preference per share per annum (equivalent to $2.28125 per share each year) from and after the date of the Delisting Event. Following the cure of such Delisting Event, the dividend rate will revert to the rate of 7.125% of the $25.00 liquidation preference per share per annum. The necessary conditions to convert the Series B Preferred Stock into common stock have not been met as of December 31, 2021. Therefore, Series B Preferred Stock did not impact Company’s earnings per share calculations for the year ended December 31, 2021.
The Series B Preferred Stock ranks on parity with the Company’s Series A Preferred Stock, and senior to its common stock, with respect to dividend rights and rights upon the Company’s voluntary or involuntary liquidation, dissolution or winding up.
Voting rights for holders of Series B Preferred Stock exist primarily with respect to the ability to elect two additional directors to the board of directors if six or more quarterly dividends (whether or not authorized or declared or consecutive) payable on the Series B Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s charter (which includes the Series B Articles Supplementary) that materially and adversely affect the rights of the Series B Preferred Stock or create additional classes or series of shares of the Company’s capital stock that are senior to the Series B Preferred Stock. Other than the limited circumstances described above and in the Series B Articles Supplementary, holders of Series B Preferred Stock do not have any voting rights.
Underwritten Offering — Series B Preferred Stock
On October 6, 2021, the Company completed the initial issuance and sale of 3,630,000 shares (which includes 430,000 shares issued and sold pursuant to the underwriters’ exercise of their option to purchase additional shares) of its 7.125% Series B Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share. The offering generated gross proceeds of $90.8 million and net proceeds of $86.8 million, after deducting underwriting discounts, structuring fees and other costs.
Pursuant to the terms of the Credit Facility, all proceeds were used to repay amounts outstanding under the Credit Facility. Subject to the terms and conditions set forth in the Credit Facility, the Company may then draw on the Credit Facility to borrow any amounts so repaid.
Distributions and Dividends
Common Stock
In April 2013, the Board authorized, and the Company began paying distributions on a monthly basis at a rate equivalent to $1.70 per annum, per share of common stock, which began in May 2013. In March 2017, the Board authorized a decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of April 1, 2017, to a rate equivalent to $1.45 per annum per share of common stock. On February 20, 2018, the Board authorized a further decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of March 1, 2018, to 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 $0.85 per annum per share of common stock. Distributions were payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.
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On August 13, 2020, the Board changed the Company’s common stock distribution policy in order to preserve the Company’s liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with an amendment to the Credit Facility described in Note 5 which restricts the Company from paying distributions on common stock until no earlier than the quarter ending June 30, 2021. Under the new policy, distributions authorized by the Board on the Company’s shares of common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of the Company’s common stock valued at the Company’s estimated per share net asset value of common stock in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter. The Company declared the Stock Dividends of 0.01349 shares of the Company’s common stock on each share of the Company’s outstanding common stock on October 2020 and January 2021, and 0.014655 shares of the Company’s common stock on each share of the Company’s outstanding common stock in April, July, October 2021 and January 2022. These amounts were based on the Company’s prior cash distribution rate of $0.85 per share per annum and the then-current Estimated Per-Share NAV. The Board may further change the Company’s common stock distribution policy at any time, further reduce the amount of distributions paid or suspend distribution payments at any time, and therefore distribution payments are not assured.
The following table details from a tax perspective the portion of distributions classified as a return of capital, capital gain dividend income and ordinary dividend income, per share per annum, for the years ended December 31, 2020 and 2019. All common dividends in the year ended December 31, 2021, and a portion of common dividends issued in the year ended December 31, 2020, were issued as stock dividends, which do not represent taxable dividends to our shareholders for U.S. federal income tax purposes. All dividends paid on the Series A Preferred Stock were considered 100% return of capital for tax purposes for the years ended December 31, 2021 and 2020. There were no dividends paid on the Series B Preferred Stock, as the first dividend payment was made in January, 2022.
Year Ended December 31,
20202019
Return of capital (1)
100 %$0.42 100 %$0.83 
Capital gain dividend income— %— — %— 
Ordinary dividend income— %— — %— 
Total100.0 %$0.42 100.0 %$0.83 
________
(1) Amount for December 31, 2020 represents actual cash distributions paid to common shareholders during the year ended 2020, but excludes the stock dividends which do not represent taxable dividends to the Company’s shareholders for U.S. federal income tax purposes.
Series A Preferred Stock
Dividends on the Company’s Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375% per annum on 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 the Company’s board of directors and declared by the Company. Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock become part of the liquidation preference thereof.
Series B Preferred Stock
Dividends on the Company’s Series B Preferred Stock accrue in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to Series B Preferred Stock holders, which is equivalent to 7.125% per annum on 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 the Company’s board of directors and declared by the Company. The first quarterly dividend for the Series B Preferred Stock sold in this offering was paid on January 15, 2022 and represented an accrual for less than a full quarter, covering the period from October 6, 2021 to December 31, 2021. Any accrued and unpaid dividends payable with respect to the Series B Preferred Stock become part of the liquidation preference thereof.
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Note 9 — Related Party Transactions and Arrangements
As of December 31, 20182021 and 2017,2020, the Special Limited Partner owned 8,8889,537 and 9,008 shares, respectively, of the Company'sCompany’s outstanding common stock. The Advisor and its affiliates may incur and pay costs and fees on behalf of the Company. As of December 31, 20182021 and 2017,2020, the Advisor held 90 partnership units in the OP designated as "OP Units" ("“OP Units” (“OP Units"Units”).
The limited partnership agreement of the OP provides(as amended from time to time, the “LPA”) allows for athe 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.
Fees Incurred in Connection with the Operations of the Company
On February 17, 2017, the members of a special committee of the Board unanimously approved certain amendments to and a restatement of the then effective advisory agreement,The Second A&R Advisory Agreement by and among the Company, the OP and the Advisor (the "Second(as amended, the “Second A&R Advisory Agreement"Agreement”). The Second A&R Advisory Agreement, which superseded, amended and restated the previously effective advisory agreement (the "Original A&R Advisory Agreement"), took effect on February 17, 2017. The initial term of the Second A&R Advisory Agreement is ten years beginning 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 controlthe Second A&R Advisory Agreement) or a transition to self-management, (see the section titled "Termination Fees" included within this footnote), (iii) by 67% of the independent directors of the Board for cause, without penalty, with 45 days'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.
Acquisition Fees
UnderOn July 25, 2019, the Original A&RCompany entered into Amendment No. 1 to the Second Amended and Restated Advisory Agreement (the “Advisory Agreement Amendment”) among the Company, the OP, and until February 17, 2017, the AdvisorAdvisor. The Advisory Agreement Amendment was paid an acquisition fee equal to 1.0% ofunanimously approved by the contract purchase price of each acquired propertyCompany’s independent directors. Additional information on the Advisory Agreement Amendment is included later in this footnote under “—Professional Fees and 1.0% of the amount advanced for a loan or other investment. Other Reimbursements.”
Acquisition Expense Reimbursements
The Advisor was also 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. The aggregate amount of acquisition fees and financing coordination fees (as described below) could not exceed 1.5% of the contract purchase price and the amount advanced for a loan or other investment for all the assets acquired. As of December 31, 2018, aggregate acquisition fees and financing fees did not exceed the 1.5% threshold. In no event was the total of all acquisition fees, acquisition expenses and any financing coordination fees payable with respect to the Company's portfolio of investments or reinvestments permitted to exceed 4.5% of the contract purchase price of the Company's portfolio to be measured at the close of the acquisition phase or 4.5% of the amount advanced for all loans or other investments. As of December 31, 2018, the total of all cumulative acquisition fees, acquisition expenses and financing coordination fees did not exceed the 4.5% threshold.
The Second A&R Advisory Agreement, does not provide for an acquisition fee, however the Advisor may continue to 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.
Financing Coordination Fees
Under the Original A&R Advisory Agreement and until February 17, 2017, if the Advisor provided services in connection with the origination or refinancing of any debt that the Company obtained and used to acquire properties or to make other permitted investments, or that was assumed, directly or indirectly, in connection with the acquisition of properties, the Company paid the Advisor a financing coordination fee equal to 0.75% of the amount available or outstanding under such financing, subject to certain limitations.
The Second A&R Advisory Agreement, doestotal acquisition expenses may not provideexceed 4.5% of the contract purchase price of the Company’s portfolio or 4.5% of the amount advanced for a financing coordination fee.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
all loans or other investments. This threshold has not been exceeded through December 31, 2018

2021.
Asset Management Fees and Variable Management/Incentive Fees
Under the limited partnership agreement of the OPLPA and the advisory agreement that was superseded by the Original A&R 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“Class B Units" ("Units” (“Class B Units"Units”). The Class B Units were intended to be profit interests and vest, and no longer are subject to forfeiture, at such time as: (x) the value of the OP'sOP’s assets plus all distributions made equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pre-tax, non-compounded annual return thereon (the "economic hurdle"“Economic Hurdle”); (y) any one of the following occurs: (1) a listing; (2) another liquidity event or (3) the termination of the advisory agreement by an affirmative vote of a majority of the Company'sCompany’s independent directors without cause; and (z) the Advisor is still providing advisory services to the Company (the "performance condition"“Performance Condition”).
Unvested Class B Units will 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'sCompany’s independent directors without cause before the economic hurdleEconomic Hurdle has been met.
Subject to approval by the Board, the Class B Units were issued to the Advisor quarterly in arrears pursuant to the terms of the limited partnership agreement of the OP.LPA. The number of Class B Units issued in any quarter was equal to: (i) the excess of (A) the product of (y) the cost of assets multiplied by (z) 0.1875% over (B) any amounts payable as an oversight fee (as described below) for such calendar quarter; divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which was initially equal to $22.50 (the IPO price in the Company’s initial public offering of common stock minus the selling commissions and dealer manager fees). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance conditionPerformance Condition to be probable. As of December 31, 2018,2021, the Company cannot determine the probability of
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achieving the performance condition.Performance Condition. The Advisor receives cash distributions on each issued Class B Units equalUnit equivalent to the cash distribution rate receivedpaid, if any on the Company'sCompany’s common stock. SuchThese cash distributions on Class B Units are included in general and administrative expenses in the consolidated statement of operations and comprehensive loss until the performance conditionPerformance Condition is considered probable to occur. As of December 31, 2018,Stock Dividends do not cause the OP to issue additional Class OP Units, rather, the redemption ratio to common stock is adjusted. The Board hadhas previously approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement. The Board determined in February 2018 that Economic Hurdle had been satisfied, however none of the events have occurred, including a listing of the Company’s common stock on a national securities exchange, which would have satisfied the other vesting requirement of the Class B Units. Therefore, no expense has ever been recognized in connection with the Class B Units.
On May 12, 2015, the Company, the OP and the Advisor entered into an amendment (the “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 April 1, 2015, the Company began paying an asset management fee to the Advisor or its assignees as compensation for services rendered in connection with the management of the Company’s assets. The asset management fee was payable on the first business day of each month in the amount of 0.0625% multiplied by the lesser of (a) cost of assets or (b) fair value of assets for the preceding monthly period. The asset management fee was payable to the Advisor or its assignees in cash, in shares, or a combination of both, the form of payment to be determined in the sole discretion of the Advisor. For the purposes of the payment of any fees in shares (a) prior to the Original NAV Pricing Date, each share was valued at $22.50, (b) after the Original NAV Pricing Date and prior to any listing on a national securities exchange, if it occurs, each share will be valued at the then-current Estimated Per-Share NAV and (c) at all other times, each share shall be valued by the Board in good faith at the fair market value.
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 themonth. 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) raisedissued by the Company and its subsidiaries subsequent to February 17, 2017 per month. The base management fee is payable to the Advisor or its assignees in cash, 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 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 number of shares of common stock outstanding multiplied by (2) (x) 15.0% of the applicable prior quarter'squarter’s Core Earnings (as defined below) per share in excess of $0.375 per share plus (y) 10.0% of the applicable prior quarter'squarter’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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

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 variable management incentive fee was incurred for the years ended December 31, 2021, 2020 and 2019.
Property Management Fees
Unless the Company contracts with a third party, the Company pays the Property Manager a property management fee ofon a monthly basis, equal to 1.5% of gross revenues from the Company'sCompany’s stand-alone single-tenant net leased properties managed and 2.5% of gross revenues from all other types of properties respectively.managed, plus market-based leasing commissions applicable to the geographic location of the property. The Company also reimburses the Property Manager for property level expenses incurred by the Property Manager. The Property Manager may charge a separate fee for the one-time initial rent-up or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s length transactions by others rendering similar services in the same geographic area for similar properties, and the Property Manager is allowed to receive a higher property management fee in certain cases if approved by our Board of Directors (including a majority of the independent directors).
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If the Company contracts directly with third parties for such services, the Company will pay themthe third party customary market fees and will pay the Property Manager an oversight fee of up to 1.0% of the gross revenues of the property managed.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 was entered into to reflect amendments to the original agreement between the parties and further amends the original agreement by extending the term of the agreement from one to two years, until February 17, 2019. The A&R Property Management Agreement will automatically renewrenews for successive one-year terms unless any party provides written notice of its intention to terminate the A&R Property Management Agreement at least 90 days prior to the end of the term. Neither party provided notice of intent to terminate. The current term of the A&R Property Management Agreement expires February 17, 2023. The Property Manager may assign the A&R Property Management Agreement to any party with expertise in commercial real estate which has, together with its affiliates, over $100.0 million in assets under management.

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

Professional Fees and Other Reimbursements
The Company reimburses the Advisor'sAdvisor’s costs of providing administrative services. Until June 2015, reimbursement of these expenses was subjectservices including personnel costs, except for costs to the limitationextent that the Company did not reimburseemployees perform services for which the Advisor for any amount by which the Company's operating expenses at the end of the four preceding fiscal quarters exceeded the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt or other similar non-cash expenses and excluding any gain from the sale of assets for that period (the "2%/25% Limitation"), unless the Company's independent directors determined that such excess was justified based on unusual and nonrecurring factors which they deemed sufficient, in which case the excess amount could be reimbursed to the Advisor in subsequent periods. This limitation ceased to exist after June 2015, when the Original A&R Advisory Agreement became effective. Additionally, the Company reimburses the Advisor for personnel costs, excluding any compensation paid to individuals who also serve as the Company's executive officers, or the executive officers of the Advisor, the Property Manager or their respective affiliates.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 reimbursementsreimbursement 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 yearsyear ended December 31, 2018, 2017,2021, 2020 and 20162019, the Company incurred $8.9$9.4 million, $7.6$12.1 million and $4.5$10.6 million, respectively, of reimbursement expenses from the Advisor for providing administrative services. These reimbursement expenses are included in general and administrative expense on the consolidated statements of operations and comprehensive income (loss).
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 respectively.for which the Advisor receives a separate fee.
The Advisor may electAdvisory Agreement Amendment clarifies that, with respect to forgive and absorb certain fees. Becauseexecutive officers of the Advisor, may forgivethe Company is required to reimburse the Advisor or absorb certain fees, cash flow from operationsits affiliates for the reasonable salaries and wages, benefits and overhead of the Company’s executive officers, other than for any executive officer that would have been paidis 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 and benefits, including for executive officers and all other employees of the Advisor or its affiliates (the “Capped Reimbursement Amount”), for each fiscal year is subject to a limit that is equal to the Advisor may be available to pay distributions to stockholders. The fees that are forgiven are not deferralsgreater of: (a) a fixed component (the “Fixed Component”) and accordingly, will not be paid(b) a variable component (the “Variable Component”).
Both the Fixed Component and the Variable Component increase by an annual cost of living adjustment equal to the Advisorgreater of (x) 3.0% and (y) the CPI, as defined in the future. There were no such fees forgiven duringAdvisory Agreement Amendment for the yearsprior year ended December 31st. Initially, for the year ended December 31, 2018, 20172019; (a) the Fixed Component was equal to $6.8 million and 2016. In certain instances,(b) the Variable Component was equal to improve(i) the Company's working capital,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 4, which amount is then (ii) multiplied by 0.29%.
If the Company sells real estate investments aggregating an amount equal to or more than 25.0% of Real Estate Cost, in one or a series of related dispositions in which the proceeds of the disposition(s) are not reinvested in Investments (as defined in the Advisory Agreement Amendment), then within 12 months following the disposition(s), the advisory agreement requires the Advisor may electand the Company to absorb a portionnegotiate in good faith to reset the Fixed Component; provided that if the proceeds of the Company's property operating and general and administrative costs, whichdisposition(s) are paid to shareholders of the Company will not repay. There wereas a special distribution or used to repay loans with no such fees were absorbed during the years ended December 31, 2018, 2017 and 2016.intent of

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December 31, 20182021

subsequently re-financing and re-investing the proceeds thereof in Investments, the advisory agreement 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.
The Advisor elected to, without interest accrual, defer cash payment of $1.7Company paid approximately $2.5 million in certain fees and reimbursements due2019 to the Advisor or its affiliates as reimbursement for bonuses of December 31, 2017.employees of the Advisor or its affiliates who provided administrative services during the calendar year 2019, prorated for the time spent working on matters relating to the Company. The Company does not reimburse the Advisor or its affiliates for any bonus amounts relating to time dedicated to the Company by Edward M. Weil, Jr., the Company’s Chief Executive Officer. The Advisor formally awarded 2019 bonuses to employees of the Advisor or its affiliates in September 2020 (the “2019 Bonus Awards”). The original $2.5 million estimate for bonuses recorded and paid to the Advisor in 2019 exceeded the cash portion of the 2019 Bonus Awards to be paid to employees of the Advisor or its affiliates and to be reimbursed by the Company by $1.2 million. As a result, during the three months ended September 30, 2020, the Company recorded a receivable from the Advisor of $1.2 million in prepaid expenses and other assets on the consolidated balance sheet and a corresponding reduction in general and administrative expenses. Pursuant to authorization by the independent members of the Company’s board of directors, the $1.2 million receivable was being paid back to the Company over a 10-month period from January 2021 through October 2021. As of December 31, 2017,2021, all of this amount had been repaid by the Advisor.
During the second quarter of 2021, the Advisor finalized the amounts and form of the 2020 bonuses previously estimated (the “2020 Bonus Awards”) to be paid to the employees of the Advisor or its affiliates who provided administrative services during such calendar year, prorated for the time spent working on matters relating to the Company. The 2020 Bonus Awards are being paid by the Advisor over a portion of these fees and reimbursements were alreadyten-month period from June 2021 to April 2022. The final amounts exceeded the amounts previously paid andby the Company hadto the Advisor for estimated 2020 bonuses by approximately $1.0 million for the following reasons (i) forfeitures of bonuses related to employees of the Advisor or its affiliates who were terminated or resigned prior to payment (including the Company’s former chief financial officer) and (ii) a general reduction in final bonuses for remaining personnel due to on-going negative impacts of the COVID-19 pandemic. As a result, during the second quarter of 2021, the Company recorded a $0.7receivable from the Advisor of $1.0 million, which is recorded in prepaid expenses and other assets on the consolidated balance sheet and a corresponding reduction in general administrative expenses. Pursuant to authorization by the independent members of the Company’s board of directors, the $1.0 million receivable dueis required to be repaid to the Company on a pro rata basis over a six-month period from the Advisor.November 2021 through April 2022. As of December 31, 2018, there was no remaining receivable2021, $0.2 million has been repaid by the Advisor.
Reimbursements for the cash portion of 2020 bonuses paid by the Advisor to employees of the Advisor or payable due fromits affiliates were expensed and reimbursed on a monthly basis during 2020, and 2021 bonuses were expensed and reimbursed on a monthly basis during 2021 in accordance with estimates provided by the Advisor. Generally, prior to the 2019 Bonus Awards, employee bonuses have been formally awarded to employees of the Advisor or its affiliates in March as an all - cash award and paid out by the Advisor in the year subsequent to the year in which services were rendered to the Company.
In December 2020, after mediation on October 27, 2020, the Advisor agreed to a settlement with the Company’s former chief executive officer for severance claims related to his termination in 2018. Pursuant to the settlement, among other parties, the Advisor advised the Company that the Company and its directors and officers were released from any and all actions or claims the former chief executive officer now has or may ever have against them. Prior to the agreement, the Advisor did not believe any settlement was probable. In consideration of the release, among other things, and upon the recommendation of its nominating and corporate governance committee, which determined that the reimbursement was advisable and fair to, and in the best interest of, the Company, the Company’s board of directors approved the reimbursement by the Company to the Advisor of severance payments and legal costs relating to this settlement and determined that the reimbursement for those payments and costs would not be subject to (and therefore would not be aggregated with other reimbursements that are subject to) the Capped Reimbursement Amount. The $1.7Company recorded approximately $2.2 million payableof expenses for the reimbursement which is included in deferredgeneral and administrative expenses in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2020.
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Summary of fees, expenses and reimbursements were repaid during April 2018.related payables
The following table details amounts incurred, forgiven and payable in connection with the Company'sCompany’s operations-related services described above as of and for the periods presented:
Year Ended December 31,Payable (Receivable) as of
 202120202019December 31,
(In thousands)
Incurred
Incurred
Incurred20212020
One-time fees and reimbursements:
Acquisition cost reimbursements$90 $81 $39 $23 $11 
Ongoing fees and reimbursements:
Asset management fees20,710 19,987 19,526 — — 
Property management fees (5)
3,749 4,197 3,888 24 288 
Professional fees and other reimbursements (1) (4)
9,386 

12,102 10,073 (70)(61)
Professional fees credit due from Advisor(1,030)(1,217)— (859)(3)(1,217)(3)
Distributions on Class B Units (2)
— 178 305 — — 
Total related party operation fees and reimbursements$32,905 $35,328 $33,831 $(882)$(979)
  Year Ended December 31, Payable (Receivable) as of 
  2018 2017 2016 December 31, 
(In thousands) 
Incurred (1)
 
Incurred (1)
 
Incurred (1)
 2018 2017 
One-time fees and reimbursements:           
Acquisition cost reimbursements $176
 $124
 $
 $32
 $36
 
Financing coordination fees 
 
 450
 
 
 
Due (from) to HT III related to the Asset Purchase (2)
 
 
 
 (154) 196
 
Ongoing fees and reimbursements:           
Asset management fees (3)
 19,500
 19,189
 17,566
 
 
 
Property management fees 3,571
 3,068
 3,017
 58
 66
 
Professional fees and other reimbursements 8,883
 7,553
 4,492
 674
 1,339
(4) 
Distributions on Class B Units 340
 543
 611
 
 
 
Total related party operation fees and reimbursements $32,470
 $30,477
 $26,136
 $610
 $1,637
 
_________
_______________(1)    Included in general and administrative expenses in the consolidated statements of operations. Includes $6.2 million and $5.6 million subject to the Capped Reimbursement Amount for the years ended December 31, 2021 and 2020, respectively.
(1)
There were no fees or reimbursements forgiven during the years ended December 31, 2018, 2017 or 2016.
(2)
On December 22, 2017, the Company purchased substantially all the assets of American Realty Capital Healthcare Trust III, Inc. Certain proration estimates were included within the Closing. The purchase agreement calls for a final purchase price adjustment. The Company had a $154,000 net receivable and a $196,000 net payable related to the Asset Purchase included in the consolidated balance sheet as of December 31, 2018 and 2017, respectively. Please see below for additional information related to the Asset Purchase.
(3)
Prior to April 1, 2015, the Company caused the OP to issue (subject to periodic approval by the Board) to the Advisor restricted performance based Class B Units for asset management services. As of December 31, 2018, the Board had approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement. Effective April 1, 2015, the Company began paying an asset management fee to the Advisor or its assignees in cash, in shares, or a combination of both and no longer issues any Class B Units.
(4) (2)     Prior to April 1, 2015, the Company caused the OP to issue (subject to periodic approval by the Board) to the Advisor restricted performance-based Class B Units for asset management services. As of December 31, 2021, the Board had approved the issuance of, and the OP had issued, 359,250 Class B Units to the Advisor in connection with this arrangement. Effective April 1, 2015, the Company began paying an asset management fee to the Advisor or its assignees in cash, in shares, or a combination of both and the OP no longer issues any Class B Units.
(3)    Balance as of December 31, 2021 includes costsa receivable of $0.9 million from the Advisor related to the overpayment of 2020 Bonus Awards, which, were incurredpursuant to authorization by the independent members of the Company’s board of directors, is required to be repaid to the Company on a pro rata basis over a six-month period from November 2021 through April 2022. Balance as of December 31, 2020 includes a $1.2 million from the Advisor related to the overpayment of 2019 Bonus Awards, which was fully repaid as of December 31, 2021.
(4)     During the year ended December 31, 2019, the Company recorded a reduction of general and accruedadministrative expenses in the amount of $0.5 million related to the reversal of a payable balance due to American National Stock Transfer, LLC, a subsidiary of RCS Capital Corporation (“RCAP”),Corporation. During the year ended December 31, 2020 the Company recorded approximately $2.2 million of expense reimbursements to the Advisor for severance payments and related legal costs relating to the termination of its former Chief Executive Officer.
(5)    Inclusive of $0.3 million of leasing commissions which at that timeare included in prepaid expenses and prior to its bankruptcy filing was under common control with our Advisor. RCAP was alsoother assets on the parent companyconsolidated balance sheet as of the Realty Capital Securities, LLC, the dealer manager in the Company’s initial public offering.December 31, 2021 and 2020.
Fees and Participations Incurred in Connection with a Listing or the Liquidation of the Company'sCompany’s Real Estate Assets
Subordinated ParticipationFees Incurred in Connection with a Listing
If the common stock of the Company is listed on a national 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 by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Special Limited Partner will not be entitled toinvestors in the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions.Company’s initial public offering of common stock. No such distribution was incurred during the years ended December 31, 2018, 20172021, 2020 and 2016. The2019. If the Special Limited Partner or any of its affiliates receives the subordinated incentive listing distribution the Special Limited Partner and its affiliates can earn only the subordinated incentive listing distribution, orwill no longer be entitled to receive the subordinated participation in net sales proceeds or the subordinated incentive termination distribution described below.
Annual Subordinated Performance Fees and Brokerage Commissions
Under the Original A&R Advisory Agreement and until February 17, 2017, the Advisor was entitled to an annual subordinated performance fee calculated on the basis of the Company's total return to stockholders, payable annually in arrears, such that for any year in which the Company's total return on stockholders' capital exceeded 6.0% per annum, the Advisor was entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year. This fee would have been payable only upon the sale of assets, distributions or another event which resulted in the return on stockholders' capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the years ended December 31, 2018, 2017 or 2016.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Under the Original A&R Advisory Agreement and until February 17, 2017, the Advisor was entitled to a brokerage commission on the sale of property, not to exceed the lesser of (a) 2.0% of the contract sale price of the property and (b) 50.0% of the total brokerage commission paid if a third party broker was also involved; provided, however, that in no event could the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of (a) 6.0% of the contract sales price and (b) a reasonable, customary and competitive real estate commission. The brokerage commission payable to the Advisor was subject to approval by a majority of the independent directors upon a finding that the Advisor provided a substantial amount of services in connection with the sale. No such fees were incurred during the years ended December 31, 2018, 2017 and 2016.
The Second A&R Advisory Agreement does not provide for the annual subordinated performance fee and brokerage commissions payable to the Advisor, (all as defined in the Original A&R Advisory Agreement) effective February 17, 2017 and no such fees or commissions were incurred prior thereto.
Subordinated Participation in Real EstateNet Sales Proceeds
TheUpon 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 iswill 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. The Special Limited Partner is not entitled to the subordinated participation in net sale proceeds unless the Company's investors have received their capital contributions plus a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such participation in net sales proceeds became due and payable during the years ended December 31, 2018, 20172021, 2020 and 2016. The2019. Any amount of net sales proceeds paid to the Special Limited Partner andor any of its affiliates can earn onlyprior to the subordinated participation in net sales proceeds,Company’s listing or termination or non-renewal of the advisory agreement with the
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Advisor, as applicable, will reduce dollar for dollar the amount of the subordinated incentive listing distribution described above or theand subordinated incentive termination distribution described below.
Subordinated Participation in Connection with a Termination of the Advisory AgreementFees
Under the operating partnership agreement of the OP, upon termination or non-renewal of the advisory agreement with the Advisor, withwith or without cause, the Special Limited Partner iswill be entitled to receive distributionsa 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'sCompany’s market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors.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.
The If the Special Limited Partner or any of its affiliates receives the subordinated incentive termination distribution, the Special Limited Partner and its affiliates can earn only the subordinated incentive termination distribution, orwill no longer be entitled to receive the subordinated participation in net sales proceeds or the subordinated incentive listing distribution described above.
Termination Fees Payable to the Advisor
Under the Second A&R Advisory Agreement Amendment, upon the termination or non-renewal of the agreement, the Advisor will beis entitled to receive from the Company all amounts due to the Advisor, including any change inof control fee and transition fee (both described below), as well as the then-present fair market value of the Advisor'sAdvisor’s interest in the Company. All fees will be due within 30 days after the effective date of the termination of the Second A&R Advisory Agreement.Agreement Amendment.
Upon a termination by either party in connection with a change of control (as defined in the Second A&R Advisory Agreement)Agreement Amendment), the Company wouldis required to pay the Advisor a change of control fee equal to the product of four4 (4) and the "Subject“Subject Fees."
Upon a termination by the Company in connection with a transition to self-management, the Company wouldis required to pay the Advisor a transition fee equal to (i) $15.0 million plus (ii) the product of four4 multiplied by the Subject Fees, provided that the transition fee shall not exceed an amount equal (i)to 4.5 multiplied by (ii) the Subject Fees.
The Subject Fees are equal to (i) the product of four4 multiplied by the actual base management fee plus (ii) the product of four4 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 inof control occurs or the transition to self-management, as applicable, is consummated, as applicable, 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 inof control occurs or the transition to self-management, as applicable, is consummated, as applicable.consummated.
The right to termination of the Second A&R Advisory Agreement in connection with a change of control or transition to self-management is subject to a lockout period that requires the notice of any termination in connection with a change of control or transition to self-management to be delivered after February 14, 2019.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

American Realty Capital Healthcare Trust III, Inc. Asset Purchase
On December 22, 2017, the Company, the OP and its subsidiary, ARHC TRS Holdco II, LLC, completed the Asset Purchase, purchasing all of the membership interests in indirect subsidiaries of HT III that own the 19 properties which comprised substantially all of HT III’s assets, pursuant to the Purchase Agreement, dated as of June 16, 2017. HT III was sponsored and advised by an affiliate of the Advisor. The Company had a $154,000 net receivable and a $196,000 net payable to HT III included on its consolidated balance sheet as of December 31, 2018 and 2017.
On December 22, 2017, the Company borrowed approximately $45.0 million of loans (the “Advance”) under the Prior Credit Facility. Concurrently with the occurrence of the Advance, the Company added 15 properties, including 14 of the 19 properties purchased in the Asset Purchase, to the pool of eligible unencumbered real estate assets comprising the borrowing base under the Prior Credit Facility. The Advance was used to fund a portion of the amount required to complete the Asset Purchase.
At the closing of the Asset Purchase, the Company paid HT III $108.4 million, representing the purchase price under the Purchase Agreement of $120.0 million, less (i) $0.7 million reflecting prorations and closing adjustments in accordance with the Purchase Agreement, (ii) $4.9 million reflecting the outstanding principal amount of the loan secured by HT III’s Philip Center property assumed by the Company at the closing in accordance with the Purchase Agreement, and (iii) $6.0 million deposited by the Company into an escrow account in accordance with the Purchase Agreement. This escrow amount was released in full to HT III in installments over a period of 14 months following the closing, with the final installment being released in March 2019. No indemnification claims were made under the Purchase Agreement. In addition, the Company incurred $1.2 million in closing and other transaction costs.
Note 10 — Economic Dependency
Under various agreements, the Company has engaged or will engage 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, the Company will be required to find alternative providers of these services.
Note 11 — Share-BasedEquity-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"“RSP”), which provides the Company with the ability to grant awards of restricted shares of common stock ("(“restricted shares"shares”) to the Company'sCompany’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'sCompany’s outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 3.43.6 million shares (as such number may be further adjusted for stock splits, stock dividends, combinations and similar events).
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Prior to August 2017, the RSP provided for an automatic grant of 1,333 restricted shares of common stock to each of the independent directors, without any further approval by the Board or the stockholders, on the date of his or her initial election to the Board and thereafter on the date of each annual stockholder meeting. The restricted shares granted as annual automatic awards prior to August 2017 were subject to vesting over a five-year period following the date of grant.
In August 2017, the Board amended the RSP to provide that the number of restricted shares comprising the automatic annual award to each of the independent directors would be equal to the quotient of $30,000 divided by the then-current Estimated Per-Share NAV and subsequently amended and restated the RSP to eliminate the automatic annual awards and to make other revisions related to the implementation of a new independent director equity compensation program. As part of this new independent director equity compensation program, the Board approved a one-time grant of restricted share awards to the independent directors as follows: (i) 300,000 restricted shares to the chairman, with one-seventh of the shares vesting annually in equal increments over a seven-year period with initial vesting on August 4, 2018; and (ii) 25,000 restricted shares to each of the three other independent directors, with one-fifth of the shares vesting annually in equal increments over a five-year period with initial vesting on August 4, 2018. In connection with these one-time grants, the restricted shares granted as automatic annual awards in connection with the Company’s 2017 annual meeting of stockholders on July 21, 2017 were forfeited.
On July 29, 2019, the Board elected B.J. Penn as a member of the Board to serve as a director effective immediately. Mr. Penn, like the Company’s other independent directors, participates in the Company’s independent director compensation program. During the year ended December 31, 2019, the Company paid to Mr. Penn an annual cash retainer effective as of July 29, 2019 pro-rated for the remaining portion of the current annual period, and he was awarded 15,000 restricted shares vesting annually in equal increments over a three-year period with initial vesting on August 4, 2020.
Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

distributions prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in shares of common stock shall beare subject to the same restrictions as the underlying restricted shares.

The following table reflects the amount of restricted share awardshares outstanding as of December 31, 2021 and activity for the period presented:
Number of Common SharesWeighted-Average Issue Price
 Number of Common Shares Weighted-Average Issue Price
Unvested, December 31, 2015 11,731
 $22.50
Unvested, December 31, 2018Unvested, December 31, 2018322,242 $21.41 
Granted 6,735
 22.27
Granted15,000 17.50 
Vested (7,212) 22.50
Vested(60,001)21.48 
Forfeitures (1,333) 22.50
Forfeitures— — 
Unvested, December 31, 2016 9,921
 22.42
Unvested, December 31, 2019Unvested, December 31, 2019277,241 21.18 
Stock DividendStock Dividend2,878 15.75 
Granted 380,592
 21.45
Granted— — 
Vested (2,411) 22.40
Vested(64,735)21.18 
Forfeitures (5,592) 21.45
Forfeitures— — 
Unvested, December 31, 2017 382,510
 21.47
Unvested, December 31, 2020Unvested, December 31, 2020215,384 21.11 
Stock dividendStock dividend12,646 14.79 
Granted 
 
Granted— — 
Vested (60,268) 21.78
Vested(68,603)19.72 
Forfeitures 
 
Forfeitures— — 
Unvested, December 31, 2018 322,242
 21.41
Unvested, December 31, 2021Unvested, December 31, 2021159,427 21.21 
As of December 31, 2018,2021, the Company had $6.9$2.7 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP. That cost is expected to be recognized over a weighted-average period of 5.22.3 years. Compensation expense related to restricted shares was $1.2$1.3 million, $0.5$1.3 million and approximately $0.2$1.3 million during the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively. Compensation expense related to restricted shares is recorded as general and administrative expense in the accompanying consolidated statement
F-51

Table of operations and comprehensive loss.Contents

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Other Share-Based Compensation
The Company may issue common stock in lieu of cash to pay fees earned by the Company'sCompany’s directors at the respective director'sdirector’s election. There are no restrictions on the 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 years ended December 31, 20182021, 2020 and 2017.2019.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Note 12 — Accumulated Other Comprehensive (Loss) Income
The following table illustrates the changes in accumulated other comprehensive (loss) income as of and for the periods presented:
(In thousands) Unrealized Gains (Losses) on Designated Derivative
Balance, December 31, 2015 $(6)
Other comprehensive income, before reclassifications 62
Amounts reclassified from accumulated other comprehensive income (1)
 (56)
Balance, December 31, 2016 
Other comprehensive income, before reclassifications 2,473
Amounts reclassified from accumulated other comprehensive income 
Balance, December 31, 2017 2,473
Other comprehensive income, before reclassifications 2,367
Amounts reclassified from accumulated other comprehensive income (258)
Balance, December 31, 2018 $4,582
__________________
(1)(In thousands)During the year endedUnrealized Gains (Losses) on Designated Derivative
Balance, December 31, 2016, the Company sold its investments in securities, resulting in realized gains20184,582 
Other comprehensive income, before reclassifications(10,753)
Amounts reclassified from accumulated other comprehensive (loss) income(872)
Balance, December 31, 2019(7,043)
Other comprehensive loss, before reclassifications(40,614)
Amounts reclassified from accumulated other comprehensive (loss) income7,999 
Rebalancing of $0.1 million, which is included in gain on sale of investment securities on the consolidated statement of operations andownership percentage(15)
Balance, December 31, 2020(39,673)
Other comprehensive loss.loss, before reclassifications14,322 
Amounts reclassified from accumulated other comprehensive (loss) income11,010 
Balance, December 31, 2021$(14,341)

Accumulated other comprehensive (loss) income predominately relates to the unrealized gains (losses) on designated derivatives, however, as previously discussed in Note 7 — Derivatives and Hedging, a previously designated hedge was terminated and the termination costs are being amortized over the term of the hedged item. The unamortized portion of the terminated swap still remaining in accumulated other comprehensive (loss) income is $0.4 million as of December 31, 2021. The terminated swap will be fully amortized within the year ending December 31, 2022.
Note 13 — Non-Controlling Interests
Non-controlling interests on the Company’s consolidated balance sheet is comprised of the following:
Balance as of December 31,
(In thousands)20212020
Common OP Units held by third parties$3,758 $4,016 
Series A Preferred Units held by third parties2,578 — 
Total Non-controlling Interests in the Operating Partnership6,336 4,016 
Non-controlling Interests in property owning subsidiaries368 371 
Total Non-controlling Interests$6,704 $4,387 
Non-Controlling Interests in the Operating Partnership
For preferred and common shares issued by the Company, the Company typically issued mirror securities with substantially equivalent economic rights between the Company and the Operating Partnership. The securities held by the Company are eliminated in consolidation.
Common OP Units
The Company is the sole general partner and holds substantially all of the OP Units. As of December 31, 20182021 and 2017,2020, the Advisor held 90 OP Units, which represents a nominal percentage of the aggregate ownership in the OP.
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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
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 OP Units, with a value of $10.1 million, or $25.00 per unit, to the unaffiliated third party.
A holder of OP Units has the right to distributions.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. After holding the OP Units for a period of one year, a holder of OP Units has the right to redeem OP Units for, at the option of the OP, the cash value of a corresponding number of shares of the Company'sCompany’s common stock as retroactively adjusted for the Stock Dividends, other stock dividends and other similar events, or a corresponding number of shares of the Company's common stock.cash equivalent. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP'sOP’s assets. During the years ended December 31, 2018, 20172021, 2020 and 2016,2019, OP Unit non-controlling interest holders were paid distributions of $0.5$0.0 million, $0.6$0.2 million, and $0.7$0.3 million respectively.
Stock Dividends do not cause the OP to issue additional Common OP Units, rather, the redemption ratio to common stock is adjusted. The 405,908 Common OP Units outstanding held by unaffiliated third parties as of December 31, 2021 would be redeemable for 442,014 shares of common stock, giving effect to adjustments for the impact of the Stock Dividends through January 2022.
Series A Preferred OP Units
The Company is the sole general partner and holds substantially all of the Series A Preferred Units.
In September 2021, the Company partially funded the purchase of a MOB from an unaffiliated third party by causing the OP to issue 100,000 Series A Preferred Units, with a face value of $25.00 per unit, which were recorded at a 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. After holding the Series A Preferred Units for a period of one year, a holder of Series A Preferred Units has the right to redeem Series A Preferred Units for, at the option of the OP, the corresponding number of shares of the Company’s Series A Preferred Stock, or the cash equivalent. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets. During the year ended December 31, 2021, Series A Preferred Unit holders were paid distributions of $46,000.
Non-Controlling Interests in Property Owning Subsidiaries
The Company also has investment arrangements with other unaffiliated third parties whereby such investors receive an ownership interest in certain of the Company'sCompany’s property-owning subsidiaries and are entitled to receive a proportionate share of the net operating cash flow derived from the subsidiaries'subsidiaries’ property. Upon disposition of a property subject to non-controlling interest, the investor will receive a proportionate share of the net proceeds from the sale of the property. The investor has no recourse to any other assets of the Company. Due to the nature of the Company'sCompany’s involvement with these arrangements and the significance of its investment in relation to the investment of the third party, the Company has determined that it controls each entity in these arrangements and therefore the entities related to these arrangements are consolidated within the Company'sCompany’s financial statements. A non-controlling interest is recorded for the investor'sinvestor’s ownership interest in the properties.

On November 4, 2020, the Company purchased all of the outstanding the membership interests in the joint venture that owns the UnityPoint Clinics in Muscatine, Iowa and Moline, Illinois for approximately $0.6 million, funded with cash on hand. Following this transaction, the properties were wholly owned by the Company and added to the borrowing base under the Credit Facility.
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Table of Contents

HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

The following table summarizes the activity related to investment arrangements with unaffiliated third parties.
    Third Party Net Investment Amount Non-Controlling Ownership Percentage 
Net Real Estate Assets Subject to Investment Arrangement (1)
 Distributions
    As of December 31, As of December 31, As of December 31, Year Ended December 31,
Property Name
(Dollar amounts in thousands)
 Investment Date 2018 2018 2018 2017 2018 2017 2016
Plaza Del Rio Medical Office Campus Portfolio May 2015 $324
 1.9% $14,747
 $10,784
 $87
 $52
 $40
UnityPoint Clinic Portfolio (2)
 December 2017 $488
 5.0% $9,241
 $9,639
 $
 $
 $
Third Party Net Investment AmountNon-Controlling Ownership PercentageNet Real Estate Assets Subject to Investment ArrangementDistributions
As of December 31,As of December 31,As of December 31,Year Ended December 31,
Property Name
(Dollar amounts in thousands)
Investment Date2021202120212020202120202019
Plaza Del Rio Medical Office Campus Portfolio(1)
May 2015$368 2.4 %$12,925 $12,790 $— $— $— 
_____________
(1)    One property within the Plaza Del Rio Medical Office Campus Portfolio was mortgaged as part of the Multi-Property CMBS Loan. See Note 4- Mortgage Notes Payable for additional information.
(1)
One property within the Plaza Del Rio Medical Office Campus Portfolio was mortgaged as part of the Multi-Property CMBS Loan. See Note 4- Mortgage Notes Payable for additional information.
(2)
Assumed as part of the Asset Purchase. See Note 9 - Related Party Transactions and Arrangements for further information on the Asset Purchase.
Note 14 — Net Loss Per Share
The following is a summary of the basic and diluted net loss per share computation for the years ended December 31, 2018, 20172021, 2020 and 2016:2019 and has been retroactively adjusted to reflect the Stock Dividend (see Note 1 — Organization for additional details):
Year Ended December 31,
202120202019
Net loss attributable to stockholders (in thousands)
$(92,942)$(78,781)$(88,087)
Basic and diluted weighted-average shares outstanding (1)
100,534,438 100,312,245 100,093,694 
Basic and diluted net loss per share (1)
$(0.92)$(0.79)$(0.88)
  Year Ended December 31,
  2018 2017 2016
Net loss attributable to stockholders (in thousands)
 $(52,762) $(42,548) $(20,874)
Basic and diluted weighted-average shares outstanding 91,118,929
 89,802,174
 87,878,907
Basic and diluted net loss per share $(0.58) $(0.47) $(0.24)
(1) Retroactively adjusted for the effects of the Stock Dividends (see Note 1 — Organization for additional details).

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. The Company considers unvested restricted shares, OP Units and Class B Units to be common share equivalents. The Company had the following potentially dilutive securities as of December 31, 2018, 2017 and 2016, whichcommon stock equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share attributable to stockholders as thetheir effect would have been antidilutive:antidilutive. The amounts in the table below have been retroactively adjusted to reflect the Stock Dividend (see Note 1 — Organization for additional details):
December 31,
202120202019
Unvested restricted shares (1)
202,782 273,151 332,514 
OP Units (2)
442,014 442,014 442,014 
Class B Units (3)
391,119 391,119 391,119 
Total weighted average antidilutive common share equivalents1,035,915 1,106,284 1,165,647 
________
(1)    Weighted average number of antidilutive unvested restricted shares outstanding for the periods presented. There were 159,427, 215,384 and 277,241 unvested restricted shares outstanding as of December 31, 2021, 2020 and 2019, respectively.
(2)    Weighted average number of antidilutive OP Units held by unaffiliated third parties presented as shares outstanding for the periods presented, at the current conversion rate as retroactively adjusted for the effect of the Stock Dividends. There were 405,998 OP Units outstanding as of December 31, 2021, 2020 and 2019.
(3)    Weighted average number of antidilutive Class B Units presented as shares outstanding for the periods presented, at the current conversion rate as retroactively adjusted for the effect of the Stock Dividends. There were 359,250 Class B Units outstanding as of December 31, 2021, 2020 and 2019.
F-54
  December 31,
  2018 2017 2016
Unvested restricted shares (1)
 358,071
 130,339
 9,921
OP Units (2)
 405,998
 405,998
 405,998
Class B Units (3)
 359,250
 359,250
 359,250
Total weighted average antidilutive common share equivalents 1,123,319
 895,587
 775,169

Table of Contents
_____________
(1)
Weighted average number of antidilutive unvested restricted shares outstanding for the periods presented. There were 322,242, 382,510 and 9,921 unvested restricted shares outstanding as of December 31, 2018, 2017 and 2016, respectively.
(2)
Weighted average number of antidilutive OP Units outstanding for the periods presented. There were 405,998 OP Units outstanding as of December 31, 2018, 2017 and 2016.
(3)
Weighted average number of antidilutive Class B Units outstanding for the periods presented. There were 359,250 Class B Units outstanding as of December 31, 2018, 2017 and 2016.


HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
Note 15 — Segment Reporting
DuringThe disclosures below for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, are presented for the Company operated in threeCompany’s 2 reportable business segments for management and internal financial reporting purposes: MOBs triple-net leased healthcare facilities, and SHOPs.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Prior to December 31, 2018

2021, the Company had 3 reportable segments 1) medical office and outpatient buildings (“Former MOBs”), 2) triple-net lease healthcare properties (“Former NNN”) and 3) SHOPs. Culminating in the year ended December 31, 2021, the Company has completed several strategic property divestitures from the Company’s Former NNN segment and transitioned certain properties previously reported in the Company’s Former NNN segment into the Company’s SHOP segment. The remaining Former NNN properties are similar in nature, cash flows, and risk structure with the Former MOB segment and are managed operationally and reported collectively by the Company’s management. Accordingly, in the fourth quarter of 2021, the Company reevaluated its segments and concluded that it had 2 reportable segments. The Company combined the properties in its Former NNN segment with the properties in its Former MOB segment for segment reporting. All prior periods presented in the tables below have been conformed to the presentation of the Company’s new reportable segment structure. The Company will restate other quarterly prior periods when they are subsequently reported in later quarterly filings for comparative purposes.
The Company evaluates performance and makes resource allocations based on its three2 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. The triple-net leased healthcare facilities segment primarily consists of investments inexpenses 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 managers. There were no intersegment sales or transfers during the periods presented.operators.
Net Operating Income
The Company evaluates the performance of the combined properties in each segment based on net operating income ("NOI"(“NOI”). NOI is defined as total revenues excluding contingent purchase price consideration,from tenants, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).
NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property'sproperty’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently. The Company believes that in order to facilitate a clear understanding of the Company'sCompany’s operating results, NOI should be examined in conjunction with net income (loss) as presented in the Company'sCompany’s consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of the Company'sCompany’s performance or to cash flows as a measure of the Company'sCompany’s liquidity or ability to pay distributions.
Transition Properties
As described in more detail below, the number of the Company's properties as of December 31, 2018 includes 18 properties that were transitioned from the Company's triple-net leased healthcare facilities segment to the Company's SHOP segment during the period from January 1, 2017 through December 31, 2018 (collectively the "Transition Properties"). For purposes of the segment reporting below, the Company made an adjustment to include the Transition Properties as part of the SHOP segment and exclude them entirely from the triple-net leased healthcare facilities segment.
On June 8, 2017, the Company's taxable REIT subsidiary, through 12 separately executed membership interest or stock transfer agreements, acquired 12 operating entities that leased 12 healthcare facilities included in the Company's triple-net leased healthcare facilities segment. Concurrently with the acquisition of the 12 operating entities, the Company transitioned the management of the healthcare facilities to a third-party management company that manages other healthcare facilities in the Company's SHOP segment. See Note 3 — Real Estate Investments for additional disclosure. The segment reporting results of these 12 operating entities is included in the Company's triple-net leased healthcare facilities segment through June 8, 2017. Subsequent to June 8, 2017, these operating entities are operated under the RIDEA structure and are included in the Company's SHOP segment.
On January 1, 2018, the Company transitioned six properties in its triple-net leased healthcare facilities segment to operating properties under a structure permitted by the RIDEA structure. The properties consist of two assisted living facilities located in Burlington and Cudahy, Wisconsin, two assisted living facilities located in Dixon and Rockford, Illinois, an assisted living facility located in Richmond, Kentucky and a skilled nursing facility located in Lutz, Florida. The prior tenants of the six properties transferred the operations of the properties to newly-formed subsidiaries of the Company and third-party managers engaged by those Company subsidiaries pursuant to market operations transfer agreements. The Company’s subsidiaries simultaneously entered into new management agreements with the third-party managers, who will operate and manage the facilities on behalf of the Company's subsidiaries.



HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

The following tables reconcile the segment activity adjusted for the Transition Properties, to consolidated net loss for the years ended December 31, 20182021, 2020 and 2017:    2019:
F-55

  Year Ended December 31, 2018
(In thousands) Medical Office Buildings Triple-Net Leased Healthcare Facilities Seniors Housing — Operating Properties Consolidated
Revenues:        
Rental income $79,210
 $23,484
 $14
 $102,708
Operating expense reimbursements 19,893
 965
 
 20,858
Resident services and fee income 
 
 238,840
 238,840
Total revenues 99,103
 24,449
 238,854
 362,406
Property operating and maintenance 30,295
 13,777
 176,925
 220,997
NOI $68,808
 $10,672
 $61,929
 141,409
Impairment charges       (20,655)
Operating fees to related parties       (23,071)
Acquisition and transaction related       (302)
General and administrative       (17,275)
Depreciation and amortization       (83,212)
Interest expense       (49,471)
Interest and other income       23
Loss on non-designated derivatives       (157)
Loss on sale of real estate investment       (70)
Income tax expense       (197)
Net income attributable to non-controlling interests       216
Net loss attributable to stockholders       $(52,762)
Table of Contents


HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

Year Ended December 31, 2021
(In thousands)Medical Office BuildingsSeniors Housing — Operating PropertiesConsolidated
Revenue from tenants$122,867 $206,488 $329,355 
Property operating and maintenance34,480 171,333 205,813 
NOI$88,387 $35,155 123,542 
Impairment charges(40,951)
Operating fees to related parties(24,206)
Acquisition and transaction related(2,714)
General and administrative(16,828)
Depreciation and amortization(79,926)
Gain on sale of real estate investments3,648 
Interest expense(47,900)
Interest and other income61 
Loss on non designated derivatives37 
Income tax expense(203)
Net income attributable to non-controlling interests260 
Allocation for preferred stock(7,762)
Net loss attributable to common stockholders$(92,942)
Year Ended December 31, 2020
(In thousands)Medical Office BuildingsSeniors Housing — Operating PropertiesConsolidated
Revenue from tenants$119,824 $261,788 $381,612 
Property operating and maintenance32,812 210,736 243,548 
NOI87,012 51,052 138,064 
Impairment charges(36,446)
Operating fees to related parties(23,922)
Acquisition and transaction related(173)
General and administrative(21,572)
Depreciation and amortization(81,053)
Interest expense(51,519)
Interest and other income44 
Gain on sale of real estate investments5,230 
Loss on sale of non-designated derivatives(102)
Income tax expense(4,061)
Net loss attributable to non-controlling interests(303)
Allocation for preferred stock(2,968)
Net loss attributable to common stockholders$(78,781)
F-56

  Year Ended December 31, 2017
(In thousands) Medical Office Buildings Triple-Net Leased Healthcare Facilities Seniors Housing — Operating Properties Consolidated
Revenues:        
Rental income $67,390
 $21,023
 $6,739
 $95,152
Operating expense reimbursements 15,460
 1,146
 (1) 16,605
Resident services and fee income 
 
 199,416
 199,416
Total revenues 82,850
 22,169
 206,154
 311,173
Property operating and maintenance 24,137
 12,789
 149,351
 186,277
NOI $58,713
 $9,380
 $56,803
 124,896
Impairment charges       (18,993)
Operating fees to related parties       (22,257)
Acquisition and transaction related       (2,986)
General and administrative       (15,673)
Depreciation and amortization       (77,641)
Interest expense       (30,264)
Interest and other income       306
Loss on non-designated derivatives       (198)
Gain on sale of real estate investment       438
Gain on asset acquisition       307
Income tax expense       (647)
Net income attributable to non-controlling interests       164
Net loss attributable to stockholders       $(42,548)
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HEALTHCARE TRUST, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20182021

Year Ended December 31, 2019
(In thousands)Medical Office BuildingsSeniors Housing — Operating PropertiesConsolidated
Revenue from tenants$114,943 $259,971 $374,914 
Property operating and maintenance34,123 200,062 234,185 
NOI80,820 59,909 140,729 
Impairment charges(55,969)
Operating fees to related parties(23,414)
Acquisition and transaction related(362)
General and administrative(20,530)
Depreciation and amortization(81,032)
Gain on sale of real estate investment8,790 
Interest expense(56,059)
Interest and other income
Loss on non-designated derivatives(68)
Income tax expense(399)
Net loss attributable to non-controlling interests393 
Allocation for preferred stock(173)
Net loss attributable to common stockholders$(88,087)
The following table reconciles the segment activity to consolidated net loss for the year ended December 31, 2016:
  Year Ended December 31, 2016
(In thousands) Medical Office Buildings Triple-Net Leased Healthcare Facilities Seniors Housing — Operating Properties Consolidated
Revenues:        
Rental income $65,994
 $37,374
 $7
 $103,375
Operating expense reimbursements 14,927
 949
 
 15,876
Resident services and fee income 
 
 183,177
 183,177
Contingent purchase price consideration 
 
 138
 138
Total revenues 80,921
 38,323
 183,322
 302,566
Property operating and maintenance 23,816
 18,810
 129,451
 172,077
NOI $57,105
 $19,513
 $53,871
 130,489
Impairment charges       (389)
Operating fees to related parties       (20,583)
Acquisition and transaction related       (3,163)
General and administrative       (12,105)
Depreciation and amortization       (98,886)
Interest expense       (19,881)
Interest and other income       47
Gain on non-designated derivatives       31
Gain on sale of real estate investment       1,330
Gain on sale of investment securities       56
Income tax benefit       2,084
Net income attributable to non-controlling interests       96
Net loss attributable to stockholders       $(20,874)

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018


The following table reconciles the segment activity to consolidated total assets as of the periods presented:
December 31,
(In thousands)20212020
ASSETS
Investments in real estate, net:
Medical office and other healthcare-related buildings$1,149,241 $1,121,898 
Seniors housing — operating properties900,686 987,050 
Total investments in real estate, net2,049,927 2,108,948 
Cash and cash equivalents59,738 72,357 
Restricted cash25,644 17,989 
Assets held for sale— 90 
Derivative assets, at fair value174 13 
Straight-line rent receivable, net23,858 23,322 
Operating lease right-of-use asset7,914 13,912 
Prepaid expenses and other assets32,564 34,932 
Deferred costs, net14,581 15,332 
Total assets$2,214,400 $2,286,895 

F-57

  December 31,
(In thousands) 2018 2017
ASSETS    
Investments in real estate, net:    
Medical office buildings $878,703
 $897,264
Triple-net leased healthcare facilities 289,686
 294,727
Construction in progress 90,829
 82,007
Seniors housing — operating properties 911,952
 902,343
Total investments in real estate, net 2,171,170
 2,176,341
Cash and cash equivalents 77,264
 94,177
Restricted cash 14,094
 8,411
Assets held for sale 52,397
 37,822
Derivative assets, at fair value 4,633
 2,550
Straight-line rent receivable, net 17,351
 15,327
Prepaid expenses and other assets 28,785
 22,099
Deferred costs, net 11,752
 15,134
Total assets $2,377,446
 $2,371,861
Table of Contents

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
The following table reconciles capital expenditures by reportable business segmentsegments, excluding corporate non-real estate expenditures, for the periods presented:
Year Ended December 31,
(In thousands)202120202019
Medical office and other healthcare-related buildings$6,152 $8,561 $5,705 
Seniors housing — operating properties12,919 12,833 11,014 
Total capital expenditures$19,071 $21,394 $16,719 
  Year Ended December 31,
(In thousands) 2018 2017 2016
Medical office buildings $7,582
 $4,037
 $3,198
Triple-net leased healthcare facilities 1,152
 154
 112
Seniors housing — operating properties 4,176
 4,810
 4,166
Total capital expenditures $12,910
 $9,001
 $7,476
Note 16 — Commitments and Contingencies
TheAs of December 31, 2021, the Company has entered into7 operating and capital6 direct financing lease agreements related to certain acquisitions under leasehold interestinterests arrangements. The following table reflects the minimum base cash rental payments due7 operating leases have durations, including assumed renewals, ranging from 20.9 to 85.7 years, excluding an adjacent parking lot lease with a term of 2.8 years as of December 31, 2021. On January 1, 2019, the Company overadopted ASU 2016- 02 and recorded ROU assets and lease liabilities related to these ground operating leases (see Note 2Summary of Significant Accounting Policies for additional information). The Company did not enter into any additional ground leases during the next five yearsyear ended December 31, 2021.
As of December 31, 2021, the Company’s balance sheet includes ROU assets and thereafter under these arrangements, includingoperating lease liabilities of $7.9 million and $8.1 million, respectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively, on the presentCompany’s consolidated balance sheet. In determining operating ROU assets and lease liabilities for the Company’s existing operating leases upon the adoption of the new lease guidance 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. During the year ended December 31, 2021, the Company sold a property which included a prepaid ground lease. Upon disposition, the carrying value of the net minimum payment due under capital leases. These amounts exclude contingent rent payments,ROU asset was $5.7 million, and was recorded as applicable,a reduction of the gain on sale for that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items.property.
  Future Minimum Base Rent Payments
(In thousands) Operating Leases Capital Leases
2019 $780
 $80
2020 781
 82
2021 774
 84
2022 790
 86
2023 760
 88
Thereafter 34,344
 7,590
Total minimum lease payments $38,229
 8,010
Less: amounts representing interest   (3,202)
Total present value of minimum lease payments   $4,808

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 34.9 years and a weighted-average discount rate of 7.35% as of December 31, 2018

Total2021. For the years ended December 31, 2021 and 2019, the Company paid cash of $0.8 million and $0.8 million for amounts included in the measurement of lease liabilities and recorded total rental expense from operating leases wasof $0.9 million, $0.8$0.9 million and $0.8$1.0 million, on a straight-line basis in accordance with the standard, during the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively. DuringThe lease expense is recorded in property operating expenses in the three years endedconsolidated statements of operations and comprehensive loss.
Future Base Rent Payments
(In thousands)Operating Leases
Direct Financing Leases (1)
2022$642 $86 
2023645 88 
2024632 90 
2025588 92 
2026599 95 
Thereafter22,560 7,321 
Total minimum lease payments25,666 7,772 
Less: amounts representing interest(17,536)(2,934)
Total present value of minimum lease payments$8,130 $4,838 
_______
(1) The Direct Finance Lease liability is included in Accounts Payable and accrued expenses on the balance sheet as of December 31, 2018, 20172021. The Direct Financing lease asset is included as part of building and 2016, interest expense relatedimprovements as the land component was not required to capital leases was approximately $85,000, $85,000 and $84,000, respectively.be bifurcated under ASU 840.
Litigation and Regulatory Matters
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.
F-58

Table of Contents

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
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 December 31, 2018,2021, 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.
Development Project Funding
In August 2015, the Company entered into an asset purchase agreement and development agreement to acquire land and construction in progress, and subsequently fund the remaining construction, of a development property in Jupiter, Florida for $82.0 million. As of December 31, 2018, the Company had funded $90.6 million, including $10.0 million for the land and $80.6 million for construction in progress. As a result, the Company believes that it has satisfied its funding commitments for the construction. As of December 31, 2018, the Company had funded $8.6 million in excess of its $72.0 million funding commitment for the construction. The Company has and may continue to, at its election, provide additional funding to ensure completion of the construction. To the extent the Company funds additional monies for the completion of the development, Palm, the developer of the facility, is responsible for reimbursing the Company for any amounts funded. Entities related to Palm, referred to herein as the NuVista Tenants, are, however, in default to the Company under leases at other properties in the Company's portfolio (see Note 3 — Real Estate Investments for more information). The Company currently does not expect that Palm will reimburse the Company for construction overruns funded and there can be no assurance that they will do so, in whole or in part.
Palm is also responsible for completing the development and obtaining a final certificate of occupancy for the facility (the "CO"). However, Palm is in default of the development agreement and has ceased providing services under the development agreement. There is no assurance as to when and if Palm will comply with its obligations, and this has resulted in delays in obtaining the CO. The Company is currently working to obtain the CO, but there can be no assurance as to how long this process will take, or if the Company will be able to complete it at all.
Under the development agreement, the targeted completion date was December 31, 2016. Additionally, the estimated rent commencement date was expected to be no later than April 1, 2017 with the Jupiter Tenant, entities related to Palm operating the property as the tenants. The Company does not expect entities related to Palm to become the tenant and is working to find a replacement tenant once it obtains the CO, although there can be no assurance the Company will be able to do so on a timely basis, or at all. Pursuant to an agreement between the Company and the Jupiter Tenant, the Jupiter Tenant agreed to transfer all contracts, licenses and permits (including all operational permissions and certificates of need) to a replacement tenant designated by the Company. Until a replacement tenant is identified, there can be no assurance that this transfer will take place or that the Jupiter Tenant will comply with its obligations when required to do so. Moreover, until the CO is obtained and a replacement tenant is identified, the Company will not receive income from the property, and the amount of cash the Company is able to generate to fund distributions to its stockholders will continue to be adversely affected.
Concurrent with the acquisition, the Company entered into a loan agreement and lease agreement with an affiliate of Palm. The loan agreement is intended to provide working capital to the tenant during the initial operating period of the facility and allows for borrowings of up to $2.7 million from the Company on a non-revolving basis. Any outstanding principal balances under the loan will bear interest at 7.0% per year, payable on the first day of each fiscal quarter. As of December 31, 2018 and 2017, there were no amounts outstanding under the loan agreement as operations at the facility have not yet started.
Note 17 — Quarterly Results (Unaudited)
Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2018 and 2017:
  Quarter Ended
(In thousands, except for share and per share data) March 31,
2018
 June 30,
2018
 September 30,
2018
 December 31,
2018
Total revenues $89,438
 $90,957
 $90,191
 $91,820
Net loss attributable to stockholders $(5,991) $(6,950) $(29,607) $(10,214)
Basic and diluted weighted average shares outstanding 90,783,065
 90,978,411
 90,203,311
 91,520,444
Basic and diluted net loss per share $(0.07) $(0.08) $(0.33) $(0.11)
  Quarter Ended
(In thousands, except for share and per share data) March 31,
2017
 June 30,
2017
 September 30,
2017
 December 31,
2017
Total revenues $74,615
 $75,766
 $79,072
 $81,720
Net loss attributable to stockholders $(6,139) $(4,716) $(24,136) $(7,557)
Basic and diluted weighted average shares outstanding 89,639,676
 89,335,489
 89,821,799
 90,403,032
Basic and diluted net loss per share $(0.07) $(0.05) $(0.27) $(0.08)
Note 18 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for the following:following disclosures:
New York Five Disposition
The disposition of five of the New York Six MOBs closed on February 6, 2019 for a contract sales price of $45.0 million. The net proceeds after closing costs and the repayment of debt, including prepayment penalties, was $26.6 million.

Amendment to Share Repurchase ProgramStock Dividend
On January 28, 2019,3, 2022, the Board approved an amendment toCompany declared a quarterly stock dividend of 0.014655 shares of the Company’s existing SRP changingcommon stock on each share of the date on which any repurchases are to be made in respect of requests made during the period commencing March 13, 2018 up to and including December 31, 2018 to no later than March 31, 2019, rather than on or before the 31st day following December 31, 2018. This SRP amendment will become effectiveCompany’s outstanding common stock. The stock dividend was payable on January 30, 2019. All other terms18, 2022 to holders of record of the SRP remain in effect, including that repurchases pursuant to the SRP areCompany’s common stock at the sole discretionclose of the Board.business on January 13, 2022.
New Credit Facility
On March 13, 2019, the Company entered into the New Credit Facility by amending and restating the Prior Credit Facility prior to its maturity on March 21, 2019. The total commitments under our New Credit Facility are $630.0 million and include an uncommitted “accordion feature” whereby, upon our request, but at the sole discretion of the participating lenders, the commitments under our New Credit Facility may be increased by up to an additional $370.0 million up to a total of $1.0 billion.
F-59
The New Credit Facility consists of two components, the Revolving Credit Facility and our Term Loan. The Revolving Credit Facility is interest-only and matures on March 13, 2023, subject to one one-year extension at our option. The Term Loan is interest-only and matures on March 13, 2024.
The amount available for borrowings under the New Credit Facility is based on the lesser of (1) a percentage of the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, and (2) a maximum amount permitted to maintain a minimum debt service coverage ratio with respect to the borrowing base, in each case, as of the determination date.
At the closing under the New Credit Facility, the Company had a total borrowing capacity thereunder of $263.1 million based on the value of the borrowing base thereunder. Of this amount, $233.6 million was outstanding including $150.0 million outstanding under the Term Loan, $83.6 million outstanding under the Revolving Credit Facility and $29.5 million remained available for future borrowings under the Revolving Credit Facility.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Like the Prior Credit Facility, the New Credit Facility is secured by a pledged pool of the equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base thereunder. After the closing of the New Credit Facility, the 65 properties that had comprised the borrowing base under the Prior Credit Facility comprised the borrowing base under the New Credit Facility.
At the closing under the New Credit Facility, the Revolving Credit Facility and the Term Loan bore interest at a weighted average rate per annum equal to 4.61%. Prior to the closing of the New Credit Facility, the Prior Credit Facility bore interest at a rate per annum equal to 4.62%.
The New Credit Facility contains customary representations, warranties, as well as affirmative and negative covenants. As of December 31, 2018, the Company was in compliance with the financial covenants under the Prior Credit Facility, and, as of the date of the closing thereunder, the Company was in compliance with the financial covenants under the New Credit Facility.

F-47

Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


   Initial CostsSubsequent to Acquisition  
PropertyStateAcquisition
Date
Encumbrances at 
December 31, 2021
LandBuilding and
Improvements
LandBuilding and
Improvements
Gross Amount at
December 31, 2021(1) (2)
Accumulated
Depreciation(3) (4)
Fresenius Medical Care - Winfield, AL(5)AL5/10/2013$— $152 $1,568 $— $— $1,720 $399 
Adena Health Center - Jackson, OH(5)OH6/28/2013— 242 4,494 — — 4,736 990 
Ouachita Community Hospital - West Monroe, LA(5)LA7/12/2013— 633 5,304 — — 5,937 1,189 
CareMeridian - Littleton, CO(5)CO8/8/2013— 976 8,900 — 111 9,987 2,798 
Oak Lawn Medical Center - Oak Lawn, ILIL8/21/20135,343 835 7,217 — 25 8,077 1,806 
Surgery Center of Temple - Temple, TX(5)TX8/30/2013— 225 5,208 — 432 5,865 1,185 
Greenville Health System - Greenville, SC(5), (9)SC10/10/2013— 720 3,045 — 194 3,959 657 
Stockbridge Family Medical - Stockbridge, GAGA2/21/20141,781 823 1,799 — 165 2,787 460 
Arrowhead Medical Plaza II - Glendale, AZAZ2/21/20147,540 — 9,758 — 2,011 11,769 2,854 
Village Center Parkway - Stockbridge, GAGA2/21/20142,434 1,135 2,299 — 156 3,590 709 
Creekside MOB - Douglasville, GAGA4/30/20148,814 2,709 5,320 — 637 8,666 1,660 
Bowie Gateway Medical Center - Bowie, MDMD5/7/20149,153 983 10,321 — 252 11,556 2,181 
Campus at Crooks & Auburn Building D - Rochester Mills, MIMI5/19/20143,627 640 4,166 — 131 4,937 975 
Berwyn Medical Center - Berwyn, IL(5)IL5/29/2014— 1,305 7,559 — — 8,864 1,495 
Countryside Medical Arts - Safety Harbor, FLFL5/30/20146,983 915 7,663 — 60 8,638 1,645 
St. Andrews Medical Park - Venice, FLFL5/30/201411,119 1,666 10,005 935 12,608 2,689 
Campus at Crooks & Auburn Building C - Rochester Mills, MIMI6/3/20143,831 609 3,893 — 166 4,668 945 
Laguna Professional Center - Elk Grove, CACA7/15/20148,887 1,811 14,598 — 311 16,720 3,214 
UC Davis MOB - Elk Grove, CACA7/15/20148,136 1,138 7,242 — 285 8,665 1,703 
Estate at Hyde Park - Tampa, FL(7)FL7/31/201420,116 1,777 20,308 — 1,005 23,090 4,531 
Autumn Ridge of Clarkston - Clarkston, MI(7)MI8/12/201419,245 655 19,967 — 65 20,687 4,325 
Sunnybrook of Burlington - Burlington, IA(6)IA8/26/201412,783 518 16,739 — 254 17,511 3,924 
Sunnybrook of Carroll - Carroll, IA(6)IA8/26/20146,144 473 11,263 — 36 11,772 2,385 
Prairie Hills at Cedar Rapids - Cedar Rapids, IA(7)IA8/26/20148,014 195 8,595 — 158 8,948 1,861 
Prairie Hills at Clinton - Clinton, IA(6)IA8/26/201410,759 890 18,882 — 120 19,892 4,213 
Prairie Hills at Des Moines - Des Moines, IA(6)IA8/26/20145,418 647 13,745 — 57 14,449 3,210 
Sunnybrook of Fairfield - Fairfield, IA(5)IA8/26/2014— 340 14,115 — 269 14,724 3,253 
Sunnybrook of Ft. Madison - Ft. Madison, IA(5)IA8/26/2014— 263 3,931 — 223 4,417 601 
Prairie Hills at Independence - Independence, IA(5)IA8/26/2014— 473 10,600 — 176 11,249 2,234 
Sunnybrook of Mt. Pleasant - Mt. Pleasant, IA(5)IA8/26/2014— 205 10,935 — 326 11,466 2,257 
Sunnybrook of Muscatine - Muscatine, IA(6)IA8/26/201411,989 302 13,840 — 151 14,293 2,989 
Prairie Hills at Ottumwa - Ottumwa, IA(5)IA8/26/2014— 538 9,186 — 178 9,902 2,109 
Prairie Hills at Tipton - Tipton, IA(5)IA8/26/2014— 306 10,409 — 80 10,795 2,110 
F-60
        Initial Costs Subsequent to Acquisition    
Property State 
Acquisition
Date
 
Encumbrances at 
December 31, 2018
 Land 
Building and
Improvements
 Building and
Improvements
 
Gross Amount at
December 31,2018(1) (2)
 
Accumulated
Depreciation(3) (4)
Fresenius Medical Care - Winfield, AL
(5) 
AL 5/10/2013 $
 $152
 $1,568
 $
 $1,720
 $261
Adena Health Center - Jackson, OH
(5) 
OH 6/28/2013 
 242
 4,494
 
 4,736
 641
Ouachita Community Hospital - West Monroe, LA
(5) 
LA 7/12/2013 
 633
 5,304
 
 5,937
 769
CareMeridian - Littleton, CO
(5) 
CO 8/8/2013 
 976
 8,900
 103
 9,979
 2,084
Oak Lawn Medical Center - Oak Lawn, IL IL 8/21/2013 5,343
 835
 7,477
 
 8,312
 1,250
Surgery Center of Temple - Temple, TX TX 8/30/2013 3,141
 225
 5,208
 
 5,433
 721
Greenville Health System - Greenville, SC
(5) 
SC 10/10/2013 
 720
 3,045
 
 3,765
 412
Arrowhead Medical Plaza II - Glendale, AZ AZ 2/21/2014 7,540
 
 9,707
 1,078
 10,785
 1,643
Village Center Parkway - Stockbridge, GA GA 2/21/2014 2,434
 1,135
 2,299
 131
 3,565
 446
Stockbridge Family Medical - Stockbridge, GA GA 2/21/2014 1,781
 823
 1,799
 11
 2,633
 264
Creekside MOB - Douglasville, GA GA 4/30/2014 6,018
 2,709
 5,320
 603
 8,632
 1,070
Bowie Gateway Medical Center - Bowie, MD MD 5/7/2014 7,390
 983
 10,321
 
 11,304
 1,309
Campus at Crooks & Auburn Building D - Rochester Hills, MI MI 5/19/2014 2,613
 640
 4,107
 151
 4,898
 546
Berwyn Medical Center - Berwyn, IL
(5) 
IL 5/29/2014 
 1,305
 7,559
 
 8,864
 904
Countryside Medical Arts - Safety Harbor, FL FL 5/30/2014 5,690
 915
 7,663
 60
 8,638
 994
St. Andrews Medical Park - Venice, FL FL 5/30/2014 6,289
 1,666
 9,944
 386
 11,996
 1,397
Campus at Crooks & Auburn Building C - Rochester Hills, MI MI 6/3/2014 2,877
 609
 3,842
 152
 4,603
 552
UC Davis MOB - Elk Grove, CA CA 7/15/2014 6,282
 1,138
 7,242
 235
 8,615
 961
Laguna Professional Center - Elk Grove, CA CA 7/15/2014 8,887
 1,811
 14,598
 218
 16,627
 1,876
Estate at Hyde Park - Tampa, FL
(7) 
FL 7/31/2014 20,116
 1,777
 20,153
 168
 22,098
 2,819
Autumn Ridge of Clarkston - Clarkston, MI
(7) 
MI 8/12/2014 19,245
 655
 19,834
 118
 20,607
 2,838
Sunnybrook of Burlington - Burlington, IA
(6) 
IA 8/26/2014 12,783
 518
 16,651
 97
 17,266
 2,381
Sunnybrook of Carroll - Carroll, IA
(6) 
IA 8/26/2014 6,144
 473
 11,150
 103
 11,726
 1,458
Sunnybrook of Fairfield - Fairfield, IA IA 8/26/2014 1,867
 340
 14,028
 109
 14,477
 2,063
Sunnybrook of Ft. Madison - Ft. Madison, IA IA 8/26/2014 1,113
 263
 3,898
 28
 4,189
 185
Sunnybrook of Mt. Pleasant - Mt. Pleasant, IA IA 8/26/2014 1,417
 205
 10,811
 230
 11,246
 1,336
Sunnybrook of Muscatine - Muscatine, IA
(6) 
IA 8/26/2014 11,989
 302
 13,752
 111
 14,165
 1,837
Prairie Hills at Cedar Rapids -Cedar Rapids, IA
(7) 
IA 8/26/2014 8,014
 195
 8,544
 74
 8,813
 1,137
Prairie Hills at Clinton - Clinton, IA
(6) 
IA 8/26/2014 10,759
 890
 18,801
 66
 19,757
 2,525

F-48

Table of Contents
Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


   Initial CostsSubsequent to Acquisition  
PropertyStateAcquisition
Date
Encumbrances at 
December 31, 2021
LandBuilding and
Improvements
LandBuilding and
Improvements
Gross Amount at
December 31, 2021(1) (2)
Accumulated
Depreciation(3) (4)
Liberty Court - Dixon, IL(5)IL8/29/2014— 119 1,998 — 59 2,176 482 
Lakeside Vista - Holland, MI(6)MI8/29/20146,128 378 12,196 — 632 13,206 2,675 
The Atrium - Rockford, IL(5)IL8/29/2014— 164 1,746 — 267 2,177 290 
Arrowhead Medical Plaza I - Glendale, AZAZ9/10/20144,571 — 6,447 — 1,309 7,756 1,610 
Sunnybrook of Burlington - Land - Burlington, IAMO9/23/2014— 620 — — — 620 — 
Community Health MOB - Harrisburg, PA(10)PA9/26/20145,424 — 6,170 — — 6,170 1,156 
Brady MOB - Harrisburg, PA(10)PA9/26/201419,661 — 22,485 — — 22,485 4,113 
Landis Memorial - Harrisburg, PA(5), (10)PA9/26/2014— — 32,484 — — 32,484 5,960 
FOC II - Mechanicsburg, PA(10)PA9/26/201416,136 — 16,473 — 142 16,615 3,471 
FOC Clinical - Mechanicsburg, PA(10)PA9/26/201417,695 — 19,634 — — 19,634 4,057 
FOC I - Mechanicsburg, PA(10)PA9/26/20148,204 — 8,923 — 277 9,200 2,002 
Copper Springs Senior Living - Meridian, ID(5)ID9/29/2014— 498 7,130 — 207 7,835 1,965 
Addington Place of Brunswick - Brunswick, GA(5)GA9/30/2014— 1,509 14,402 — 463 16,374 3,328 
Addington Place of Dublin - Dublin, GA(5)GA9/30/2014— 403 9,281 — 160 9,844 2,289 
Allegro at Elizabethtown - Elizabethtown, KY(5)KY9/30/2014— 317 7,290 — 255 7,862 1,926 
Addington Place of Johns Creek - Johns Creek, GA(7)GA9/30/201410,139 997 11,943 — 477 13,417 2,837 
Allegro at Jupiter - Jupiter, FL(6)FL9/30/201434,370 3,741 49,534 — 422 53,697 10,712 
Addington Place of Lee's Summit - Lee's Summit, MO(7)MO9/30/201417,187 2,734 25,008 — 384 28,126 5,461 
Addington Place at Mills - Roswell, GA(5)GA9/30/2014— 1,000 8,611 — 2,621 12,232 2,723 
Addington Place of College Harbour - St Petersburg, FL(5)FL9/30/2014— 3,791 8,684 — 1,817 14,292 3,008 
Allegro at Stuart - Stuart, FL(6)FL9/30/201449,069 5,018 60,575 — 715 66,308 13,410 
Allegro at Tarpon - Tarpon Springs, FL(7)FL9/30/20147,350 2,360 13,728 — 579 16,667 3,826 
Addington Place of Titusville - Titusville, FL(6)FL9/30/201412,423 1,379 13,976 — 655 16,010 3,570 
Allegro at St. Petersburg - Land - St. Petersburg, FLFL9/30/2014— 3,045 — — — 3,045 — 
Gateway MOB - Clarksville, TN(9)TN10/3/201417,560 — 16,367 — 1,011 17,378 3,649 
Dyer Building - Dyer, IN(5)IN10/17/20146,143 601 8,992 — 64 9,657 1,722 
757 Building - Munster, IN(5)IN10/17/2014— 645 7,885 — — 8,530 1,478 
761 Building - Munster, ININ10/17/20146,797 1,436 8,616 — 59 10,111 1,732 
759 Building - Munster, ININ10/17/20148,271 1,101 8,899 — — 10,000 1,715 
Schererville Building - Schererville, ININ10/17/2014— 1,260 935 — 79 2,274 329 
Meadowbrook Senior Living - Agoura Hills, CA(7)CA11/25/201419,167 8,821 48,682 — 2,115 59,618 10,168 
Mount Vernon Medical Office Building - Mount Vernon, WA(9)WA11/25/201415,797 — 18,519 — 18,522 3,561 
F-61
        Initial Costs Subsequent to Acquisition    
Property State 
Acquisition
Date
 
Encumbrances at 
December 31, 2018
 Land 
Building and
Improvements
 Building and
Improvements
 
Gross Amount at
December 31,2018(1) (2)
 
Accumulated
Depreciation(3) (4)
Prairie Hills at Des Moines - Des Moines, IA
(6) 
IA 8/26/2014 5,418
 647
 13,645
 130
 14,422
 2,003
Prairie Hills at Tipton - Tipton, IA IA 8/26/2014 1,113
 306
 10,370
 26
 10,702
 1,243
Prairie Hills at Independence - Independence, IA IA 8/26/2014 1,372
 473
 10,534
 73
 11,080
 1,358
Prairie Hills at Ottumwa - Ottumwa, IA IA 8/26/2014 1,305
 538
 9,100
 86
 9,724
 1,292
Sunnybrook of Burlington - Land - Burlington, IA IA 8/26/2014 
 620
 
 
 620
 
Buchanan Meadows - Buchanan, MI
(6) 
MI 8/29/2014 4,234
 288
 6,988
 134
 7,410
 990
Crystal Springs - Kentwood, MI (f/k/a Addington Place of Grand Rapids) MI 8/29/2014 1,462
 661
 14,507
 74
 15,242
 2,272
Golden Orchards - Fennville, MI MI 8/29/2014 787
 418
 5,318
 66
 5,802
 712
Lakeside Vista - Holland, MI
(6) 
MI 8/29/2014 6,128
 378
 12,196
 126
 12,700
 1,695
Liberty Court - Dixon, IL
(5) 
IL 8/29/2014 
 119
 1,957
 25
 2,101
 303
Prestige Centre - Buchanan, MI MI 8/29/2014 450
 297
 2,207
 10
 2,514
 365
Prestige Commons - Chesterfield Twp, MI MI 8/29/2014 641
 318
 5,346
 78
 5,742
 709
Prestige Pines - Dewitt, MI (f/k/a Addington Place of DeWitt) MI 8/29/2014 934
 476
 3,065
 142
 3,683
 573
Prestige Place - Clare, MI
(5) 
MI 8/29/2014 
 59
 1,169
 29
 1,257
 321
Prestige Point - Grand Blanc, MI (f/k/a Addington Place of Grand Blanc) MI 8/29/2014 
 73
 734
 58
 865
 45
Prestige Way - Holt, MI
(5) 
MI 8/29/2014 
 151
 1,339
 32
 1,522
 72
The Atrium - Rockford, IL IL 8/29/2014 
 164
 1,746
 20
 1,930
 85
Waldon Woods - Wyoming, MI MI 8/29/2014 
 205
 1,915
 88
 2,208
 126
Whispering Woods - Grand Rapids, MI (f/k/a Addington Place of East Paris)
(5) 
MI 8/29/2014 
 806
 12,204
 586
 13,596
 2,021
Arrowhead Medical Plaza I - Glendale, AZ AZ 9/10/2014 4,571
 
 6,377
 713
 7,090
 835
Cardiovascular Consultants of Cape Girardeau Medical Office Building- Cape Girardeau, MO
(5) 
MO 9/18/2014 
 1,624
 5,303
 
 6,927
 838
FOC Clinical - Mechanicsburg, PA PA 9/26/2014 13,408
 
 19,634
 
 19,634
 2,378
Brady MOB - Harrisburg, PA PA 9/26/2014 14,622
 
 22,485
 
 22,485
 2,411
Community Health MOB - Harrisburg, PA PA 9/26/2014 3,985
 
 6,170
 
 6,170
 677
FOC I - Mechanicsburg, PA PA 9/26/2014 5,859
 
 8,923
 155
 9,078
 1,141
FOC II - Mechanicsburg, PA PA 9/26/2014 11,508
 
 16,473
 132
 16,605
 2,011

F-49

Table of Contents
Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


   Initial CostsSubsequent to Acquisition  
PropertyStateAcquisition
Date
Encumbrances at 
December 31, 2021
LandBuilding and
Improvements
LandBuilding and
Improvements
Gross Amount at
December 31, 2021(1) (2)
Accumulated
Depreciation(3) (4)
Wellington at Hershey's Mill - West Chester, PA(5)PA12/3/2014— 8,531 80,734 — 3,654 92,919 16,328 
Eye Specialty Group Medical Building - Memphis, TNTN12/5/20148,475 775 7,223 — — 7,998 1,343 
Addington Place of Alpharetta - Alpharetta, GAGA12/10/2014— 1,604 26,069 — 597 28,270 5,597 
Addington Place of Prairie Village - Prairie Village, KS(7)KS12/10/201414,812 1,782 21,869 — 413 24,064 4,846 
Bloom MOB - Harrisburg, PA(10)PA12/15/201415,322 — 15,928 — 517 16,445 3,066 
Medical Sciences Pavilion - Harrisburg, PA(10)PA12/15/201418,272 — 22,309 — — 22,309 4,004 
Wood Glen Nursing and Rehab Center - West Chicago, IL(5)IL12/16/2014— 1,896 16,107 — — 18,003 4,023 
Pinnacle Center - Southaven, MSMS12/16/20147,085 1,378 6,547 — 663 8,588 1,641 
Paradise Valley Medical Plaza - Phoenix, AZAZ12/29/201413,085 — 25,194 — 1,244 26,438 5,212 
Victory Medical Center at Craig Ranch - McKinney, TXTX12/30/2014— 1,596 40,475 — 1,164 43,235 7,644 
Rivershores Healthcare & Rehab Centre - Marseilles, IL(5)IL12/31/2014— 1,276 6,868 — — 8,144 1,826 
Morton Terrace Healthcare & Rehab Centre - Morton, IL(5)IL12/31/2014— 709 5,649 — — 6,358 1,738 
Morton Villa Healthcare & Rehab Centre - Morton, IL(5)IL12/31/2014— 645 3,687 — 87 4,419 1,095 
The Heights Healthcare & Rehab Centre - Peoria Heights, IL(5)IL12/31/2014— 214 7,952 — — 8,166 2,218 
Colonial Healthcare & Rehab Centre - Princeton, IL(5)IL12/31/2014— 173 5,871 — — 6,044 1,806 
Capitol Healthcare & Rehab Centre - Springfield, IL(5)IL12/31/2014— 603 21,699 — 26 22,328 5,307 
Acuity Specialty Hospital - Mesa, AZ(5)AZ1/14/2015— 1,977 16,203 — 543 18,723 3,187 
Acuity Specialty Hospital - Sun City, AZ(11)AZ1/14/2015— 2,329 15,795 (909)(7,715)9,500 219 
Addington Place of Shoal Creek - Kansas City, MO(7)MO2/2/201513,391 3,723 22,259 — 440 26,422 4,782 
Aurora Healthcare Center - Green Bay, WI(5)WI3/18/2015— 1,130 1,678 — — 2,808 365 
Aurora Healthcare Center - Greenville, WI(5)WI3/18/2015— 259 958 — — 1,217 221 
Aurora Healthcare Center - Kiel, WI(5)WI3/18/2015— 676 2,214 — — 2,890 430 
Aurora Healthcare Center - Plymouth, WIWI3/18/201517,038 2,891 24,224 — — 27,115 4,729 
Aurora Healthcare Center - Waterford, WI(5)WI3/18/2015— 590 6,452 — — 7,042 1,215 
Aurora Healthcare Center - Wautoma, WI(5)WI3/18/2015— 1,955 4,361 — — 6,316 856 
Arbor View Assisted Living and Memory Care - Burlington, WI(5)WI3/31/2015— 367 7,815 — 66 8,248 1,866 
Advanced Orthopedic Medical Center - Richmond, VAVA4/7/201515,390 1,523 19,229 — — 20,752 3,445 
Palm Valley Medical Plaza - Goodyear, AZAZ4/7/20152,879 1,890 4,940 — 317 7,147 1,087 
Physicians Plaza of Roane County - Harriman, TNTN4/27/20156,293 1,746 7,842 — 113 9,701 1,503 
Adventist Health Lacey Medical Plaza - Hanford, CACA4/29/201511,526 328 13,302 — 98 13,728 2,271 
Medical Center I - Peoria, AZAZ5/15/20153,085 807 1,115 — 1,306 3,228 927 
Medical Center II - Peoria, AZAZ5/15/2015— 945 1,330 — 5,036 7,311 1,490 
Commercial Center - Peoria, AZAZ5/15/20153,254 959 1,110 — 656 2,725 470 
F-62
        Initial Costs Subsequent to Acquisition    
Property State 
Acquisition
Date
 
Encumbrances at 
December 31, 2018
 Land 
Building and
Improvements
 Building and
Improvements
 
Gross Amount at
December 31,2018(1) (2)
 
Accumulated
Depreciation(3) (4)
Landis Memorial - Harrisburg, PA
(5) 
PA 9/26/2014 
 
 32,484
 
 32,484
 3,494
Copper Springs Senior Living - Meridian, ID
(5) 
ID 9/29/2014 
 498
 7,053
 130
 7,681
 1,302
Addington Place of Brunswick - Brunswick, GA GA 9/30/2014 1,464
 1,509
 14,385
 25
 15,919
 2,080
Addington Place of Dublin - Dublin, GA GA 9/30/2014 1,239
 403
 9,254
 55
 9,712
 1,466
Addington Place of Johns Creek - Johns Creek, GA
(7) 
GA 9/30/2014 10,139
 997
 11,849
 104
 12,950
 1,777
Addington Place of Lee's Summit - Lee's Summit, MO
(7) 
MO 9/30/2014 17,187
 2,734
 24,970
 60
 27,764
 3,342
Manor on the Square - Roswell, GA
(5) 
GA 9/30/2014 
 1,000
 8,505
 216
 9,721
 1,486
Addington Place of Titusville - Titusville, FL
(6) 
FL 9/30/2014 12,423
 1,379
 13,827
 177
 15,383
 2,198
Allegro at Elizabethtown - Elizabethtown, KY KY 9/30/2014 1,001
 317
 7,261
 173
 7,751
 1,238
Allegro at Jupiter - Jupiter, FL
(6) 
FL 9/30/2014 34,370
 3,741
 49,413
 163
 53,317
 6,660
Addington Place of College Harbour - St Petersburg, FL
(5) 
FL 9/30/2014 
 3,791
 7,950
 1,183
 12,924
 1,845
Allegro at Stuart - Stuart, FL
(6) 
FL 9/30/2014 49,069
 5,018
 60,505
 314
 65,837
 8,355
Allegro at Tarpon - Tarpon Springs, FL
(7) 
FL 9/30/2014 7,350
 2,360
 13,412
 365
 16,137
 2,358
Allegro at St Petersburg - Land - St Petersburg, FL FL 9/30/2014 
 3,045
 
 
 3,045
 
Gateway Medical Office Building - Clarksville, TN TN 10/3/2014 11,481
 
 16,367
 730
 17,097
 1,938
757 Building - Munster, IN
(5) 
IN 10/17/2014 
 645
 7,885
 
 8,530
 859
Dyer Building - Dyer, IN
(5) 
IN 10/17/2014 
 601
 8,867
 158
 9,626
 982
759 Building - Munster, IN IN 10/17/2014 6,440
 1,101
 8,899
 
 10,000
 997
761 Building - Munster, IN IN 10/17/2014 6,797
 1,436
 8,580
 48
 10,064
 1,000
Schererville Building - Schererville, IN IN 10/17/2014 
 1,260
 750
 201
 2,211
 181
Nuvista at Hillsborough - Lutz, FL (f/k/a Lutz Health and Rehabilitation Center) FL 10/17/2014 
 913
 17,176
 160
 18,249
 3,203
Nuvista at Wellington Green - Wellington, FL
(5) 
FL 10/17/2014 
 4,273
 42,098
 
 46,371
 6,565
Mount Vernon Medical Office Building - Mount Vernon, WA WA 11/25/2014 11,085
 
 18,519
 
 18,519
 2,050

F-50

Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


   Initial CostsSubsequent to Acquisition  
PropertyStateAcquisition
Date
Encumbrances at 
December 31, 2021
LandBuilding and
Improvements
LandBuilding and
Improvements
Gross Amount at
December 31, 2021(1) (2)
Accumulated
Depreciation(3) (4)
Medical Center III - Peoria, AZAZ5/15/20152,137 673 1,651 — 947 3,271 801 
Morrow Medical Center - Morrow, GAGA6/24/20154,334 1,155 5,674 — 438 7,267 1,176 
Belmar Medical Building -Lakewood, COCO6/29/20153,770 819 4,287 — 465 5,571 884 
Addington Place - Northville, MI(7)MI6/30/201513,287 440 14,975 — 345 15,760 2,981 
Conroe Medical Arts and Surgery Center - Conroe, TXTX7/10/201513,221 1,965 12,198 — 573 14,736 2,454 
Medical Center V - Peoria, AZAZ7/10/20152,684 1,089 3,200 — 389 4,678 673 
Legacy Medical Village - Plano, TXTX7/10/201523,662 3,755 31,097 — 704 35,556 5,708 
Scripps Cedar Medical Center - Vista, CACA8/6/201514,983 1,213 14,596 — 861 16,670 2,454 
Ramsey Woods Memory Care - Cudahy, WI(5)WI10/2/2015— 930 4,990 — 49 5,969 1,054 
East Coast Square West - Cedar Point, NCNC10/15/20155,254 1,535 4,803 — 6,344 829 
East Coast Square North - Morehead City, NCNC10/15/20153,933 899 4,761 — 5,666 809 
Eastside Cancer Institute - Greenville, SC(5)SC10/22/2015— 1,498 6,637 — 181 8,316 1,157 
Sassafras Medical Building - Erie, PAPA10/22/20152,315 928 4,629 — 5,560 734 
Sky Lakes Klamath Medical Clinic - Klamath Falls, OR(5)OR10/22/2015— 433 2,623 — — 3,056 437 
Courtyard Fountains - Gresham, OR(5)OR12/1/2015— 2,476 50,601 — 1,136 54,213 9,361 
Presence Healing Arts Pavilion - New Lenox, IL(9)IL12/4/20155,966 — 6,768 — 76 6,844 1,184 
Mainland Medical Arts Pavilion - Texas City, TXTX12/4/20156,174 320 7,923 — 305 8,548 1,511 
Renaissance on Peachtree - Atlanta, GA(6)GA12/15/201550,821 4,535 68,895 — 2,360 75,790 11,942 
Fox Ridge Senior Living at Bryant - Bryant, ARAR12/29/20156,977 1,687 12,936 — 607 15,230 3,229 
Fox Ridge Senior Living at Chenal - Little Rock, ARAR12/29/201516,024 6,896 20,579 — 209 27,684 4,320 
Fox Ridge North Little Rock - North Little Rock, AR(9)AR12/29/20159,943 — 19,265 — 268 19,533 3,708 
Autumn Leaves of Cy-Fair - Houston, TX(11)TX12/31/2015— 1,225 11,335 (895)(8,940)2,725 — 
Autumn Leaves of Meyerland - Houston, TX(11)TX12/31/2015— 2,033 13,411 (1,486)(10,559)3,399 — 
Autumn Leaves of Clear Lake, Houston, TX(11)TX12/31/2015— 1,599 13,194 (1,169)(10,388)3,236 — 
Autumn Leaves of The Woodlands - The Woodlands, TX(11)TX12/31/2015— 2,413 9,141 (1,763)(7,252)2,539 — 
High Desert Medical Group Medical Office Building - Lancaster, CACA4/7/20177,480 1,459 9,300 — — 10,759 1,445 
Northside Hospital - Canton, GAGA7/13/20178,014 3,408 8,191 — 42 11,641 1,010 
West Michigan Surgery Center - Big Rapids, MI(5)MI8/18/2017— 258 5,677 — — 5,935 653 
Camellia Walk Assisted Living and Memory Care - Evans, GA(6)GA9/28/201712,476 1,854 17,372 — 1,285 20,511 2,731 
Cedarhurst of Collinsville - Collinsville, IL(5), (8)IL12/22/2017— 1,228 8,652 — 228 10,108 1,102 
Arcadian Cove Assisted Living - Richmond, KY(5), (8)KY12/22/2017— 481 3,923 — 73 4,477 567 
Beaumont Medical Center - Warren, MI(5), (8)MI12/22/2017— 1,078 9,525 — 19 10,622 1,062 
F-63
        Initial Costs Subsequent to Acquisition    
Property State 
Acquisition
Date
 
Encumbrances at 
December 31, 2018
 Land 
Building and
Improvements
 Building and
Improvements
 
Gross Amount at
December 31,2018(1) (2)
 
Accumulated
Depreciation(3) (4)
Meadowbrook Senior Living - Agoura Hills, CA
(7) 
CA 11/25/2014 19,167
 8,821
 48,454
 772
 58,047
 5,860
Hampton River Medical Arts Building - Hampton, VA VA 12/3/2014 15,678
 
 17,706
 146
 17,852
 2,074
Careplex West Medical Office Building- Hampton, VA VA 12/3/2014 10,663
 2,628
 16,098
 
 18,726
 1,752
Wellington at Hershey's Mill - West Chester, PA
(5) 
PA 12/3/2014 
 8,531
 80,076
 89
 88,696
 9,634
Eye Specialty Group Medical Building - Memphis, TN TN 12/5/2014 5,332
 775
 7,223
 
 7,998
 774
Addington Place of Alpharetta - Alpharetta, GA
(7) 
GA 12/10/2014 14,812
 1,604
 26,055
 21
 27,680
 3,364
Addington Place of Prairie Village - Prairie Village, KS KS 12/10/2014 2,633
 1,782
 21,831
 33
 23,646
 2,905
Medical Sciences Pavilion - Harrisburg, PA PA 12/15/2014 13,461
 
 22,309
 
 22,309
 2,308
Bloom MOB - Harrisburg, PA PA 12/15/2014 11,217
 
 15,928
 166
 16,094
 1,734
Pinnacle Center - Southaven, MS MS 12/16/2014 4,223
 1,378
 6,418
 301
 8,097
 845
Wood Glen Nursing and Rehab Center - West Chicago,IL
(5) 
IL 12/16/2014 
 1,896
 16,107
 
 18,003
 2,616
Paradise Valley Medical Plaza - Phoenix, AZ AZ 12/29/2014 12,405
 
 25,187
 601
 25,788
 2,827
The Hospital at Craig Ranch - McKinney, TX TX 12/30/2014 
 1,596
 40,389
 716
 42,701
 4,218
Capitol Healthcare & Rehab Centre - Springfield, IL
(5) 
IL 12/31/2014 
 603
 21,690
 35
 22,328
 3,419
Colonial Healthcare & Rehab Centre- Princeton, IL
(5) 
IL 12/31/2014 
 173
 5,871
 
 6,044
 1,205
Morton Terrace Healthcare & Rehab Centre - Morton, IL
(5) 
IL 12/31/2014 
 709
 5,649
 
 6,358
 1,185
Morton Villa Healthcare & Rehab Centre - Morton, IL
(5) 
IL 12/31/2014 
 645
 3,665
 109
 4,419
 720
Rivershores Healthcare & Rehab Centre - Marseilles, IL
(5) 
IL 12/31/2014 
 1,276
 6,868
 
 8,144
 1,184
The Heights Healthcare & Rehab Centre - Peoria Heights, IL
(5) 
IL 12/31/2014 
 214
 7,952
 
 8,166
 1,438
Specialty Hospital - Mesa, AZ AZ 1/14/2015 
 1,977
 16,146
 566
 18,689
 1,767
Specialty Hospital - Sun City, AZ AZ 1/14/2015 
 2,329
 15,795
 274
 18,398
 1,725
Addington Place of Shoal Creek - Kansas City, MO
(7) 
MO 2/2/2015 13,391
 3,723
 22,206
 112
 26,041
 2,820
Aurora Healthcare Center - Green Bay, WI
(5) 
WI 3/18/2015 
 1,130
 1,678
 
 2,808
 203
Aurora Healthcare Center - Greenville, WI
(5) 
WI 3/18/2015 
 259
 958
 
 1,217
 123
Aurora Healthcare Center - Plymouth, WI WI 3/18/2015 17,038
 2,891
 24,224
 
 27,115
 2,627
Aurora Healthcare Center - Waterford, WI
(5) 
WI 3/18/2015 
 590
 6,452
 
 7,042
 675
Aurora Healthcare Center - Wautoma, WI
(5) 
WI 3/18/2015 
 1,955
 4,361
 
 6,316
 475

F-51

Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


   Initial CostsSubsequent to Acquisition  
PropertyStateAcquisition
Date
Encumbrances at 
December 31, 2021
LandBuilding and
Improvements
LandBuilding and
Improvements
Gross Amount at
December 31, 2021(1) (2)
Accumulated
Depreciation(3) (4)
DaVita Dialysis - Hudson, FL(5), (8)FL12/22/2017— 226 1,979 — 88 2,293 214 
DaVita Bay Breeze Dialysis Center - Largo, FL(5), (8)FL12/22/2017— 399 896 — 48 1,343 117 
Greenfield Medical Plaza - Gilbert, AZ(5), (8)AZ12/22/2017— 1,476 4,144 — 195 5,815 489 
RAI Care Center - Clearwater, FL(5), (8)FL12/22/2017— 624 3,156 — — 3,780 336 
Illinois CancerCare - Galesburg, IL(8)IL12/22/20172,323 290 2,457 — — 2,747 294 
UnityPoint Clinic - Muscatine, IA(5), (8)IA12/22/2017— 570 4,541 — 5,113 519 
Lee Memorial Health System Outpatient Center - Ft. Myers(5), (8)FL12/22/2017— 439 4,374 — 363 5,176 510 
Decatur Medical Office Building - Decatur, GA(5), (8), (9)GA12/22/2017— 695 3,273 — 238 4,206 396 
Madison Medical Plaza - Joliet, IL(8), (9)IL12/22/201712,477 — 16,855 — 37 16,892 1,689 
Woodlake Office Center - Woodbury, MN(8)MN12/22/20178,638 1,017 10,688 — 1,297 13,002 1,263 
Rockwall Medical Plaza - Rockwall, TX(5), (8)MN12/22/2017— 1,097 4,582 — 182 5,861 554 
MetroHealth Buckeye Health Center - Cleveland, OH(5), (8)OH12/22/2017— 389 4,367 — 255 5,011 491 
UnityPoint Clinic - Moline, IL(5), (8)IL12/22/2017— 396 2,880 — 3,281 329 
VA Outpatient Clinic - Galesberg, IL(5), (8)IL12/22/2017— 359 1,852 — — 2,211 242 
Philip Professional Center - Lawrenceville, GAGA12/22/20175,780 1,285 6,714 — 238 8,237 811 
Texas Children’s Hospital - Houston, TXTX3/5/20184,590 1,368 4,428 — 116 5,912 638 
Florida Medical Heartcare - Tampa, FL(5)FL3/29/2018— 586 1,902 — — 2,488 268 
Florida Medical Somerset - Tampa, FL(5)FL3/29/2018— 61 1,366 — — 1,427 169 
Florida Medical Tampa Palms - Tampa, FL(5)FL3/29/2018— 141 1,402 — — 1,543 179 
Florida Medical Wesley Chapel - Tampa, FL(5)FL3/29/2018— 485 1,987 — — 2,472 286 
Aurora Health Center - Milwaukee, WIWI4/17/20183,984 1,014 4,041 — — 5,055 652 
Vascular Surgery Associates - Tallahassee, FL(5)FL5/11/2018— 902 5,383 — — 6,285 705 
Glendale MOB - Farmington Hills, MI(5)MI8/28/2018— 504 12,332 — — 12,836 1,223 
Crittenton Washington MOB - Washington Township, MI(5)MI9/12/2018— 640 4,090 — 78 4,808 469 
Crittenton Sterling Heights MOB - Sterling Heights, MI(5)MI9/12/2018— 1,398 2,695 — 216 4,309 385 
Advocate Aurora MOB - Elkhorn, WIWI9/24/20187,184 181 9,452 — — 9,633 1,021 
Pulmonary & Critical Care Med - Lemoyne, PAPA11/13/20184,271 621 3,805 — — 4,426 551 
Dignity Emerus Blue Diamond - Las Vegas, NVNV11/15/201813,966 2,182 16,594 — — 18,776 1,417 
Dignity Emerus Craig Rd - North Las Vegas, NVNV11/15/201818,780 3,807 22,803 — — 26,610 1,964 
Greenfield MOB - Greenfield, WIWI1/17/20197,526 1,552 8,333 — 225 10,110 978 
Milwaukee MOB - South Milwaukee, WIWI1/17/20194,136 410 5,041 — — 5,451 411 
St. Francis WI MOB - St. Francis, WIWI1/17/20199,085 865 11,355 — 159 12,379 1,040 
F-64
        Initial Costs Subsequent to Acquisition    
Property State 
Acquisition
Date
 
Encumbrances at 
December 31, 2018
 Land 
Building and
Improvements
 Building and
Improvements
 
Gross Amount at
December 31,2018(1) (2)
 
Accumulated
Depreciation(3) (4)
Aurora Sheboyan Clinic - Kiel, WI
(5) 
WI 3/18/2015 
 676
 2,214
 
 2,890
 239
Arbor View Assisted Living and Memory Care - Burlington, WI
(5) 
WI 3/31/2015 
 367
 7,815
 38
 8,220
 1,133
Advanced Orthopedic Medical Center - Richmond, VA VA 4/7/2015 11,666
 1,523
 19,229
 
 20,752
 1,914
Palm Valley Medical Plaza - Goodyear, AZ AZ 4/7/2015 3,222
 1,890
 4,876
 156
 6,922
 569
Physicians Plaza of Roane County - Harriman, TN TN 4/27/2015 6,293
 1,746
 7,813
 61
 9,620
 821
Adventist Health Lacey Medical Plaza - Hanford, CA CA 4/29/2015 8,499
 328
 13,267
 51
 13,646
 1,245
Commercial Center - Peoria, AZ AZ 5/15/2015 2,111
 959
 1,076
 428
 2,463
 200
Medical Center I - Peoria, AZ AZ 5/15/2015 1,689
 807
 1,077
 1,364
 3,248
 376
Medical Center II - Peoria, AZ AZ 5/15/2015 
 945
 1,304
 4,863
 7,112
 382
Medical Center III - Peoria, AZ AZ 5/15/2015 2,137
 673
 1,597
 642
 2,912
 338
Morrow Medical Center - Morrow, GA GA 6/24/2015 4,334
 1,155
 5,618
 234
 7,007
 553
Belmar Medical Building - Lakewood, CO CO 6/29/2015 3,770
 819
 4,273
 134
 5,226
 438
Addington Place of Northville - Northville, MI
(7) 
MI 6/30/2015 13,287
 440
 14,975
 180
 15,595
 1,701
Medical Center V - Peoria, AZ AZ 7/10/2015 2,977
 1,089
 3,200
 114
 4,403
 323
Legacy Medical Village - Plano, TX TX 7/10/2015 19,637
 3,755
 31,097
 274
 35,126
 2,966
Conroe Medical Arts and Surgery Center - Conroe, TX TX 7/10/2015 9,343
 1,965
 12,198
 274
 14,437
 1,303
Scripps Cedar Medical Center - Vista, CA CA 8/6/2015 10,082
 1,213
 14,531
 41
 15,785
 1,286
NuVista Institute for Healthy Living - Jupiter, FL FL 8/7/2015 
 10,000
 
 80,826
 90,826
 
Ocean Park of Brookings - Brookings, OR OR 9/1/2015 1,474
 589
 5,381
 (2,532) 3,438
 
Ramsey Woods - Cudahy
(5) 
WI 10/2/2015 
 930
 4,990
 13
 5,933
 569
East Coast Square North - Morehead City, NC NC 10/15/2015 3,933
 899
 4,761
 7
 5,667
 418
East Coast Square West - Cedar Point, NC NC 10/15/2015 5,254
 1,535
 4,803
 6
 6,344
 431
Eastside Cancer Institute - Greenville, SC
(5) 
SC 10/22/2015 
 1,498
 6,637
 34
 8,169
 582
Sassafras Medical Building - Erie, PA PA 10/22/2015 2,315
 928
 4,538
 
 5,466
 371
Sky Lakes Klamath Medical Clinic - Klamath Falls, OR
(5) 
OR 10/22/2015 
 433
 2,604
 18
 3,055
 223
Courtyard Fountains - Gresham, OR OR 12/1/2015 23,906
 2,476
 50,534
 700
 53,710
 4,840
Presence Healing Arts Pavilion - New Lenox, IL IL 12/4/2015 5,966
 
 6,761
 76
 6,837
 600
Mainland Medical Arts Pavilion - Texas City, TX TX 12/4/2015 6,174
 320
 7,823
 398
 8,541
 759

F-52

Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


   Initial CostsSubsequent to Acquisition  
PropertyStateAcquisition
Date
Encumbrances at 
December 31, 2021
LandBuilding and
Improvements
LandBuilding and
Improvements
Gross Amount at
December 31, 2021(1) (2)
Accumulated
Depreciation(3) (4)
Lancaster Medical Arts MOB - Lancaster, PA(5)PA6/20/2019— 85 4,417 — — 4,502 458 
Women’s Healthcare Group MOB - York, PA(5)PA6/21/2019— 624 2,161 — — 2,785 342 
Pioneer Spine Sports - Northampton, MA(5)MA7/22/2019— 435 1,858 — — 2,293 133 
Pioneer Spine Sport - Springfield, MA(5)MA7/22/2019— 333 2,530 — — 2,863 178 
Pioneer Spine Sports - West Springfield, MA(5)MA7/22/2019— 374 4,295 — — 4,669 294 
Felicita Vida - Escondido, CA(5)CA9/3/2019— 1,677 28,953 — 190 30,820 1,929 
Cedarhurst of Edwardsville - Edwardsville, IL(5)IL1/10/2020— 321 9,032 — 36 9,389 532 
UMPC Sir Thomas Court - Harrisburg, PA(5)PA1/17/2020— 745 6,272 — — 7,017 327 
UMPC Fisher Road - Mechanicsburg, PA(5)PA1/17/2020— 747 3,844 — — 4,591 219 
Swedish American MOB - Roscoe, IL(5)IL1/22/2020— 599 5,862 — — 6,461 386 
Cedarhurst of Sparta - Sparta, IL(5)IL1/31/2020— 381 13,807 — 56 14,244 814 
UMPC Chambers Hill - Harrisburg, PA(5)PA2/3/2020— 498 4,238 — — 4,736 216 
Cedarhurst of Shiloh - Shiloh, ILIL3/13/202013,384 376 28,299 — 40 28,715 1,354 
Bayshore Naples Memory Care - Naples, FL(5)FL3/20/2020— 3,231 17,112 — 15 20,358 830 
Circleville MOB - Circleville, OHOH12/7/20203,556 765 4,011 — 56 4,832 125 
Kingwood Executive Center - Kingwood, TX(5)TX1/6/2021— 1,522 4,166 — — 5,688 122 
OrthoOne Hilliard - Hilliard, OH(5)OH5/28/2021— 760 3,118 — — 3,878 76 
South Douglas MOB - Midwest City, OK(5)OK6/23/2021— 628 3,863 — — 4,491 64 
Fort Wayne Opthomology Engle - Fort Wayne, ININ6/29/20213,923 516 6,124 — — 6,640 87 
Fort Wayne Opthomology Dupont - Fort Wayne, ININ6/29/20211,924 597 2,653 — — 3,250 41 
St. Peters Albany 2 Palisades - Albany, NY(5)NY6/30/2021— 516 4,342 — — 4,858 67 
Hefner Pointe Medical Center - Oklahoma City, OKOK6/30/20213,727 678 4,819 — — 5,497 74 
St. Peters Troy 2 New Hampshire - Troy, NY(5)NY6/30/2021— 330 2,444 — — 2,774 38 
St Peters - Albany, NY - 4 Palisades(5)NY7/30/2021— 542 2,416 — — 2,958 32 
St Peters - Albany, NY - 5 Palisades(5)NY7/30/2021— 593 5,359 — — 5,952 65 
St Lukes Heart Vascular Center - East Stroudsburg(5)PA8/31/2021— 363 3,224 — — 3,587 29 
Metropolitan Eye Lakeshore Surgery - St. Clair, MI(5)MI8/31/2021— 203 4,632 — — 4,835 41 
Naidu Clinic - Odessa, TX(5)TX9/1/2021— 730 2,409 — — 3,139 23 
Belpre V Cancer Center - Belpre, OH(5)OH9/30/2021— 1,153 63,894 — — 65,047 414 
Center for Advanced Dermatology - Lakewood, CO(5)CO12/1/2021— 1,034 1,874 — — 2,908 
Florida Medical Clinic - Tampa, FL(5)FL12/1/2021— 1,104 1,137 — — 2,241 
F-65
        Initial Costs Subsequent to Acquisition    
Property State 
Acquisition
Date
 
Encumbrances at 
December 31, 2018
 Land 
Building and
Improvements
 Building and
Improvements
 
Gross Amount at
December 31,2018(1) (2)
 
Accumulated
Depreciation(3) (4)
Renaissance on Peachtree - Atlanta, GA
(6) 
GA 12/15/2015 50,821
 4,535
 68,605
 813
 73,953
 6,478
Fox Ridge Senior Living at Bryant - Bryant, AR AR 12/29/2015 7,427
 1,687
 12,862
 244
 14,793
 1,646
Fox Ridge Senior Living at Chenal - Little Rock, AR AR 12/29/2015 16,988
 6,896
 20,484
 105
 27,485
 2,226
Fox Ridge Senior Living at Parkstone - North Little Rock, AR AR 12/29/2015 10,541
 
 19,190
 266
 19,456
 1,900
Autumn Leaves of Clear Lake - Houston, TX TX 12/31/2015 
 1,599
 13,194
 ��
 14,793
 1,308
Autumn Leaves of Cy-Fair - Houston, TX TX 12/31/2015 
 1,225
 11,335
 
 12,560
 1,127
Autumn Leaves of Meyerland- Houston, TX TX 12/31/2015 
 2,033
 13,411
 
 15,444
 1,273
Autumn Leaves of the Woodlands - The Woodlands, TX TX 12/31/2015 
 2,413
 9,141
 
 11,554
 971
High Desert Medical Group Medical Office Building - Lancaster, CA CA 4/7/2017 7,480
 1,459
 9,300
 
 10,759
 532
Northside Hospital Medical Office Building - Canton, GA GA 7/13/2017 8,014
 3,408
 8,191
 30
 11,629
 334
West Michigan Surgery Center - Big Rapids, MI
(5) 
MI 8/18/2017 
 258
 5,677
 
 5,935
 201
Camellia Walk Assisted Living and Memory Care - Evans, GA
(6) 
GA 9/28/2017 12,476
 1,855
 17,361
 8
 19,224
 753
Cedarhurst of Collinsville - Collinsville, IL
(5) 
IL 12/22/2017 
 1,228
 8,638
 40
 9,906
 268
Beaumont Medical Center - Warren, MI
(5) 
MI 12/22/2017 
 1,078
 9,525
 17
 10,620
 265
DaVita Dialysis - Hudson, FL
(5) 
FL 12/22/2017 
 226
 1,979
 
 2,205
 53
DaVita Bay Breeze - Largo, FL
(5) 
FL 12/22/2017 
 399
 896
 
 1,295
 29
Greenfield Medical Center - Gilbert, AZ
(5) 
AZ 12/22/2017 
 1,476
 4,131
 6
 5,613
 118
RAI Care Center - Clearwater, FL
(5) 
FL 12/22/2017 
 624
 3,156
 
 3,780
 84
Illinois CancerCare - Galesburg, IL
(5) 
IL 12/22/2017 
 290
 2,457
 
 2,747
 74
UnityPoint Clinic - Muscatine, IA IA 12/22/2017 
 570
 4,541
 
 5,111
 130
Lee Memorial Health System Outpatient Center - Ft. Meyers, FL
(5) 
FL 12/22/2017 
 439
 4,374
 
 4,813
 121
Arcadian Cove Assisted Living - Richmond, KY
(5) 
KY 12/22/2017 
 481
 3,923
 9
 4,413
 136
Decatur Medical Office Building - Decatur, GA
(5) 
GA 12/22/2017 
 695
 3,273
 
 3,968
 98
Madison Medical Plaza - Joliet, IL
(5) 
IL 12/22/2017 
 
 16,855
 
 16,855
 422
Woodlake Office Center - Woodbury, MN MN 12/22/2017 8,638
 1,017
 10,688
 
 11,705
 291
Rockwall Medical Plaza - Rockwall, TX
(5) 
TX 12/22/2017 
 1,097
 4,571
 27
 5,695
 126
Buckeye Health Center - Cleveland, OH
(5) 
OH 12/22/2017 
 389
 4,367
 6
 4,762
 116
UnityPoint Clinic - Moline, IL IL 12/22/2017 
 396
 2,880
 
 3,276
 82
VA Outpatient Clinic - Galesburg, IL
(5) 
IL 12/22/2017 
 359
 1,852
 
 2,211
 60

F-53

Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


   Initial CostsSubsequent to Acquisition  
PropertyStateAcquisition
Date
Encumbrances at 
December 31, 2021
LandBuilding and
Improvements
LandBuilding and
Improvements
Gross Amount at
December 31, 2021(1) (2)
Accumulated
Depreciation(3) (4)
Pensacola Nephrology MOB - Pensacola, FL(5)FL12/29/2021— 1,578 5,123 — — 6,701 — 
Fannie Mae Master Credit Facilities (6)(7)
355,045 
Total$1,301,869 $212,612 $2,106,359 $(6,220)$11,537 $2,324,288 $367,442 
______________
(1)Acquired intangible lease assets allocated to individual properties in the amount of $288.4 million are not reflected in the table above.
(2)The tax basis of aggregate land, buildings and improvements as of December 31, 2021 is $2.2 billion.
(3)The accumulated depreciation column excludes $195.3 million of accumulated amortization associated with acquired intangible lease assets.
(4)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 and 5 years for fixtures.
(5)These unencumbered properties were part of the borrowing base of the Credit Facility, which had $150.0 million of outstanding borrowings as of December 31, 2021. The equity interests and related rights in the Company’s wholly owned subsidiaries that directly own or lease the real estate assets comprising the borrowing base have been pledged for the benefit of the lenders thereunder (see Note 5 Credit Facilities, Net for additional details).
(6)These properties collateralize the Capital One Facility, which had $212.4 million of outstanding borrowings as of December 31, 2021.
(7)These properties collateralize the KeyBank Facility, which had $142.6 million of outstanding borrowings as of December 31, 2021.
(8)These properties were acquired from American Realty Capital Healthcare Trust III, Inc. in 2017, which was a related party to the Company’s Advisor.
(9)Some or all of the land underlying this property is subject to an operating land lease. The related right-of-use assets are separately recorded. SeeNote 16 — Commitments and Contingencies for additional information.
(10)The building amount represents combined direct financing lease for the total asset as the land element was not required to be bifurcated under ASU 840. See Note 16 — Commitments and Contingencies for additional information.
(11)The property has been impaired as of December 31, 2021. See Note 3— Real Estate Investments, Net “Assets Held for Use and Related Impairments” for additional information.

F-66
        Initial Costs Subsequent to Acquisition    
Property State 
Acquisition
Date
 
Encumbrances at 
December 31, 2018
 Land 
Building and
Improvements
 Building and
Improvements
 
Gross Amount at
December 31,2018(1) (2)
 
Accumulated
Depreciation(3) (4)
Philip Professional Center - Lawrenceville, GA GA 12/22/2017 4,793
 757
 6,710
 532
 7,999
 182
Texas Children's Hospital - Houston, TX
(5) 
TX 3/5/2018 
 1,368
 4,791
 67
 6,226
 145
Florida Medical - Somerset
(5) 
FL 3/26/2018 
 61
 1,577
 
 1,638
 43
Florida Medical - Heartcare
(5) 
FL 3/26/2018 
 586
 2,266
 
 2,852
 69
Florida Medical - Tampa Palms
(5) 
FL 3/26/2018 
 141
 1,631
 
 1,772
 46
Florida Medical - Wesley Chapel
(5) 
FL 3/26/2018 
 485
 2,346
 
 2,831
 73
Aurora Health Center - Milwaukee, WI
(5) 
WI 4/17/2018 
 1,014
 4,408
 
 5,422
 131
Vascular Surgery Associates
(5) 
FL 5/11/2018 
 902
 6,071
 
 6,973
 139
Glendale MOB-Farmington Hills MI
(5) 
MI 8/28/2018 
 504
 12,833
 
 13,337
 130
Crittenton Washington MOB
(5) 
WI 9/12/2018 
 640
 4,477
 
 5,117
 59
Crittenton Sterling Heights MOB
(5) 
WI 9/12/2018 
 1,398
 2,961
 
 4,359
 43
Advocate Aurora MOB - Elkhorn, WI
(5) 
WI 9/24/2018 
 181
 10,265
 
 10,446
 85
Pulmonary & Critical Care Medicine Assoc - Lemoyne, PA
(5) 
PA 11/13/2018 
 621
 5,229
 
 5,850
 34
Dignity Emerus Craig Road - North Las Vegas, NV
(5) 
NV 11/15/2018 
 3,807
 22,803
 
 26,610
 103
Dignity Emerus Blue Diamond Road - Las Vegas, NV
(5) 
NV 11/15/2018 
 2,182
 16,594
 
 18,776
 75
                 
Encumbrances based on the notes below
(8) 
    250,584
          
Total     $1,073,425
 $208,999
 $1,981,840
 $105,788
 $2,296,627
 $226,167

(1)
Acquired intangible lease assets allocated to individual properties in the amount of $256.5 million are not reflected in the table above.
(2)
The tax basis of aggregate land, buildings and improvements as of December 31, 2018 is $2.2 billion (unaudited).
(3)
The accumulated depreciation column excludes $155.7 million of amortization associated with acquired intangible lease assets.
(4)
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 and five years for fixtures.
(5)
These unencumbered properties were part of the borrowing base of the Prior Credit Facility, which had $243.3 million of outstanding borrowings as of December 31, 2018. The equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease the real estate assets comprising the borrowing base have been pledged for the benefit of the lenders thereunder (see Note 5 Credit Facilities for additional details).
(6)
These properties collateralize the Capital One Credit Facility, which had $216.6 million of outstanding borrowings as of December 31, 2018.
(7)
These properties collateralize the KeyBank Credit Facility, which had $142.7 million of outstanding borrowings as of December 31, 2018.
(8)
Includes $243.3 million of outstanding borrowings under the Prior Credit Facility and $7.3 million in mortgage notes outstanding that are encumbered by assets classified as held-for-sale, which are excluded from the table above.
f/k/a — Formerly Known As

F-54

Healthcare Trust, Inc. and Subsidiaries


Real Estate and Accumulated Depreciation
Schedule III
December 31, 20182021
(In thousands)


A summary of activity for real estate and accumulated depreciation for the years ended December 31, 2018, 20172021, 2020 and 2016:2019:
December 31,
(In thousands)202120202019
Real estate investments, at cost (1):
 
Balance at beginning of year$2,345,708 $2,211,451 $2,296,627 
Additions-Acquisitions147,161 98,364 80,980 
Disposals, impairments and reclasses (2)
(168,581)35,893 (166,156)
Balance at end of the year$2,324,288 $2,345,708 $2,211,451 
  
Accumulated depreciation (1):
 
Balance at beginning of year$328,095 $260,399 $226,167 
Depreciation expense61,388 63,393 64,731 
Disposals, impairments and reclasses (2)
(22,041)4,303 (30,499)
Balance at end of the year$367,442 $328,095 $260,399 
  December 31,
(In thousands) 2018 2017 2016
Real estate investments, at cost(1):
      
Balance at beginning of year $2,229,374
 $2,060,458
 $2,078,503
Additions-Acquisitions 121,244
 169,741
 6,478
Disposals(2)
 (53,991) (825) (24,523)
Balance at end of the year $2,296,627
 $2,229,374
 $2,060,458
   
    
Accumulated depreciation(1):
  
    
Balance at beginning of year $170,271
 $119,014
 $60,575
Depreciation expense 62,595
 51,268
 59,478
Disposals(2)
 (6,699) (11) (1,039)
Balance at end of the year $226,167
 $170,271
 $119,014
__________

(1)
Acquired intangible lease assets and related accumulated depreciation are not reflected in the table above.
(2)
Includes amounts relating to dispositions, impairment charges and assets transferred to held-for-sale.

(1)Acquired intangible lease assets and related accumulated depreciation are not reflected in the table above.
(2)Includes amounts relating to dispositions and impairment charges on assets for the years ended December 31, 2021, 2020 and 2019. Amounts for the year ended December 31, 2020 include the reclassification of approximately $49.4 million and $8.7 million of assets and accumulated depreciation, respectively, that were previously classified as held-for-sale as of December 31, 2019 to real estate investments, at cost and accumulated depreciation during the year ended December 31, 2020. For additional information on this reclassification during the year ended December 31, 2020, see Note 3 — Real Estate Investments.

See accompanying report of independent registered public accounting firm.

F-55F-67