Table of ~~delinquency and foreclosure.~~Contents

We may originate and purchase real estate debt securities, which are subject to risks of delinquency and foreclosure and risks of loss. Typically, we will not have recourse to the personal assets of our borrowers. The ability of a borrower to repay a real estate debt security secured by an income-producing property depends primarily upon the successful operation of the property, rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the real estate debt security may be impaired. A property’s net operating income can be affected by, among other things:

~~increased costs, added costs imposed by franchisors for improvements or operating changes required, from time to time, under the franchise agreements;~~

~~property management decisions;~~

~~property location and condition;~~

~~competition from comparable types of properties;~~

~~changes in specific industry segments;~~

~~declines in regional or local real estate values, or occupancy rates; and~~

~~increases in interest rates, real estate tax rates and other operating expenses.~~

We bear the risks of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the real estate debt security, which could have a material adverse effect on our cash flow from operations and limit amounts available for distribution to our stockholders. In the event of the bankruptcy of a real estate debt security borrower, the real estate debt security to that borrower will be deemed to be collateralized only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the real estate debt security will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a real estate debt security can be an expensive and lengthy process that could have a substantial negative effect on our anticipated return on the foreclosed real estate debt security. We also may be forced to foreclose on certain properties, be unable to sell these properties and be forced to incur substantial expenses to improve operations at the property.

U.S. Federal Income Tax Risks

Failure to maintain our qualification as a REIT would adversely affect our operations and our ability to make distributions.

In order for us to maintain our qualification as a REIT, we must satisfy certain requirements set forth in the Code and Treasury Regulations and various factual matters and circumstances that are not entirely within our control. We intend to structure our activities in a manner designed to satisfy all of these requirements. However, if certain of our operations were to be recharacterized by the Internal Revenue Service, or IRS, such recharacterization could jeopardize our ability to satisfy all of the requirements for qualification as a REIT.

If we fail to maintain our qualification 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 corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the taxable year ~~of losing~~in which we lost our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional corporate-level tax liability. In addition, distributions to stockholders 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. Our failure to qualify as a REIT would adversely affect the return of ~~a stockholder's investment.~~stockholders' investments.

To maintain our qualification as a REIT, we must meet annual distribution requirements, which may result in us distributing amounts that may otherwise be used for our operations and which could result in our ~~inability to acquire appropriate assets.~~forgoing otherwise attractive investment opportunities.

To maintain the favorable tax treatment afforded to REITs under the Code, we generally will be required each year to distribute to our stockholders at least 90% of our REIT taxable income determined without regard to the dividends-paid deduction and excluding net capital gain. To the extent that we do not distribute all of our net capital gains or distribute ~~at least 90%, but~~ less than 100%, of our REIT taxable income, as adjusted, we will have to pay tax on ~~those~~the undistributed amounts at ~~regular ordinary and capital gains~~ corporate tax rates. Furthermore, if we fail to distribute during each calendar year at least the sum ofof: (a) 85% of our ordinary income for that ~~year,~~year; (b) 95% of our capital gain net income for that ~~year,~~year; and (c) any undistributed taxable income from prior periods, ((a) through (c), collectively referred to as the Required Distribution), we would have to pay a 4% nondeductible excise tax on the excess of the ~~required distribution~~Required Distribution over the sum of ~~(a)~~(x) the amounts that we actually ~~distributed~~distributed; and ~~(b)~~ the amounts we retained and upon which we paid income tax at the corporate level. 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. In addition, we could pay part of these required distributions in shares of our common stock, which ~~would~~could result in ~~shareholders~~stockholders having tax liabilities from such distributions in excess of the cash they receive. ~~The treatment of such taxable share distributions is not clear, and it~~It is possible the taxable share distribution will not count towards our distribution requirement, in which case adverse consequences could apply. Although we intend to continue to make distributions sufficient to meet the annual distribution requirements and to avoid U.S. federal income and excise taxes, it is possible that we might not always be able to do so.

Our stockholders may have current tax liability on distributions they elect to reinvest in our common stock but would not receive cash from such distributions, and therefore our stockholders would need to use funds from another source to pay such tax liability.

If our stockholders participate in our distribution reinvestment plan, they will be deemed to have received, and for U.S. federal income tax purposes will be taxed on, the amount reinvested in common stock to the extent the amount reinvested was not a tax-free return of capital. As a result, unless stockholders are a tax-exempt entity, they may have to use funds from other sources to pay their tax liability on distributions reinvested in our shares.

Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on our stockholders’ investment.

Our ability to dispose of a property during the first few years following its acquisition ismay be restricted to a substantial extent as a result of our REIT status. Under applicable provisions of the Code regarding "prohibited transactions" by REITs, we would be subject to a 100% tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own, directly or through any subsidiary entity, including our Operating Partnership, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of 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. Properties we own, directly or through any subsidiary entity, including our Operating Partnership, ~~but generally excluding our taxable REIT subsidiaries,~~ may, depending on how we conduct our operations, be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business. Under applicable provisions of the Code regarding prohibited transactions by REITs, we would be subject to a 100% tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own, directly or through any subsidiary entity, including our Operating Partnership, but generally excluding our taxable REIT subsidiaries, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of trade or business. Any such taxes we pay would reduce our cash available for distribution to our stockholders. Our ~~concern over paying~~desire to avoid the prohibited transactions tax may cause us to forego disposition opportunities that would otherwise be advantageous if we were not a REIT.

In certain circumstances, we may be subject to U.S. federal, state and local income taxes as a REIT, which would reduce our cash available for distribution to our stockholders.

Even if we maintain our qualification 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" properties sold by a REIT (a "prohibited transaction" under the Code) will~~we may be subject to ~~a 100%~~the prohibited transactions tax and/or the excise ~~tax. We may not be able~~tax for failing to make (or be deemed to have made) sufficient distributions, ~~to avoid excise taxes applicable to REITs.~~as described above. We also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay 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

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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. ~~Further, a 100% excise tax would be imposed on certain transactions between us and any potential taxable REIT subsidiaries that are not conducted on an arm’s-length basis.~~ We also may be subject to state and local taxes on our income or property, either directly or ~~at the level of~~indirectly through our Operating Partnership or ~~at the level of the~~ other companies through which we indirectly own ~~our~~ assets. Any taxes we pay would reduce our cash available for distribution to our stockholders.

The use of taxable REIT subsidiaries, which may be required for REIT qualification purposes, would increase our overall tax liability and thereby reduce our cash available for distribution to our stockholders.

Some of our assets may need to be owned by, or operations may need to be conducted through, one or more taxable REIT subsidiaries. Any of our taxable REIT subsidiaries would be subject to U.S. federal, state and local income tax on its taxable ~~income.~~income at applicable corporate rates. The after-tax net income of our taxable REIT subsidiaries would be available for distribution to us. Further, we would incur a 100% excise tax on transactions with our taxable REIT subsidiaries that are not conducted on an arm’s-length basis. For example, to the extent that the rent paid by one of our taxable REIT subsidiaries exceeds an arm’s-length rental amount, such amount would be potentially subject to a 100% excise tax. While we intend that all transactions between us and our taxable REIT subsidiaries would be conducted on an arm’s-length basis, and therefore, any amounts paid by our taxable REIT subsidiaries to us would not be subject to the excise tax, no assurance can be given that no excise tax would not arise from such transactions. At this time, we have no taxable REIT subsidiaries.

Complying with REIT requirements may force us to forgo and/or liquidate otherwise attractive investment opportunities.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of shares of our common stock. We may be required to forego otherwise attractive investments or make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Complying with the REIT asset test requirements may force us to liquidate otherwise attractive investments.

To maintain 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 real estate assets, including certain mortgage loans and certain kinds of mortgage-related securities. The remainder of our investment in securities (other than government securities, taxable REIT subsidiaries and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets can consist of the securities (other than government securities, taxable REIT subsidiaries, and qualified real estate assets) of any one issuer. ~~For taxable years beginning after December 31, 2017, no~~No more than 20% of the value of our total assets can be

represented by securities of one or more taxable REIT ~~subsidiaries.~~subsidiaries, and no more than 25% of the value of our assets may consist of "non-qualified publicly offered REIT instruments." If we fail to comply with these requirements at the end of any ~~calendar quarter other than our first REIT~~ 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 from our portfolio or not make otherwise attractive investments in order to maintain our qualification as a REIT. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

If ~~we fail to invest a sufficient amount of the net proceeds from selling our common stock in real estate assets within one year from the receipt of the proceeds, we could fail to qualify as a REIT.~~

Temporary investment of the net proceeds from sales of our common stock in short-term securities and income from such investment generally will allow us to satisfy various REIT income and asset requirements, but only during the one-year period beginning on the date we receive the net proceeds. If we are unable to invest a sufficient amount of the net proceeds from sales of our common stock in qualifying real estate assets within such one-year period, we could fail to satisfy one or more of the gross income or asset tests and/or we could be limited to investing all or a portion of any remaining funds in cash or cash equivalents. If we fail to satisfy any such income or asset test, unless we are entitled to relief under certain provisions of the Internal Revenue Code, we could fail to qualify as a REIT.

Recharacterization of sale-leaseback transactions may cause us to lose our REIT status, which would subject us to U.S. federal income tax at corporate rates, which would reduce the amounts available for distribution to our stockholders and threaten our ability to remain qualified as a REIT.

We have and may continue to purchase properties and lease them back to the sellers of such properties. While we will use our best efforts to structure any such sale-leaseback transaction such that the lease will be characterized as a true lease, thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes, the IRS could challenge such characterization. In the event that any such sale-leaseback 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 such 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 also might cause us to fail to meet the annual distribution requirement for a taxable year in the event we cannot make a sufficient deficiency dividend.

If our leases are not considered as true leases for U.S. federal income tax purposes, we ~~would~~could 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.” In order for rent paid to us 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 ~~would~~could fail to qualify as a REIT, which would materially and adversely impact the value of an investment in our ~~securities~~shares and in our ability to pay dividends to our stockholders.

~~The lease of our properties to a TRS is subject to special requirements.~~

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”), we may lease certain “qualified health care properties” to a TRS (or a limited liability company of which a TRS is a member). The TRS in turn would contract with a third party operator to manage the health care operations at these properties. The rents paid by a TRS in this structure would be treated as qualifying rents from real property for purposes of the REIT requirements only if (i) they are paid pursuant to an arm’s-length lease of a qualified health care property and (ii) the operator qualifies as an “eligible independent contractor” with respect to the property. An operator will qualify as an eligible independent contractor if it meets certain ownership tests with respect to us, and if, at the time the operator enters into the property management agreement, the operator is actively engaged in the trade or business of operating qualified health care properties for any person who is not a related person to us or the TRS. If any of the above conditions were not satisfied, then the rents would not be considered income from a qualifying source for purposes of the REIT rules, which could cause us to incur penalty taxes or to fail to qualify as a REIT.

Legislative or regulatory action could adversely affect the returns to our investors.

In recent years, numerous legislative, judicial and administrative changes have been made in the provisions of U.S. federal income tax laws applicable to investments similar to an investment in shares of our common stock. Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect our taxation and our ability to continue to qualify as a REIT or the taxation of a stockholder. Any such changes could have ana material adverse effect on an investment in our shares or on the market value or the resale potential of our assets. Our stockholders are urged to consult with their own tax ~~advisor~~advisors 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 our shares.

Although REITs generally receive better tax treatment than entities taxed as regular 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

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invests in real estate to elect to be treated for U.S. federal income tax purposes as a regular corporation. As a result, our charter provides ~~our board of directors~~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, without the vote of our stockholders. ~~Our board of directors~~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 the best interests of ~~our stockholders.~~

In addition, on December 22, 2017, the Tax Cuts and Jobs Act was signed into law. The Tax Cuts and Jobs Act makes significant changes to the U.S. federal income tax rules for taxation of individuals and businesses, generally effective for taxable years beginning after December 31, 2017. In addition to reducing corporate and individual tax rates, the Tax Cuts and Jobs Act eliminates or restricts various deductions. Most of the changes applicable to individuals are temporary and apply only to taxable years beginning after December 31, 2017 and before January 1, 2026. The Tax Cuts and Jobs Act makes numerous changes to the tax rules that do not affect the REIT qualification rules directly, but may otherwise affect us or our stockholders.

While the changes in the Tax Cuts and Jobs Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Internal Revenue Code may have unanticipated effects on us or our stockholders. Moreover, Congressional leaders have recognized that the process of adopting extensive tax legislation in a short amount of time without hearings and substantial time for review is likely to have led to drafting errors, issues needing clarification and unintended consequences that will have to be revisited in subsequent tax legislation. At this point, it is not clear if or when Congress will address these issues or when the IRS will issue administrative guidance on the changes made in the Tax Cuts and Jobs Act.

We urge you to consult with your own tax advisor with respect to the status of ~~the Tax Cuts and Jobs Act and other~~ legislative, regulatory or administrative developments and proposals and their potential effect on an investment in shares of our common stock.

Dividends payable by REITs generally ~~do not qualify for reduced~~are subject to a higher tax ~~rates~~rate than regular corporate dividends under current law.

The maximum U.S. federal income tax rate for ~~certain qualified dividends~~“qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates generally is 20%. Dividends payable by REITs, however, are generally not eligible for the reduced rates for qualified dividends and ~~therefore~~are taxed at ordinary income rates. However, for taxable years beginning after December 31, 2017, and before January 1, 2026, U.S. stockholders that are individuals, trusts and estates generally may ~~be subject to~~deduct 20% of ordinary dividends from a ~~higher~~REIT resulting in an effective maximum U.S. federal income tax rate of 29.6% on ~~ordinary income when paid~~such income. Although these rules do not adversely affect the taxation of REITs or dividends payable by REITs, to ~~such stockholders. The more favorable~~the extent that the reduced rates ~~applicable~~continue to apply to regular corporate qualified dividends, ~~under current law could cause~~ investors ~~who~~that are individuals, trusts and estates ~~or are otherwise sensitive to these lower rates to~~may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the ~~stock~~shares of REITs, including our common stock.

If our Operating Partnership fails to maintain its status as a partnership, its income may be subject to taxation, which would reduce the cash available for distribution to our stockholders.

We intend to maintain the status of our Operating Partnership as a partnership for U.S. federal income tax purposes. However, if the IRS were to successfully challenge the status of our Operating Partnership as a partnership or disregarded entity for such purposes, it would be taxable as a corporation. In such event, this would reduce the amount of distributions that our Operating Partnership could make to us. This would also result in our losing REIT status, and becoming subject to a corporate level tax on our own income. This would substantially reduce our cash available to pay distributions and the yield on our stockholders’ investment. In addition, if any of the partnerships or limited liability companies through which our Operating Partnership 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, it would be subject to taxation as a corporation, thereby reducing distributions to our Operating Partnership. Such a recharacterization of an underlying property owner could also threaten our ability to maintain REIT ~~status.~~status and would have a material adverse impact on us.

Foreign purchasers of our ~~common stock~~shares may be subject to FIRPTA tax upon the sale of their shares or upon the payment of a capital gain dividend, which would reduce ~~any gains~~the net amount they would otherwise ~~have~~realize on their investment in our shares.

A foreign person (other than certain foreign pension plans and certain foreign publicly traded entities) disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests, is generally subject to the Foreign Investment in Real Property Tax Act of 1980, as amended, or FIRPTA, on the gain recognized on the disposition. ~~However, certain foreign pension plans and certain foreign publicly traded entities are exempt from FIRPTA withholding. Further, such~~Such FIRPTA tax does not apply to the disposition of stock in a REIT if the REIT is “domestically controlled.” A REIT is "domestically controlled" if less than 50% of the REIT’s stock, by value, has been owned directly or indirectly by persons who are not qualifying U.S. persons during a continuous five-year period ending on the date of disposition or, if shorter, during the entire period of the REIT’s existence. We cannot assure

our stockholders that we will qualify as a "domestically controlled" REIT. If we were to fail to so qualify, any gain realized by foreign investors on a sale of our shares would be subject to FIRPTA tax, unless our shares were traded on an established securities market and the foreign investor did not at any time during a specified testing period directly or indirectly own more than 10% of the value of our outstanding common stock.

A foreign investor also may be subject to FIRPTA tax upon the payment of any capital gain dividend by us, which dividend is attributable to gain from sales or exchanges of U.S. real property interests. We encourage our stockholders to consult their own tax advisor to determine the tax consequences applicable to them if they are a foreign investor.

~~Employee Benefit Plan, IRA, and Other Tax-Exempt Investor~~ERISA Risks

~~We, and~~If our ~~stockholders that~~assets are ~~employee benefit plans, IRAs, annuities described in Sections 403(a) or (b) of the Internal Revenue Code, Archer MSAs, health savings accounts, or Coverdell education savings accounts (referred~~deemed to ~~generally as Benefit Plans and IRAs) will~~ be ~~subject~~ERISA plan assets, we may be exposed to ~~risks relating specifically to our having such Benefit Plan and IRA stockholders, which risks are discussed below.~~

~~If a stockholder fails to meet the fiduciary and other standards~~liabilities under ~~ERISA or the Internal Revenue Code as a result of an investment in shares of our common stock, such stockholder could be subject to civil penalties (and criminal penalties, if the failure is willful).~~

There are special considerations that apply to Benefit Plans or IRAs investing in shares of our common stock. If a stockholder is investing the assets of a Benefit Plan or IRA in us, he or she should consider:

~~whether the investment is consistent with the applicable provisions~~Title I of ERISA and the Internal Revenue ~~Code,~~Code.

In some circumstances where an Employee Retirement Income Security Act of 1974, as amended, or ~~any other applicable governing authority~~ERISA, plan holds an interest in an entity, the ~~case~~assets of ~~a government plan;~~the entire entity are deemed to be ERISA plan assets unless an exception applies. This is

~~whether~~

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known as the ~~stockholder's investment is made in accordance with~~"look-through rule." Under those circumstances, the ~~documents and instruments governing his or her Benefit Plan or IRA, including any investment policy;~~

~~whether the stockholder's investment satisfies the prudence, diversification~~obligations and other ~~requirements~~responsibilities of ~~Sections 404(a)(1)(B)~~plan sponsors, plan fiduciaries and ~~404(a)(1)(C)~~plan administrators, and of ~~ERISA;~~

~~whether the stockholder's investment will impair the liquidity needs to satisfy minimum~~parties in interest and ~~other distribution requirements of the Benefit Plan or IRA and tax withholding requirements that may be applicable;~~

~~whether the stockholder's investment will constitute a prohibited transaction~~disqualified persons, under ~~Section 406~~Title I of ERISA orand Section 4975 of the ~~Internal Revenue Code;~~

~~whether the stockholder's investment will produce or result in “unrelated business taxable income” or UBTI,~~Code, as ~~defined in Sections 511 through 514 of the Internal Revenue Code, to the Benefit Plan or IRA;~~applicable, may be applicable, and

~~the stockholder's need to value the assets of the Benefit Plan or IRA annually in accordance with ERISA~~ there may be liability under these and ~~the Internal Revenue Code.~~

~~In addition to considering their fiduciary responsibilities under ERISA and the prohibited transaction rules~~other provisions of ERISA and the ~~Internal Revenue~~Code. We believe that our assets should not be treated as plan assets because the shares should qualify as "publicly-offered securities" that are exempt from the look-through rules under applicable Treasury Regulations. We note, however, that because certain limitations are imposed upon the transferability of shares so that we may qualify as a REIT, and perhaps for other reasons, it is possible that this exemption may not apply. If that is the case, and if we are exposed to liability under ERISA or the Code, ~~a Benefit Plan or IRA purchasing~~our performance and results of operations could be adversely affected. Prior to making an investment in us, you should consult with your legal and other advisors concerning the impact of ERISA and the Code on your investment and our performance.

General Risk Factors

Our shares of ~~our~~ common stock are not listed on an exchange, and we are not required to provide for a liquidity event. Therefore, it may be difficult for stockholders to sell their shares and, if stockholders are able to sell their shares, they will likely sell them at a substantial discount. Our stockholders are also limited in their ability to sell their shares pursuant to our share repurchase program and may have to hold their shares for an indefinite period of time.

There is currently no public market for our shares. Although we presently intend to consider alternatives for providing liquidity to our stockholders, we do not have a fixed date or method for providing stockholders with liquidity, and our completion of a liquidity event is not guaranteed. If we do not pursue a liquidity transaction, or delay such a transaction due to market conditions, shares may continue to be illiquid and stockholders may, for an indefinite period of time, be unable to convert their investment to cash easily and could suffer losses on their investment. If our stockholders are able to find a buyer for their shares, our stockholders likely will have to sell them at a substantial discount to their purchase price. Moreover, investors should ~~consider~~not rely on our share repurchase program as a method to sell shares promptly because our share repurchase program includes numerous restrictions that limit stockholders' ability to sell shares to us, and the ~~effect~~Board may suspend (in whole or in part) the share repurchase program at any time, and may amend, reduce or terminate our share repurchase program upon 30 days' prior notice to our stockholders for any reason it deems appropriate. The restrictions of our share repurchase program limit our stockholders’ ability to sell their shares should they require liquidity and limit our stockholders’ ability to recover the ~~plan asset regulations~~value they invested. We can only repurchase shares due to death or involuntary exigent circumstance in accordance with our share repurchase program, subject in each case to specified terms and limitations, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation, and DRIP funding limitations. See Part II, Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" for more information on the ~~U.S. Department~~limitations of ~~Labor. To avoid~~our share repurchase program.

It may be difficult to accurately reflect material events that may impact our Estimated Per Share NAV between valuations, and accordingly we may be selling and repurchasing shares at too high or too low a price.

Estimated Per Share NAV is based on the estimated value of our assets ~~from being considered plan assets under those regulations, our charter prohibits “benefit plan investors” from owning 25.0% or more of~~less the ~~shares~~estimated value of our liabilities divided by the number of shares outstanding, calculated as of a certain date. The Estimated Per Share NAV of each of our Class A common stock, ~~prior to the time that the~~Class I common stock ~~qualifies~~and Class T common stock is an estimate as of a ~~class~~certain time and may not reflect the value that stockholders will receive for their investment. The Estimated Per Share NAV is determined by an independent third-party valuation firm, the engagement of ~~publicly-offered securities, within~~which is approved by the ~~meaning~~Audit Committee. The Financial Industry Regulatory Authority, or FINRA, rules provide no guidance on the methodology an issuer must use to determine its estimated value per share. As with any valuation methodology, our independent valuation firm's methodology is based upon a number of ~~the ERISA plan asset regulations. However, we cannot assure our stockholders~~estimates and assumptions that ~~those provisions in our charter will~~may not be ~~effective in limiting benefit plan investor ownership~~accurate or complete. Some of these estimates and assumptions relate to ~~less than the 25.0% limit. For example, the limit~~potential, future events and expectations, so they are inherently subject to inaccuracy and differences from actual results. Different parties with different assumptions and estimates could derive a different estimated value per share, and these differences could be ~~unintentionally exceeded if a benefit plan investor misrepresents its status as a benefit plan. Even if~~significant. The Estimated Per Share NAV is not audited and does not represent the fair value of our assets ~~are not considered~~or liabilities according to ~~be plan assets, a prohibited transaction could occur if we~~U.S. generally accepted accounting principles, or ~~any of our affiliates is a fiduciary (within the meaning of ERISA)~~GAAP. Accordingly, with respect to the Estimated Per Share NAV, we can give no assurance that: (i) a ~~Benefit Plan or IRA purchasing shares of our common stock, and, therefore, in the event any such persons are fiduciaries (within the meaning of ERISA) of a stockholder's Benefit Plan or IRA, such~~ stockholder ~~should not purchase shares of our common stock unless an administrative or statutory exemption applies~~would be able to resell his or her ~~purchase.~~shares at the Estimated Per Share NAV; (ii) a stockholder would ultimately realize distributions per share equal to the Estimated Per Share NAV upon liquidation of our assets and settlement of our liabilities or a sale of the company; (iii) our shares of common stock would trade at the Estimated Per Share NAV on a national securities exchange; (iv) a different independent third-party appraiser or other third-party valuation firm would agree with the Estimated Per Share NAV; or (v) the methodology used to estimate our NAV per share would be acceptable to FINRA or comply with ERISA reporting requirements.

The ~~U.S. Department~~value of ~~Labor has issued a final regulation revising~~our shares will fluctuate over time in response to developments related to individual assets in the ~~definition of “fiduciary”~~portfolio and the ~~scope~~management of ~~“investment advice” under ERISA,~~those assets and in response to the real estate and finance markets. We expect to engage an independent valuation firm to update the Estimated Per Share NAV at least annually.

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Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

We consider a cyber incident to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our tenant and investor relationships. As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those we have outsourced. There is no guarantee that any processes, procedures and internal controls we have implemented or will implement will prevent cyber intrusions, which could have a negative impact on our ~~ability~~financial results, operations, business relationships or confidential information.

We expect that most of our properties will continue to ~~raise capital.~~

~~On April 8, 2016,~~be located in the ~~U.S. Department of Labor issued a final regulation that substantially expands the range of activities that~~continental United States and would be ~~considered~~affected by economic downturns, as well as economic cycles and risks inherent to ~~be fiduciary investment advice under ERISA~~that area.

Our properties are concentrated in, and we expect to continue to acquire commercial real estate located in the continental United States; however, we may purchase properties in other jurisdictions. 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 the continental United States could hurt our financial performance and the ~~Internal Revenue Code, which may make it more difficult to qualify for a prohibited transaction exemption. This new regulation could have negative implications on~~value of our ~~ability to raise capital from potential investors, including those investing through IRAs or other arrangements. Prior to~~properties. The factors affecting economic conditions in the ~~issuance of the new regulation, ERISA and the Internal Revenue Code broadly defined fiduciaries to include persons who give~~

investment advice for a fee, regardless of whether that fee is paid directly by the customer or by a third party. However, prior law required that advice must be given on a “regular basis” before a fiduciary standard would apply, and that a mutual agreement or understanding between the customer and the adviser that the advice would serve as a primary basis for the investment decision would also be required. Under the new regulation, a person is a fiduciary if the person receives compensation for providing advice (a “recommendation” or “communication that would reasonably be viewed as a suggestion that the recipient engage in or refrain from taking a particular course of action”) with the understanding it is based on the particular needs of the person being advised or that it is directed to a specific plan sponsor, plan participant, or IRA owner. Such decisions cancontinental United States real estate market include, but are not limited ~~to, what assets to purchase~~to: financial performance and productivity of, among others, the publishing, advertising, financial, technology, retail, insurance and real estate industries; business layoffs or ~~sell~~downsizing; industry slowdowns; relocations of businesses; changing demographics; increased telecommuting and ~~(unlike~~use of alternative workplaces; infrastructure quality; any oversupply of, or reduced demand for, real estate; concessions or reduced rental rates under ~~prior law) whether to rollover~~new leases for properties where tenants defaulted; increased insurance premiums; and increased interest rates.

Distributions paid from ~~an employment-based plan to an IRA. The fiduciary can be a broker, registered investment adviser or~~sources other ~~type~~than our cash flows from operations, including from the proceeds of adviser, some of which are subject to federal securities laws and some of which are not. The final regulation and the related exemptions were expected to become applicable for investment transactions on and after April 10, 2017. However, on February 3, 2017, the President asked for additional review of this regulation. In response, on March 2, 2017, the U.S. Department of Labor published a notice seeking public comments on, among other things, a proposal to adopt a 60-day delay of the April 10 applicability date of the final regulation. On April 7, 2017, the U.S. Department of Labor published a final rule extending the applicability date of the final regulation to June 9, 2017. However, certain requirements and exemptions under the regulation are implemented through a phased-in approach, and on November 27, 2017, the U.S. Department of Labor further delayed the implementation of certain requirements and exemptions. Therefore, certain requirements and exemptionsour Offerings, will ~~not take effect until July 1, 2019. On March 15, 2018, the U.S. Court of Appeals~~result in us having fewer funds available for the ~~Fifth Circuit vacated the fiduciary rule in its entirety, including the expanded definition~~acquisition of ~~"investment advice fiduciary"~~properties and ~~the associated exemptions. Accordingly, the final regulation does not apply in the Fifth Circuit,~~real estate-related investments, which includes Texas, Louisiana and Mississippi. It is unclear what impact this ruling will have on the final regulation - the U.S. Department of Labor could, among other things, seek review by the U.S. Supreme Court or further revise or withdraw the final regulation.

~~The final regulation and the accompanying exemptions are complex and~~ may be subject to further revision or withdrawal. Plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding the impact of the final regulation on purchasing and holding shares of common stock in the Company. The final regulation could have negative implications onadversely affect our ability to ~~raise capital~~fund future distributions with cash flows from ~~potential investors, including those investing through IRAs.~~operations and may adversely affect a stockholder's overall return.

~~If stockholders invest~~We have previously paid, and may pay in the future, distributions from sources other than from our ~~shares through an IRA or other retirement plan, they~~cash flows from operations. We may ~~be limited in their~~pay, and have no limits on the amounts we may pay, distributions from any source, such as the sale of assets and the sale of additional securities. Funding distributions from the sale of assets may affect our ability to ~~withdraw required minimum distributions.~~

~~If stockholders establish a plan or account through which to invest in our common stock, federal law may require stockholders to withdraw required minimum~~generate cash flows. Funding distributions from ~~such plan~~the sale of additional securities could dilute stockholders' interest in ~~the future. Our stock will be highly illiquid, and our share repurchase program only offers limited liquidity. If stockholders require liquidity, they may generally~~us if we sell ~~their shares, but such sale may be at a price less than the price at which the stockholder initially purchased his or her~~ shares of our common ~~stock. If~~stock to third party investors. As a ~~stockholder fails to withdraw required minimum~~result, the return investors may realize on their investment may be reduced and investors who invested in us before we generated significant cash flow may realize a lower rate of return than later investors. Payment of distributions from ~~his or her plan or account, the stockholder may be subject to certain taxes and tax penalties.~~

~~Specific rules apply to foreign, governmental and church plans.~~

As a general rule, certain employee benefit plans, including foreign pension plans, governmental plans established or maintained in the United States (as defined in Section 3(32) of ERISA), and certain church plans (as defined in Section 3(33) of ERISA), are not subject to ERISA’s requirements and are not “benefit plan investors” within the meaningany of the ~~plan asset regulations~~aforementioned sources could restrict our ability to generate sufficient cash flows from operations, affect our profitability and/or affect the distributions payable upon a liquidity event, any or all of ~~The U.S. Department of Labor. Any such plan that is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Internal Revenue Code~~which may ~~nonetheless be subject to the prohibited transaction rules set forth~~have an adverse effect on an investment in Section 503 of the Internal Revenue Code and, under certain circumstances in the case of church plans, Section 4975 of the Internal Revenue Code. Also, some foreign plans and governmental plans may be subject to foreign, state, or local laws which are, to a material extent, similar to the provisions of ERISA or Section 4975 of the Internal Revenue Code. Each fiduciary of a plan subject to any such similar law should make its own determination as to the need for and the availability of any exemption relief.us.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our principal executive ~~offices are~~office is located at ~~4890 West Kennedy Blvd.,~~1001 Water Street, Suite ~~650,~~800, Tampa, Florida ~~33609. We do not have an address separate from our Advisor or our Sponsor.~~

33602. As of December 31, ~~2017,~~2022, we owned a portfolio of 53132 real estate ~~investments, consisting of 70~~ properties, ~~located in 37 MSAs and one µSA, comprising~~composed of approximately ~~5,190,000~~5,535,000 rentable square feet of commercial ~~space.~~spaces, and two undeveloped land parcels. As of December 31, ~~2017, 40~~2022, 118 of our real estate ~~investments~~properties were single-tenant ~~commercial properties~~ and 1314 of our real estate ~~investments~~properties were ~~multi-tenant commercial properties.~~multi-tenant. As of December 31, ~~2017, 97.7%~~2022, 99.5% of our rentable square feet was leased, with a weighted average remaining lease term of ~~10.34~~9.3 years. As of December 31, 2022, all of our real estate investments are in healthcare properties and undeveloped land parcels.

Table of Contents

Property Statistics

The following table shows the property statistics of our real estate portfolio as of December 31, ~~2017:~~2022:


Property Name	MSA/µSA	Date Acquired	Year Constructed	Year Renovated	% Leased	Leased Sq Ft	Encumbrances, $ (in thousands)
Houston Healthcare Facility	Houston-The Woodlands-Sugar Land, TX	07/31/2014	1993	—	100%	13,645	(1)
Cincinnati Healthcare Facility	Cincinnati, OH-KY-IN	10/29/2014	2001	—	100%	14,868	(1)
Winston-Salem Healthcare Facility	Winston-Salem, NC	12/17/2014	2004	—	100%	22,200	(1)
Stoughton Healthcare Facility	Boston-Cambridge-Newton, MA-NH	12/23/2014	1973	1997	100%	180,744	(1)
Fort Worth Healthcare Facility	Dallas-Fort Worth-Arlington, TX	12/31/2014	2014	—	100%	83,464	(1)
Fort Worth Healthcare Facility II	Dallas-Fort Worth-Arlington, TX	12/31/2014	2014	—	100%	8,268	(1)
Winter Haven Healthcare Facility	Lakeland-Winter Haven, FL	01/27/2015	2009	—	100%	7,560	(1)
Overland Park Healthcare Facility	Kansas City, MO-KS	02/17/2015	2014	—	100%	54,568	(1)
Clarion Healthcare Facility	Pittsburgh, PA	06/01/2015	2012	—	100%	33,000	(1)
Webster Healthcare Facility	Houston-The Woodlands-Sugar Land, TX	06/05/2015	2015	—	100%	53,514	(1)
Augusta Healthcare Facility	Augusta-Waterville, ME (µSA)	07/22/2015	2010	—	100%	51,000	(1)
Cincinnati Healthcare Facility II	Cincinnati, OH-KY-IN	07/22/2015	1960	2014	100%	139,428	(1)
Cincinnati Healthcare Facility III	Cincinnati, OH-KY-IN	07/22/2015	2014	—	100%	41,600	(1)
Florence Healthcare Facility	Cincinnati, OH-KY-IN	07/22/2015	2014	—	100%	41,600	(1)
Oakland Healthcare Facility	Augusta-Waterville, ME (µSA)	07/22/2015	2004	—	100%	20,000	(1)
Wyomissing Healthcare Facility	Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	07/24/2015	2007	—	100%	33,217	(1)
Luling Healthcare Facility	Austin-Round Rock, TX	07/30/2015	2003	—	100%	40,901	(1)
Omaha Healthcare Facility	Omaha-Council Bluffs, NE-IA	10/14/2015	2014	—	100%	40,402	(1)
Sherman Healthcare Facility	Sherman-Denison, TX	11/20/2015	2005	2010	100%	57,576	(1)
Sherman Healthcare Facility II	Sherman-Denison, TX	11/20/2015	2005	—	100%	8,055	(1)
Fort Worth Healthcare Facility III	Dallas-Fort Worth-Arlington, TX	12/23/2015	1998	2007/2015	100%	36,800	(1)
Oklahoma City Healthcare Facility	Oklahoma City, OK	12/29/2015	1985	1998/2003	100%	94,076	(1)
Oklahoma City Healthcare Facility II	Oklahoma City, OK	12/29/2015	1994	1999	100%	41,394	(1)
Edmond Healthcare Facility	Oklahoma City, OK	01/20/2016	2002	—	100%	17,700	(1)
Oklahoma City Healthcare Facility III	Oklahoma City, OK	01/27/2016	2006	—	100%	5,000	(1)
Oklahoma City Healthcare Facility IV	Oklahoma City, OK	01/27/2016	2007	—	100%	8,762	(1)
Newcastle Healthcare Facility	Oklahoma City, OK	02/03/2016	1995	1999	100%	7,424	(1)
Oklahoma City Healthcare Facility V	Oklahoma City, OK	02/11/2016	2008	—	100%	43,676	(1)
Rancho Mirage Healthcare Facility	Riverside-San Bernardino-Ontario, CA	03/01/2016	2018	—	100%	47,008	(1)
Oklahoma City Healthcare Facility VI	Oklahoma City, OK	03/07/2016	2007	—	100%	14,676	(1)
Oklahoma City Healthcare Facility VII	Oklahoma City, OK	06/22/2016	2016	—	100%	102,978	(1)
Las Vegas Healthcare Facility	Las Vegas-Henderson-Paradise, NV	06/24/2016	2017	—	100%	56,220	(1)
Oklahoma City Healthcare Facility VIII	Oklahoma City, OK	06/30/2016	1997	2008	100%	62,857	(1)
Marlton Healthcare Facility	Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	11/01/2016	1995	—	100%	89,139	(1)
Grand Rapids Healthcare Facility	Grand Rapids-Wyoming, MI	12/07/2016	2008	—	80%	86,008	(1)
Corpus Christi Healthcare Facility	Corpus Christi, TX	12/22/2016	1992	2016	100%	25,102	(1)
Aurora Healthcare Facility	Chicago-Naperville-Elgin, IL-IN-WI	03/30/2017	2002	—	100%	24,722	(1)
Allen Healthcare Facility	Dallas-Fort Worth-Arlington, TX	03/31/2017	2007	—	100%	42,627	(1)
Austin Healthcare Facility	Austin-Round Rock, TX	03/31/2017	2012	—	100%	66,095	(1)
Beaumont Healthcare Facility	Beaumont-Port Arthur, TX	03/31/2017	1991	—	100%	61,000	(1)
San Antonio Healthcare Facility	San Antonio-New Braunfels, TX	06/29/2017	1984	—	100%	44,746	(1)
Silverdale Healthcare Facility	Bremerton-Silverdale, WA	08/25/2017	2005	—	100%	26,127	(1)
Silverdale Healthcare Facility II	Bremerton-Silverdale, WA	09/20/2017	2007	—	100%	19,184	(1)
Saginaw Healthcare Facility	Saginaw, MI	12/21/2017	2002	—	100%	87,843	(1)
Carrollton Healthcare Facility	Dallas-Fort Worth-Arlington, TX	04/27/2018	2015	—	100%	21,990	(1)
Katy Healthcare Facility	Houston-The Woodlands-Sugar Land, TX	06/08/2018	2015	—	100%	34,296	(1)
Indianola Healthcare Facility	Des Moines-West Des Moines, IA	09/26/2018	2014	—	100%	18,116	(1)
Indianola Healthcare Facility II	Des Moines-West Des Moines, IA	09/26/2018	2011	—	100%	20,990	(1)
Benton Healthcare Facility	Little Rock-North Little Rock-Conway, AR	10/17/2018	1992/1999	2012	100%	104,419	(1)

Table of Contents

Real Estate Investments MSA/µSA Segment Number of Properties Date Acquired Year Constructed Year Renovated Physical Occupancy Gross Leased Area (Sq Ft)
Encumbrances, $ (in thousands) ⁽⁸⁾
Cy Fair Surgical Center Houston-The Woodlands-Sugar Land, TX Healthcare 1 07/31/2014 1993 N/A 100% 13,645
⁽¹⁾
Mercy Healthcare Facility Cincinnati, OH-KY-IN Healthcare 1 10/29/2014 2001 N/A 100% 14,868
⁽¹⁾
Winston-Salem, NC IMF Winston-Salem, NC Healthcare 1 12/17/2014 2004 N/A 100% 22,200
⁽¹⁾
New England Sinai Medical Center⁽²⁾
Boston-Cambridge-
Newton, MA-NH Healthcare 1 12/23/2014 1967/1973 1997 100% 180,744
⁽¹⁾
Baylor Surgical Hospital at Fort Worth Dallas-Fort Worth-Arlington, TX Healthcare 1 12/31/2014 2014 N/A 100% 83,464
⁽¹⁾
Baylor Surgical Hospital Integrated Medical Facility Dallas-Fort Worth-Arlington, TX Healthcare 1 12/31/2014 2014 N/A 87.31% 7,219
⁽¹⁾
Winter Haven Healthcare Facility Lakeland-Winter Haven, FL Healthcare 1 01/27/2015 2009 N/A 100% 7,560
^—
Heartland Rehabilitation Hospital Kansas City, MO-KS Healthcare 1 02/17/2015 2014 N/A 100% 54,568
⁽¹⁾
Indianapolis Data Center Indianapolis-Carmel-Anderson, IN Data Center 1 04/01/2015 2000 2014 100% 43,724
⁽¹⁾
Clarion IMF Pittsburgh, PA Healthcare 1 06/01/2015 2012 N/A 100% 33,000
⁽¹⁾
Post Acute Webster Rehabilitation Hospital Houston-The Woodlands-Sugar Land, TX Healthcare 1 06/05/2015 2015 N/A 100% 53,514
⁽¹⁾
Eagan Data Center St. Cloud, MN Data Center 1 06/29/2015 1998 2015 100% 87,402
⁽¹⁾
Houston Surgical Hospital and LTACH Houston-The Woodlands-Sugar Land, TX Healthcare 1 06/30/2015 1950 2005/2008 100% 102,369
⁽¹⁾
Kentucky Maine Ohio IMF Portfolio
⁽³⁾
Healthcare 5 07/22/2015
⁽³⁾

⁽³⁾
100% 293,628
⁽¹⁾
Reading Surgical Hospital Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Healthcare 1 07/24/2015 2007 N/A 100% 33,217
⁽¹⁾
Post Acute Warm Springs Specialty Hospital of Luling Austin-Round Rock, TX Healthcare 1 07/30/2015 2002 N/A 100% 40,901
⁽¹⁾
Minnetonka Data Center Minneapolis-St. Paul-Bloomington, MN-WI Data Center 1 08/28/2015 1985 N/A 100% 135,240
⁽¹⁾
Nebraska Healthcare Facility Omaha-Council Bluffs, NE-IA Healthcare 1 10/14/2015 2014 N/A 100% 40,402
⁽¹⁾
Heritage Park Portfolio Sherman-Denison, TX Healthcare 2 11/20/2015
⁽⁴⁾

⁽⁴⁾
100% 65,631
⁽¹⁾
Baylor Surgery Center at Fort Worth Dallas-Fort Worth-Arlington, TX Healthcare 1 12/23/2015 1998 2007/2015 100% 36,800
⁽¹⁾
HPI Portfolio Oklahoma City, OK Healthcare 9
⁽⁵⁾

⁽⁵⁾

⁽⁵⁾
100% 335,686
^{47,500 (5)}
Waco Data Center Waco, TX Data Center 1 12/30/2015 1956 2009 100% 43,596
⁽¹⁾
Alpharetta Data Center III Atlanta-Sandy Springs-Roswell, GA Data Center 1 02/02/2016 1999 N/A 100% 77,322
^—
Flint Data Center Flint, MI Data Center 1 02/02/2016 1987 N/A 100% 32,500
⁽¹⁾
Vibra Rehabilitation Hospital Riverside-San Bernardino-Ontario, CA Healthcare 1 03/01/2016
⁽⁶⁾
N/A —% —
^—
Tennessee Data Center Nashville-Davidson-Murfreesboro-Franklin, TN Data Center 1 03/31/2016 2015 N/A 100% 71,726
⁽¹⁾
Post Acute Las Vegas Rehabilitation Hospital Las Vegas-Henderson-Paradise, NV Healthcare 1 06/24/2016 2017 N/A 100% 56,220
^—
Somerset Data Center New York-Newark-Jersey City, NY-NJ-PA Data Center 1 06/29/2016 1973 2006 100% 36,118
⁽¹⁾
Integris Lakeside Women's Hospital Oklahoma City, OK Healthcare 1 06/30/2016 1997 2008 100% 62,857
⁽¹⁾
AT&T Hawthorne Data Center Los Angeles-Long Beach-Anaheim, CA Data Center 1 09/27/2016 1963 1983/2001 100% 288,000 39,749
McLean Data Center Portfolio Washington-Arlington-Alexandria, DC-VA-MD-WV Data Center 2 10/17/2016
⁽⁷⁾

⁽⁷⁾
97.31% 127,796 51,000
Select Medical Rehabilitation Facility Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Healthcare 1 11/01/2016 1995 N/A 100% 89,139 31,790
Andover Data Center II Boston-Cambridge-Newton, MA-NH Data Center 1 11/08/2016 2000 N/A 100% 153,000
⁽¹⁾


Property Name	MSA/µSA	Date Acquired	Year Constructed	Year Renovated	% Leased	Leased Sq Ft	Encumbrances, $ (in thousands)
Benton Healthcare Facility II	Little Rock-North Little Rock-Conway, AR	10/17/2018	1983	—	100%	11,350	(1)
Bryant Healthcare Facility	Little Rock-North Little Rock-Conway, AR	10/17/2018	1995	—	100%	23,450	(1)
Hot Springs Healthcare Facility	Little Rock-North Little Rock-Conway, AR	10/17/2018	2009	—	100%	8,573	(1)
Clive Healthcare Facility	Des Moines-West Des Moines, IA	11/26/2018	2008	—	100%	58,156	(1)
Valdosta Healthcare Facility	Valdosta, GA	11/28/2018	2004	—	100%	24,750	(1)
Valdosta Healthcare Facility II	Valdosta, GA	11/28/2018	1992	—	100%	12,745	(1)
Bryant Healthcare Facility II	Little Rock-North Little Rock-Conway, AR	08/16/2019	2016	—	100%	16,425	(1)
Laredo Healthcare Facility	Laredo, TX	09/19/2019	1998	—	100%	61,677	(1)
Laredo Healthcare Facility II	Laredo, TX	09/19/2019	1998	—	100%	118,132	(1)
Poplar Bluff Healthcare Facility	Poplar Bluff, MO (µSA)	09/19/2019	2013	—	100%	71,519	(1)
Tucson Healthcare Facility	Tucson, AZ	09/19/2019	1998	—	100%	34,009	(1)
Akron Healthcare Facility	Akron, OH	10/04/2019	2012	—	100%	98,705	(1)
Akron Healthcare Facility II	Akron, OH	10/04/2019	2013	—	100%	38,564	(1)
Akron Healthcare Facility III	Akron, OH	10/04/2019	2008	—	100%	54,000	(1)
Alexandria Healthcare Facility	Alexandria, LA	10/04/2019	2007	—	100%	15,600	(1)
Appleton Healthcare Facility	Appleton, WI	10/04/2019	2011	—	100%	7,552	(1)
Austin Healthcare Facility II	Austin-Round Rock, TX	10/04/2019	2006	—	100%	18,275	(1)
Bellevue Healthcare Facility	Green Bay, WI	10/04/2019	2010	—	100%	5,838	(1)
Bonita Springs Healthcare Facility	Cape Coral-Fort Myers, FL	10/04/2019	2002	2005	100%	9,800	(1)
Bridgeton Healthcare Facility	St. Louis, MO-IL	10/04/2019	2012	—	100%	66,914	(1)
Covington Healthcare Facility	New Orleans-Metairie, LA	10/04/2019	1984	—	100%	43,250	(1)
Crestview Healthcare Facility	Crestview-Fort Walton Beach-Destin, FL	10/04/2019	2004	2010	100%	5,685	(1)
Dallas Healthcare Facility	Dallas-Fort Worth-Arlington, TX	10/04/2019	2011	—	100%	62,390	(1)
De Pere Healthcare Facility	Green Bay, WI	10/04/2019	2005	—	100%	7,100	(1)
Denver Healthcare Facility	Denver-Aurora-Lakewood, CO	10/04/2019	1962	2018	100%	131,210	(1)
El Segundo Healthcare Facility	Los Angeles-Long Beach-Anaheim, CA	10/04/2019	2009	—	100%	12,163	(1)
Fairlea Healthcare Facility	Hagerstown-Martinsburg, MD-WV	10/04/2019	1999	—	100%	5,200	(1)
Fayetteville Healthcare Facility	Fayetteville-Springdale-Rogers, AR-MO	10/04/2019	1994	2009	100%	55,740	(1)
Fort Myers Healthcare Facility	Cape Coral-Fort Myers, FL	10/04/2019	1999	—	100%	32,148	(1)
Fort Myers Healthcare Facility II	Cape Coral-Fort Myers, FL	10/04/2019	2010	2022	100%	47,089	(1)
Fort Walton Beach Healthcare Facility	Crestview-Fort Walton Beach-Destin, FL	10/04/2019	2005	—	100%	9,017	(1)
Frankfort Healthcare Facility	Lexington-Fayette, KY	10/04/2019	1993	2019	100%	4,000	(1)
Frisco Healthcare Facility	Dallas-Fort Worth-Arlington, TX	10/04/2019	2010	2020	100%	57,051	(1)
Goshen Healthcare Facility	Elkhart-Goshen, IN	10/04/2019	2010	—	100%	15,462	(1)
Hammond Healthcare Facility	Hammond, LA	10/04/2019	2006	—	100%	63,000	(1)
Hammond Healthcare Facility II	Hammond, LA	10/04/2019	2004	—	100%	23,835	(1)
Harlingen Healthcare Facility	Brownsville-Harlingen, TX	10/04/2019	2007	—	100%	38,111	(1)
Henderson Healthcare Facility	Las Vegas-Henderson-Paradise, NV	10/04/2019	2000	—	100%	6,685	(1)
Houston Healthcare Facility III	Houston-The Woodlands-Sugar Land, TX	10/04/2019	1998	2018	100%	16,217	(1)
Howard Healthcare Facility	Green Bay, WI	10/04/2019	2011	—	100%	7,552	(1)
Jacksonville Healthcare Facility	Jacksonville, FL	10/04/2019	2009	—	100%	13,082	(1)
Lafayette Healthcare Facility	Lafayette, LA	10/04/2019	2004	2005	100%	73,824	(1)
Lakewood Ranch Healthcare Facility	North Port-Sarasota-Bradenton, FL	10/04/2019	2008	—	100%	10,919	(1)
Las Vegas Healthcare Facility II	Las Vegas-Henderson-Paradise, NV	10/04/2019	2007	—	100%	6,963	(1)
Lehigh Acres Healthcare Facility	Cape Coral-Fort Myers, FL	10/04/2019	2002	—	100%	5,746	(1)
Lubbock Healthcare Facility	Lubbock, TX	10/04/2019	2003	—	100%	102,143	(1)
Manitowoc Healthcare Facility	Green Bay, WI	10/04/2019	2003	—	100%	7,987	(1)
Manitowoc Healthcare Facility II	Green Bay, WI	10/04/2019	1964	2010	100%	36,090	(1)
Marinette Healthcare Facility	Green Bay, WI	10/04/2019	2008	—	100%	4,178	(1)
New Bedford Healthcare Facility	Providence-Warwick, RI-MA	10/04/2019	1942	1995	100%	70,657	(1)
New Braunfels Healthcare Facility	San Antonio-New Braunfels, TX	10/04/2019	2007	—	100%	27,971	(1)

Table of Contents

Real Estate Investments MSA/µSA Segment Number of Properties Date Acquired Year Constructed Year Renovated Physical Occupancy Gross Leased Area (Sq Ft)
Encumbrances, $ (in thousands) ⁽⁸⁾
Grand Rapids Healthcare Facility Grand Rapids-Wyoming, MI Healthcare 1 12/07/2016 2008 N/A 92.68% 98,992 30,450
Corpus Christi Surgery Center Corpus Christi, TX Healthcare 1 12/22/2016 1992 N/A 100% 25,102
^—
Chicago Data Center II Chicago-Naperville-Elgin, IL-IN-WI Data Center 1 12/28/2016 1987 2016 100% 115,352
⁽¹⁾
Blythewood Data Center Columbia, SC Data Center 1 12/29/2016 1983 N/A 100% 64,637
⁽¹⁾
Tempe Data Center Phoenix-Mesa-Scottsdale, AZ Data Center 1 01/26/2017 1977 1983/2008/2011 100% 44,244
⁽¹⁾
Aurora Healthcare Facility Chicago-Naperville-Elgin, IL-IN-WI Healthcare 1 03/30/2017 2002 N/A 100% 24,722
⁽¹⁾
Norwalk Data Center Bridgeport-Stamford-Norwalk, CT Data Center 1 03/30/2017 2013 N/A 100% 167,691 34,200
Texas Rehabilitation Hospital Portfolio
⁽⁹⁾
Healthcare 4
⁽⁹⁾

⁽⁹⁾

⁽⁹⁾
100% 214,468 50,400
Charlotte Data Center II Charlotte-Concord-Gastonia, NC-SC Data Center 1 05/15/2017 1989 2016 100% 52,924
⁽¹⁾
250 Williams Atlanta Data Center Atlanta-Sandy Springs-Roswell, GA Data Center 1 06/15/2017 1989 2007 90.45% 900,590 116,200
Sunnyvale Data Center San Jose-Sunnyvale-Santa Clara, CA Data Center 1 06/28/2017 1992 1998 100% 76,573
⁽¹⁾
Cincinnati Data Center Cincinnati, OH-KY-IN Data Center 1 06/30/2017 1985 2001 100% 69,826
⁽¹⁾
Silverdale Healthcare Facility Bremerton-Silverdale, WA Healthcare 1 08/25/2017 2005 N/A 100% 26,127
⁽¹⁾
Silverdale Healthcare Facility II Bremerton-Silverdale, WA Healthcare 1 09/20/2017 2007 N/A 100% 19,184
⁽¹⁾
King of Prussia Data Center Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Data Center 1 09/28/2017 1960 1997 100% 50,000 12,503
Tempe Data Center II Phoenix-Mesa-Scottsdale, AZ Data Center 1 09/29/2017 1998 N/A 100% 58,560
⁽¹⁾
Houston Data Center Houston-The Woodlands-Sugar Land, TX Data Center 1 11/16/2017 2013 N/A 100% 103,200 48,607
Saginaw Healthcare Facility Saginaw, MI Healthcare 1 12/21/2017 2002 N/A 100% 87,843
⁽¹⁾
Elgin Data Center Chicago-Naperville-Elgin, IL-IN-WI Data Center 1 12/22/2017 2000 N/A 84.45% 55,523 5,736
Oklahoma City Data Center Oklahoma City, OK Data Center 1 12/27/2017 2008/2016 N/A 100% 92,456
^—
70 5,072,070 $468,135


Property Name	MSA/µSA	Date Acquired	Year Constructed	Year Renovated	% Leased	Leased Sq Ft	Encumbrances, $ (in thousands)
North Smithfield Healthcare Facility	Providence-Warwick, RI-MA	10/04/2019	1965	2000	100%	92,944	(1)
Oklahoma City Healthcare Facility IX	Oklahoma City, OK	10/04/2019	2007	—	100%	34,970	(1)
Oshkosh Healthcare Facility	Oshkosh-Neenah, WI	10/04/2019	2010	—	100%	8,717	(1)
Palm Desert Healthcare Facility	Riverside-San Bernardino-Ontario, CA	10/04/2019	2005	—	100%	6,963	(1)
Rancho Mirage Healthcare Facility II	Riverside-San Bernardino-Ontario, CA	10/04/2019	2008	—	100%	7,432	(1)
San Antonio Healthcare Facility III	San Antonio-New Braunfels, TX	10/04/2019	2012	—	100%	50,000	(1)
San Antonio Healthcare Facility IV	San Antonio-New Braunfels, TX	10/04/2019	1987	—	100%	113,136	(1)
San Antonio Healthcare Facility V	San Antonio-New Braunfels, TX	10/04/2019	2017	—	100%	57,929	(1)
Santa Rosa Beach Healthcare Facility	Crestview-Fort Walton Beach-Destin, FL	10/04/2019	2003	—	100%	5,000	(1)
Savannah Healthcare Facility	Savannah, GA	10/04/2019	2014	—	100%	48,184	(1)
Sturgeon Bay Healthcare Facility	Green Bay, WI	10/04/2019	2007	—	100%	3,100	(1)
Victoria Healthcare Facility	Victoria, TX	10/04/2019	2013	—	100%	34,297	(1)
Victoria Healthcare Facility II	Victoria, TX	10/04/2019	1998	—	100%	28,752	(1)
Webster Healthcare Facility II	Houston-The Woodlands-Sugar Land, TX	10/04/2019	2014	2019	100%	373,070	(1)
Wilkes-Barre Healthcare Facility	Scranton–Wilkes-Barre–Hazleton, PA	10/04/2019	2012	—	100%	15,996	(1)
Yucca Valley Healthcare Facility	Riverside-San Bernardino-Ontario, CA	10/04/2019	2009	—	100%	12,240	(1)
Tucson Healthcare Facility II	Tucson, AZ	12/26/2019	2021	—	100%	60,913	(1)
Tucson Healthcare Facility III	Tucson, AZ	12/27/2019	2020	—	100%	20,000	(1)
Grimes Healthcare Facility	Des Moines-West Des Moines, IA	02/19/2020	2018	—	100%	14,669	(1)
Tampa Healthcare Facility	Tampa-St. Petersburg-Clearwater, FL	09/08/2020	2015	—	100%	33,822	(1)
Tucson Healthcare Facility IV	Tucson, AZ	12/22/2020	2022	—	89%	39,967	—
Greenwood Healthcare Facility	Indianapolis-Carmel-Anderson, IN	04/19/2021	2008	2018	100%	53,560	(1)
Clive Healthcare Facility II	Des Moines-West Des Moines, IA	12/08/2021	2008	—	100%	63,224	(1)
Clive Healthcare Facility III	Des Moines-West Des Moines, IA	12/08/2021	2008	—	100%	33,974	(1)
Clive Healthcare Facility IV	Des Moines-West Des Moines, IA	12/08/2021	2009	2018	100%	35,419	(1)
Clive Undeveloped Land	Des Moines-West Des Moines, IA	12/08/2021	—	—	—%	—	—
Clive Undeveloped Land II	Des Moines-West Des Moines, IA	12/08/2021	—	—	—%	—	—
Yukon Healthcare Facility	Oklahoma City, OK	03/10/2022	2020	—	100%	45,624	—
Pleasant Hills Healthcare Facility	Pittsburgh, PA	05/12/2022	1967	—	100%	33,712	—
Prosser Healthcare Facility I	Kennewick-Richland, WA	05/20/2022	2010	—	100%	6,000	—
Prosser Healthcare Facility II	Kennewick-Richland, WA	05/20/2022	2013	2019	100%	9,230	—
Prosser Healthcare Facility III	Kennewick-Richland, WA	05/20/2022	2013	—	100%	5,400	—
Tampa Healthcare Facility II	Tampa-St. Petersburg-Clearwater, FL	07/20/2022	2022	—	100%	87,649	—
Escondido Healthcare Facility	San Diego-Carlsbad, CA	07/21/2022	2021	—	100%	56,800	—
						5,507,777	$	—


~~(1)~~	Property collateralized under the KeyBank Credit Facility. As of December 31, 2017, 48 commercial real estate properties were collateralized under the KeyBank Credit Facility and we had an outstanding principal balance of $220,000,000.


~~(2)~~	~~The New England Sinai Medical Center consists of two buildings.~~


~~(3)~~	~~The Kentucky Maine Ohio IMF Portfolio consists of the following five properties:~~



~~Property Description~~		~~MSA/µSA~~	~~Year Constructed~~	~~Year Renovated~~
~~KMO IMF - Cincinnati I~~	~~Cincinnati, OH-KY-IN~~	~~1959~~	~~1970 & 2013~~
~~KMO IMF - Cincinnati II~~	~~Cincinnati, OH-KY-IN~~	~~2014~~	~~N/A~~
~~KMO IMF - Florence~~	~~Cincinnati, OH-KY-IN~~	~~2014~~	~~N/A~~
~~KMO IMF - Augusta~~	~~Augusta-Waterville, ME (µSA)~~	~~2010~~	~~N/A~~
~~KMO IMF - Oakland~~	~~Augusta-Waterville, ME (µSA)~~	~~2003~~	~~N/A~~


~~(4)~~	~~The Heritage Park Portfolio consists of the following two properties:~~

Property Description Year Constructed Year Renovated
Heritage Park - Sherman I 2005 2010
Heritage Park - Sherman II 2005 N/A


~~(5)~~	~~The HPI Portfolio consists of the following nine properties:~~

Property Description Date Acquired Year Constructed Year Renovated Encumbrances (in thousands)
HPI - Oklahoma City I 12/29/2015 1985 1998 & 2003 22,500
HPI - Oklahoma City II 12/29/2015 1994 1999
⁽¹⁾
HPI - Edmond 01/20/2016 2002 N/A
⁽¹⁾
HPI - Oklahoma City III 01/27/2016 2007 N/A
⁽¹⁾
HPI - Oklahoma City IV 01/27/2016 2006 N/A
⁽¹⁾
HPI - Newcastle 02/03/2016 1995 1999
⁽¹⁾
HPI - Oklahoma City V 02/11/2016 2008 N/A
⁽¹⁾
HPI - Oklahoma City VI 03/07/2016 2007 N/A
⁽¹⁾
HPI - Oklahoma City VII 06/22/2016 2016 N/A 25,000


~~(6)~~	~~As of December 31, 2017, the Vibra Rehabilitation Hospital was under construction.~~


~~(7)~~	~~The McLean Data Center Portfolio consists of the following two properties:~~

Property Description Year Constructed Year Renovated
McLean I 1966 1998
McLean II 1991 1998


~~(8)~~	~~Represents the initial loan amount for each property.~~


~~(9)~~	~~The Texas Rehabilitation Hospital Portfolio consists of the following four properties:~~



~~Property Description~~	~~MSA/µSA~~	~~Date Acquired~~	~~Year Constructed~~	~~Year Renovated~~
~~Texas Rehab - Austin~~	~~Austin-Round Rock, TX~~	~~03/31/2017~~	~~2012~~	~~N/A~~
~~Texas Rehab - Allen~~	~~Dallas-Fort Worth-Arlington, TX~~	~~03/31/2017~~	~~2007~~	~~N/A~~
~~Texas Rehab - Beaumont~~	~~Beaumont-Port Arthur, TX~~	~~03/31/2017~~	~~1991~~	~~N/A~~
~~Texas Rehab - San Antonio~~	~~San Antonio-New Braunfels, TX~~	~~06/29/2017~~	~~1985/1992~~	~~N/A~~

(1)Property is contributed to the pool of unencumbered properties of our credit facility. As of December 31, 2022, 124 commercial real estate properties were contributed to the pool of unencumbered properties under our credit facility and we had an outstanding principal balance of $583,000,000.

We believe the properties are adequately covered by insurance and are suitable for their respective intended purposes. Real estate assets, other than land, are depreciated on a straight-line basis over each asset's useful life. Tenant improvements are depreciated on a straight-line basis over the shorter of their respective lease term or expected useful life.

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Leases

Although there are variations in the specific terms of the leases in our portfolio, the following is a summary of the ~~general~~ structure of our leases. Generally, the leases of our properties provide for initial terms ranging from 10 to 20 years. As of December 31, ~~2017,~~2022, the weighted average remaining lease term of our properties was ~~10.34~~9.3 years. The properties generally are leased under net leases pursuant to which the tenant bears responsibility for substantially all property costs and expenses associated with ongoing maintenance and operation, including utilities, property taxes and insurance. ~~The leases at each individual property provide for annual rental payments (payable in monthly installments) for an average of $1,073,000 per year.~~ Certain leases provide for fixed increases in rent. Generally, the property leases provide the tenant with one or more multi-year renewal options, subject to generally the same terms and conditions as the initial lease term.

~~The following table shows lease~~Lease expirations of our real properties based on annualized contractual base rent as of December 31, ~~2017 and~~2022, for each of the next ten years ending December 31 and thereafter, are as follows:

Year of Lease
Expiration Total Number
of Leases Gross
Leased Area
(Sq Ft)
Annualized Contractual
Base Rent (in
thousands) ⁽¹⁾
Percentage of
Annualized Contractual
Base Rent
2018 6
27,323
$ 406
0.34 %
2019 8
113,141
1,773
1.49 %
2020 5
35,707
840
0.70 %
2021 1
220,599
4,097
3.44 %
2022 7
326,385
6,334
5.31 %
2023 8
206,455
4,287
3.60 %
2024 8
298,351
7,120
5.97 %
2025 6
269,738
5,083
4.27 %
2026 12
538,168
11,148
9.35 %
2027 —
—
—
— %
Thereafter 53
3,036,203
78,088
65.53 %
114
5,072,070
$ 119,176
100.00 %


Year of Lease Expiration	Total Number of Leases	Leased Sq Ft	Annualized Contractual Base Rent (in thousands) (1)		Percentage of Annualized Contractual Base Rent
2023	6	26,994	$	607	0.4	%
2024	18	162,001	4,792		2.8	%
2025	13	372,447	9,487		5.6	%
2026	13	202,884	5,837		3.4	%
2027	10	315,340	7,777		4.6	%
2028	10	236,527	5,126		3.0	%
2029	15	498,702	10,485		6.2	%
2030	13	550,814	18,120		10.7	%
2031	12	403,342	16,479		9.7	%
2032	6	174,560	7,005		4.1	%
Thereafter	41	2,564,166	83,655		49.5	%
	157	5,507,777	$	169,370	100.0	%


~~(1)~~			~~Annualized contractual base rent is based on contractual base rent from leases in effect as of December 31, 2017.~~

~~a stockholder would be able to resell his or her shares at the Estimated Per Share NAV;~~

~~stockholder would ultimately realize distributions per share equal to the Estimated Per Share NAV upon liquidation of our assets and settlement of our liabilities or a sale of the company;~~

~~our shares of common stock would trade at the Estimated Per Share NAV on a national securities exchange;~~

~~an independent third-party appraiser or other third-party valuation firm would agree with the Estimated Per Share NAV; or~~

~~the methodology used to estimate our value per share would be acceptable to FINRA or for compliance with ERISA reporting requirements.~~

~~disabilities occurring after the legal retirement age; and~~

~~disabilities that do not render a worker incapable of performing substantial gainful activity.~~

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~~funds from operations and for a reconciliation on these non-GAAP financial measures to net income (loss) attributable to common stockholders.~~

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with ~~Item 6. “Selected Financial Data” and~~ our consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this Annual Report on Form 10-K. ~~This~~The discussion contains ~~forward-looking~~forward looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly under “Risk Factors” and “Forward-Looking Statements.” All forward-looking statements in this document are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements.

This section of the Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. A discussion of the changes in our financial condition and results of operations for the years ended December 31, 2021, and 2020 may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal years ended December 31, 2021 and December 31, 2020.

Overview

We ~~were formed~~invest in high-quality properties leased to tenants capitalizing on ~~January 11, 2013 under~~critical and structural economic growth drivers. We are primarily focused on investing in strategic healthcare assets across the ~~laws~~continuum of ~~Maryland to acquire~~care, with emphasis on lower cost patient settings, which, we believe, typically generate predictable, durable and ~~operate a diversified portfolio of income-producing commercial~~growing income streams. We may also make other real estate-related investments, which may include equity or debt interests in other real estate ~~with~~entities.

We formerly invested in data center properties. During 2021, our board of directors, or the Board, made a ~~focus on~~determination to sell our data ~~centers~~center properties. On May 19, 2021, we and ~~healthcare~~certain of our wholly-owned subsidiaries entered into the PSA for the sale of up to 29 data center properties ~~preferably with long-term net leases~~owned by us. The Board's determination to ~~creditworthy tenants,~~sell the data center properties, as well as the execution of the PSA, represented a strategic shift that had a major effect on our results and operations for the periods presented. On July 22, 2021, we completed the sale of our data center segment, comprised of approximately 3,298,000 rentable square feet, for an aggregate sale price of $1,320,000,000, and generated net proceeds of approximately $1,295,367,000. As of December 31, 2021 and subsequent, we have no assets or liabilities related to ~~make~~the data center segment. The operations of the data center segment have been classified as income from discontinued operations on the consolidated statements of comprehensive income for the years ended December 31, 2021 and 2020.

As of December 31, 2022, we owned 132 real ~~estate-related investments that relate to such property types.~~estate properties and two undeveloped land parcels.

We ~~commenced~~raised the equity capital for our ~~initial public offering of $2,350,000,000 of shares of~~real estate investments through our ~~common stock, or our Initial Offering, consisting of $2,250,000,000 of shares in our primary offering~~Offerings from May 2014 through November 2018, and ~~up to $100,000,000 of~~we have offered shares pursuant to ~~our distribution reinvestment plan, or~~the DRIP ~~on May 29, 2014. We ceased offering shares~~Offerings since November 2017. As of ~~common stock pursuant to our Initial Offering on November 24, 2017. At the completion of our Initial Offering,~~December 31, 2022, we had accepted ~~investors~~investors’ subscriptions for and issued approximately ~~125,095,000~~157,508,000 shares of Class A, Class I, Class T and Class TT2 common stock ~~including shares of common stock issued pursuant to~~in our ~~DRIP~~Offerings, resulting in receipt of gross proceeds of ~~$1,223,803,000,~~approximately $1,520,086,000, before share repurchases of approximately $135,701,000, selling commissions and dealer manager fees of approximately ~~$91,503,000.~~

~~On November 27, 2017, our follow-on~~$96,734,000 and other offering or our Offering, of up to $1,000,000,000 in shares of Class A common stock, Class I common stock, and Class T common stock pursuant to a registration statement on Form S-11, or the Follow-On Registration Statement, was declared effective by the SEC.

On September 28, 2017, our board of directors, at the recommendation of the audit committee, which is comprised solely of independent directors, unanimously approved and established an Estimated Per Share NAV of $9.18 as of June 30, 2017 of each of our Class A common stock, Class I common stock and Class T common stock for purposes of assisting broker-dealers participating in the Initial Offering and the Offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers Conduct Rule 2340. As a result of our board of directors' determination of the Estimated Per Share NAV, our board of directors approved the revised primary offering prices of $10.200 per Class A share, $9.273 per Class I share, and $9.766 per Class T share, effective October 1, 2017.Further, our board of directors approved $9.18 as the per share purchase price of Class A shares, Class I shares and Class T shares pursuant to the DRIP, effective October 1, 2017. The Estimated Per Share NAV is not subject to audit by our independent registered public accounting firm. We intend to publish an updated estimated NAV per share on at least an annual basis.

On October 13, 2017, we registered 10,893,246 shares of common stock under the DRIP pursuant to a registration statement on Form S-3, or the DRIP Registration Statement, for a price per share of $9.18 per Class A share, Class I share and Class T share for a proposed maximum offering price of $100,000,000 in shares of common stock, or the DRIP Offering. The DRIP Registration Statement was automatically effective with the SEC upon filing and we commenced offering shares of common stock pursuant to the DRIP Registration Statement on December 1, 2017. On December 6, 2017, we filed a post-effective amendment to our DRIP Registration Statement to register shares of Class T2 common stock at $9.18 per share.

On June 2, 2017, we filed Articles Supplementary to the Second Articles of Amendment and Restatement with the State Department of Assessments and Taxation of Maryland reclassifying a portion of our Class A common stock, Class I common stock and Class T common stock as Class T2 common stock. On December 6, 2017, we filed Post-Effective Amendment No. 1 to our Registration Statement on Form S-11 to register Class T2 shares of common stock, which was declared effective by the SEC on February 20, 2018.

We ceased offering shares of Class T common stock in our Offering on March 14, 2018. As of March 15, 2018, we are offering, in any combination with a dollar value up to the maximum offering amount, shares of Class A common stock at a price of $10.200 per share, shares of Class I common stock at a price of $9.273 per share, and shares of Class T2 common stock at a price of $9.714 per share. The offering prices are based on the most recent estimated per share net asset value, or Estimated Per Share NAV, of $9.18 of each of our Class A common stock, Class I common stock and Class T common stock, and any

~~applicable per share upfront selling commissions and dealer manager fees. We refer to the "Offering", "Initial Offering" and "DRIP Offering" collectively as the "Offerings".~~

Substantially all of our operations are conducted through our Operating Partnership. We are externally advised by our Advisor, which is our affiliate, pursuant to an advisory agreement between us and our Advisor. Our Advisor supervises and manages our day-to-day operations and selects the properties and real estate-related investments we acquire, subject to the oversight and approval of our board of directors. Our Advisor also provides marketing, sales and client services related to real estate on our behalf. Our Advisor engages affiliated entities to provide various services to us. Our Advisor is managed by, and is a subsidiary of, our sponsor, Carter Validus REIT Management Company II, LLC, or our Sponsor. We have no paid employees and we rely on our Advisor to provide substantially all of our services.

Carter Validus Real Estate Management Services II, LLC, or our Property Manager, a wholly-owned subsidiary of our Sponsor, serves as our property manager. Our Advisor and our Property Manager received, and will continue to receive, fees during the acquisition and operational stages and our Advisor may be eligible to receive fees during the liquidation stage of the Company. SC Distributors, LLC, an affiliate of the Advisor, or the Dealer Manager, serves as the dealer manager of the Initial Offering. The Dealer Manager has received, and will continue to receive, fees for services related to our Initial Offering and Offering.

We currently operate through two reportable segments – commercial real estate investments in data centers and healthcare. As of December 31, 2017, we had purchased 53 real estate investments, consisting of 70 properties, comprising approximately 5,190,000 of gross rental square feet for an aggregate purchase pricecosts of approximately ~~$1,611,055,000.~~$27,631,000.

Critical Accounting ~~Policies~~Estimates

Our critical accounting policies are more fully described in Note 2—"Summary of Significant Accounting Policies," or Note 2, of the consolidated financial statements that are part of this Annual Report on Form 10-K. As disclosed in Note 2, theThe preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions ~~about future events~~ that affect reported amounts of assets, liabilities, revenues and expenses. Changes in these estimates and assumptions could have a significant effect on the ~~amounts reported in~~financial statements. From time to time, we evaluate our estimates based on historical experience and various assumptions that we believe are reasonable under the ~~consolidated financial statements and accompanying notes. Actual~~circumstances. Although our actual results ~~could differ significantly~~historically have not deviated materially from those ~~estimates. We believe that the following discussion addresses the most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and~~determined using estimates, our results of operations or financial condition could differ materially from these estimates under different assumptions or conditions.

We consider our critical accounting estimates to be those used in the determination of the reported amounts and ~~require management’s most difficult, subjective and complex judgments.~~

~~Investment in Real Estate~~

~~Real estate costs~~disclosure related to the ~~acquisition, development, construction and improvement~~impairment of long-lived assets.

We review our real estate assets on an asset group basis for impairment. Typically, an individual property constitutes an asset group. We identify an asset group based on the lowest level of identifiable cash flows. In the impairment analysis we must determine whether there are indicators of impairment. For operating properties, ~~are capitalized. Repair and maintenance costs are expensed as incurred and~~these indicators could include a tenant being delinquent or not paying rent, a reduction in our estimated hold period, a significant ~~replacements and betterments are capitalized. Repair and maintenance costs include all costs~~decline in a property’s leasing percentage, a current period operating loss or negative cash flows combined with a history of losses at the property, a significant decline in lease rates for that ~~do not extend~~property or others in the ~~useful life~~property’s market, a significant change in the market value of the ~~real estate asset. We consider~~property, or an adverse change in the ~~period~~financial condition of ~~future benefit~~significant tenants.

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If we determine that an asset has indicators of impairment, we then determine whether the undiscounted cash flows associated with the asset group exceed the carrying amount of the asset group. In calculating the undiscounted net cash flows of an asset ~~in determining~~group, we use considerable judgement to estimate several inputs. We estimate future rental rates, future capital expenditures, future operating expenses, and market capitalization rates for residual values, among other things. In addition, if there are alternative strategies for the ~~appropriate useful life. Real estate assets, other than land, are depreciated or amortized on~~future use of the asset, we assess the probability of each alternative strategy and perform a ~~straight-line basis over each asset’s useful life. We anticipate the estimated useful lives of our assets by class as follows:~~



~~Buildings and improvements~~		~~15 – 40 years~~
~~Tenant improvements~~		~~Shorter of lease term or expected useful life~~
~~Furniture, fixtures, and equipment~~		~~3 – 10 years~~

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of our real estate and related intangible assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets may not be recoverable, weprobability-weighted undiscounted cash flow analysis to assess the recoverability of the ~~assets by estimating whether we will recover the carrying value of such assets through their undiscounted future cash flows and eventual disposition.~~asset group. If ~~based on this analysis, we do not believe that we will be able to recover~~ the carrying value of the asset ~~we record~~group exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the ~~extent that the~~excess of carrying value ~~exceeds~~over the estimated fair value of the ~~asset. No impairment indicators have been identified and no impairment losses were recorded during~~asset group.

In determining the ~~year ended December 31, 2017.~~

~~When developing estimates~~fair value of ~~expected future~~an asset group, we exercise considerable judgment on several factors. We may determine fair value by using a direct capitalization method, a discounted cash ~~flows, we make certain assumptions regarding future market rental income amounts subsequent~~flow method or by utilizing comparable sales information. The direct capitalization method is based on a capitalization rate applied to the ~~expiration of current lease arrangements, property~~underlying asset group's most recent stabilized trailing twelve-month net operating ~~expenses, terminal capitalization and discount rates,~~income at the ~~number of months it takes to re-lease the property, required tenant improvements and the number of years the property will be held for investment.~~measurement date. The ~~use of alternative assumptions in the~~discounted cash flow method is based on estimated future cash flow ~~analysis could~~projections utilizing discount rates, terminal capitalization rates, and planned capital expenditures. We use judgment to determine an appropriate discount rate to apply to the cash flows in the discounted cash flow calculation. We also use judgment in analyzing comparable market information because no two real estate assets are identical in location and price.

The estimates and judgments used in the impairment process are highly subjective and susceptible to frequent change. Significant increases or decreases in any of these inputs, particularly with regards to cash flow projections and discount and capitalization rates, would result in a ~~different determination of the property’s future cash flows and a different conclusion regarding the existence of an impairment, the extent of such loss, if any, as well as the carrying~~significantly lower or higher fair value measurement of the real estate assets being assessed. Additionally, changes in economic and ~~related assets.~~

~~Purchase Price Allocation~~

~~Upon~~operating conditions, including changes in the ~~acquisition~~financial condition of ~~real properties, we evaluate whether the acquisition is a business combination or an asset acquisition. For both business combinations~~our tenants, and ~~asset acquisitions we allocate the purchase price of properties~~changes to ~~acquired tangible assets, consisting of land, buildings~~our intent and improvements, and acquired intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases. For asset acquisitions, we capitalize transaction costs and allocate the purchase price using a relative fair value method allocating all accumulated costs. For business combinations, we expense transaction costs associated as incurred and allocates the purchase price based on the estimated fair value of each separately identifiable asset and liability.

The fair values of the tangible assets of an acquired property (which includes land, buildings and improvements) are determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocatedability to land and buildings and improvements based on our determination of the relative fair value of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, management includes real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market conditions.

The fair values of above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts paid pursuant to the in-place leases and (ii) an estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease including any fixed rate bargain renewal periods, with respect to a below-market lease. The above-market and below-market lease values are capitalized as intangible lease assets or liabilities. Above-market lease values are amortized as an adjustment of rental income over the remaining terms of the respective leases. Below-market leases are amortized as an adjustment of rental income over the remaining terms of the respective leases, including any fixed rate bargain renewal periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above-market and below-market in-place lease values related to that lease would be recorded as an adjustment to rental income.

The fair values of in-place leases include an estimate of direct costs associated with obtaining a new tenant and opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on management’s consideration of current market costs to execute a similar lease. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. The in-place lease intangibles are amortized to expense over the remaining terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed.

~~Revenue Recognition, Tenant Receivables and Allowance for Uncollectible Accounts~~

~~We recognize revenue in accordance with Accounting Standards Codification, or ASC, 605,~~ ~~Revenue Recognition~~, or ASC 605. ASC 605 requires that all four of the following basic criteria be met before revenue is realized or realizable and earned: (1) there is persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed and determinable; and (4) collectability is reasonably assured.

~~In accordance with ASC 840,~~ ~~Leases, minimum rental revenue is recognized on a straight-line basis over the term of~~hold the related ~~lease (including rent holidays). Differences between rental income recognized~~asset, that occur after our impairment assessment could impact the assumptions used in that assessment and ~~amounts contractually due under the lease agreements are credited or charged~~could result in future charges to ~~deferred rent receivable or deferred rent liability, as applicable. Tenant reimbursement revenue, which is comprised of additional amounts recoverable~~earnings if assumptions regarding those investments differ from tenants for common area maintenance expenses and certain other recoverable expenses, is recognized as revenue in the period in which the related expenses are incurred. Tenant reimbursements are recognized and presented in accordance with ASC Subtopic 605-45, ~~Revenue Recognition—Principal Agent Consideration,~~ or ASC 605-45. ASC 605-45 requires that these reimbursements be recorded on a gross basis when we are the primary obligor with respect to purchasing goods and services from third-party suppliers, and thus, we have discretion in selecting the supplier and have credit risk.

Tenant receivables and unbilled deferred rent receivables are carried net of the allowances for uncollectible current tenant receivables and unbilled deferred rent. An allowance will be maintained for estimated losses resulting from the inability of certain tenants to meet the contractual obligations under their lease agreements. We also maintain an allowance for deferred rent receivables arising from the straight-lining of rents. Our determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, the tenant’s financial condition, security deposits, letters of credit, lease guarantees and current economic conditions and other relevant factors. No allowances for uncollectible tenant receivables were recorded as of December 31, 2017, 2016 and 2015.

~~Income Taxes~~

We elected to be taxed, and currently qualify, as a REIT for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code, commencing with the taxable year ended December 31, 2014. As a REIT, we are required, among other things, to distribute at least 90% of our REIT taxable income (computed without regard to the dividends paid deduction and excluding capital gains) to our stockholders. In addition, we generally will not be subject to federal corporate income tax to the extent we distribute our taxable income to our stockholders. REITs are subject to a number of other organizational and operational requirements. Even if we maintain our qualification for taxation as a REIT, we, or our subsidiaries, may be subject to certain state and local taxes on our income and property, and federal income and excise taxes on our undistributed income.actual results.

Real Estate ~~Investments~~Acquisitions and Dispositions in ~~2017 and Subsequent~~2022

~~During the year ended December 31, 2017, we, through our wholly-owned subsidiaries, acquired 16 real estate investments, consisting of 19~~•We purchased seven healthcare properties, in five separate transactions, comprising approximately 244,000 rentable square feet for an aggregate purchase price of ~~$610,923,000 and comprising~~ approximately ~~2,149,000 gross rental square feet of commercial space.~~$157,194,000. In addition, we placed one healthcare property into service.

~~Subsequent to December 31, 2017 and through March 16, 2018, we, through our wholly-owned subsidiaries, acquired two real estate properties~~•We sold one land parcel that formerly contained a healthcare property for an aggregate ~~purchase~~sale price of ~~$50,960,000~~$24,000,000 and ~~comprising approximately 133,000 gross rental square feet~~generated net proceeds of ~~commercial space.~~$22,701,000.

For a further discussion of our 2017 acquisitions, see Note 3—"Real Estate Investments" and for a further discussion on acquisitions in 2018, see Note 21—"Subsequent Events" to the consolidated financial statements that are a part of this Annual Report on Form 10-K.

Factors ~~that~~That May Influence Results of Operations

We are not aware at this time of any material trends or uncertainties, other than national economic conditions ~~affecting real estate generally~~ and those ~~risks listed~~discussed below and in Part I. Item 1A. ~~"Risk Factors,"~~“Risk Factors” of this Annual Report on Form 10-K, affecting our real estate properties, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, management and operation of our ~~properties.~~properties.

Rental ~~Income~~Revenue

The amount of rental ~~income~~revenue generated by our properties depends principally on our ability to maintain the occupancy rates of leased space and to lease available space at ~~the then-existing~~existing rental rates. Negative trends in one or more of these factors could adversely affect our rental ~~income~~revenue in future periods. We continually monitor our tenants' ability to meet their lease obligations to pay us rent to determine if any adjustments should be reflected currently. During the year ended December 31, 2022, certain tenants experienced a deterioration in their ability to pay rent in accordance with the contractual terms of their leases. As a result, we ceased recognizing rent on a straight-line basis and have only recorded rent for these tenants to the extent we have received cash. In addition, we wrote off $2,434,000 of previously recorded straight line rent receivable, during the year ended December 31, 2022, as a reduction in rental revenue, because the amounts were determined to be uncollectible. As of December 31, ~~2017,~~2022, our real estate properties were ~~97.7%~~99.5% leased.

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Results of Operations

The results of operations discussed below reflect the operations of our healthcare portfolio since the data centers segment is presented as discontinued operations on the consolidated statements of comprehensive income for all years presented.

Our results of operations are influenced by the timing of acquisitions and the ~~operating~~ performance of our real estate properties. The following table shows the property statistics of our real estate properties as of December 31, ~~2017, 2016~~2022 and ~~2015:~~2021:


	December 31,
	2022		2021
Number of real estate properties (1)	132		125
Leased square feet	5,508,000		5,219,000
Weighted average percentage of rentable square feet leased	99.5	%	99.5	%

December 31,
2017 2016 2015
Number of commercial operating real estate properties⁽¹⁾
69
49
28
Leased rentable square feet 5,072,000
2,972,000
1,519,000
Weighted average percentage of rentable square feet leased 97.7 % 99.6 % 99.7 %


~~(1)~~			~~As of December 31, 2017, we owned 70 real estate properties, one of which was under construction. As of December 31, 2016, we owned 51 real estate properties, two of which were under construction.~~

(1)As of December 31, 2022, we owned 132 real estate properties and two undeveloped land parcels. As of December 31, 2021, we owned 125 real estate properties and two undeveloped land parcels.

The following table summarizes our real estate activity for the years ended December 31, ~~2017, 2016~~2022 and ~~2015:~~2021:


	Year Ended December 31,
		2022			2021
Real estate properties acquired		7			4
Real estate properties disposed		—		(1)	2

Aggregate purchase price of real estate properties acquired (2)		$	157,194,000		$	69,951,000

Net book value of real estate properties disposed		$	—	(1)	$	12,553,000
Leased square feet of real estate property additions		284,000			247,000

Year Ended December 31,
2017 2016 2015
Commercial operating real estate properties acquired 19
21
⁽¹⁾
22
Commercial real estate properties placed into service 1
—
—
Approximate aggregate purchase price of acquired real estate properties $ 610,923,000
$ 523,082,000
⁽¹⁾
$ 374,164,000
Approximate aggregate cost of properties placed into service $ 3,252,000
$ —
$ —
Leased rentable square feet 2,100,000
1,443,000
1,207,000


~~(1)~~

(1)During the year ended ~~December 31, 2016, we acquired 23 real estate properties, two of which were under construction. The properties under construction were purchased for $13,601,000.~~

~~The following discussion is based on our consolidated financial statements for the years~~ December 31, ~~2017, 2016 and 2015.~~2022, we disposed of one land parcel that formerly contained a healthcare property.

(2)Includes capitalized acquisition costs associated with transactions determined to be asset acquisitions.

Same Store Properties

This section describes and compares our results of operations for the years ended December 31, ~~2017, 2016~~2022 and ~~2015.~~2021. We generate ~~almost~~substantially all of our ~~net operating income~~revenue from property operations. In order to evaluate our overall portfolio, management analyzes the ~~net operating income~~results of our same store properties. We define "same store properties" as ~~operating~~ properties that were owned and operated for the entirety of both calendar periods being compared and exclude properties under ~~development.~~development, re-development, or classified as held for sale.

By evaluating the ~~property net operating income~~results of our same store properties, management is able to monitor the operations of our existing properties for comparable periods to measure the performance of our current portfolio and ~~determine~~readily observe the expected effects of our new acquisitions and dispositions on net ~~income~~ (loss). income.

Year Ended December 31, ~~2017~~2022 Compared to Year Ended December 31, ~~2016~~2021

~~Changes in our revenues are summarized in the~~The following table represents the breakdown of total rental revenue for the year ended December 31, 2022 compared to the comparable period in 2021 (amounts in thousands):.


	Year Ended December 31,
	2022		2021		$ Change		% Change
Same store rental revenue	$	155,323	$	157,438	$	(2,115)	(1.3)	%
Same store tenant reimbursements	9,436		8,848		588		6.6	%
Non-same store rental revenue	13,727		5,649		8,078		143.0	%
Non-same store tenant reimbursements	1,495		802		693		86.4	%


Other operating income	5		101		(96)		(95.0)	%
Total rental revenue	$	179,986	$	172,838	$	7,148	4.1	%

Year Ended December 31,
2017 2016 Change

Same store rental and parking revenue $ 37,488
$ 37,445
$ 43
Non-same store rental and parking revenue 68,422
12,251
56,171
Same store tenant reimbursement revenue 5,599
5,149
450
Non-same store tenant reimbursement revenue 13,448
1,583
11,865
Other operating income 138
3
135
Total revenue $ 125,095
$ 56,431
$ 68,664

~~There was an increase in contractual~~•Same store rental revenue ~~resulting from average annual~~decreased primarily due to a $2.4 million write-off of previously recorded straight-line rent ~~escalations~~related to tenants, partially offset by base rental increases of ~~2.10% at our same store properties, which was offset entirely by straight-line rental revenue.~~$1.0 million for leases indexed to CPI.

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•Non-same store rental ~~and parking revenue, and tenant reimbursement~~ revenue increased due to an increase of $8.7 million from the acquisition of ~~40 operating~~ properties and ~~placing~~an increase of $1.4 million from the placement of development properties in service ~~one development property~~ since January 1, ~~2016.~~2021, partially offset by a decrease in non-same store rental revenue due to a decrease of $0.9 million related to the sale of properties since January 1, 2021, and a decrease of $1.1 million attributable to deferred rent from a property under renovation.

~~Same~~•There were no significant changes in same store tenant ~~reimbursement revenue increased primarily due to an increase in real estate tax~~reimbursements, non-same store tenant reimbursements and ~~common area maintenance reimbursements at certain same store properties.~~

~~Other~~other operating ~~income increased primarily due to miscellaneous fee income earned at one property.~~

income.

Changes in our expenses are summarized in the following table (amounts in thousands):


	Year Ended December 31,
	2022		2021		$ Change		% Change
Same store rental expenses	$	15,627	$	15,216	$	411	2.7	%
Non-same store rental expenses	2,323		2,496		(173)		(6.9)	%

General and administrative expenses	22,079		21,388		691		3.2	%


Depreciation and amortization	77,199		70,259		6,940		9.9	%


Impairment losses	47,424		27,837		19,587		70.4	%
Total expenses	$	164,652	$	137,196	$	27,456	20.0	%
Gain on real estate dispositions	$	460	$	89��	$	371	416.9	%

Year Ended December 31,
2017 2016 Change

Same store rental and parking expenses $ 6,719
$ 6,175
$ 544
Non-same store rental and parking expenses 19,377
1,989
17,388
General and administrative expenses 4,069
3,105
964
Acquisition related expenses —
5,339
(5,339 )
Asset management fees 9,963
4,925
5,038
Depreciation and amortization 41,133
19,211
21,922
Total expenses $ 81,261
$ 40,744
$ 40,517

~~Same~~•There were no significant changes in same store rental expenses.

•Non-same store rental expenses decreased due to a decrease of $1.7 million related to the sale of properties since January 1, 2021, which were vacant prior to sale, thus requiring us to incur incrementally more expenses in 2021, partially offset by an increase of $1.6 million related to the acquisition of properties and ~~parking~~placement of development properties in service.

•General and administrative expenses ~~certain of which are subject to reimbursement by our tenants,~~ increased primarily due to an increase in ~~real estate taxes~~stock-based compensation of $1.5 million and ~~other operating~~an increase of $0.8 million in severance payments attributable to our former chief accounting officer, partially offset by a decrease of $1.3 million in transfer agent expenses ~~at certain same store properties.~~attributable to changing our transfer agent in August 2021.

~~Non-same store rental~~•Depreciation and ~~parking expenses, certain of which are subject to reimbursement by our tenants,~~amortization increased primarily due to an increase of $4.3 million from the acquisition of ~~40 operating~~ properties, ~~and placing~~an increase of $0.7 million from the placement of development properties in service ~~one development property~~ since January 1, ~~2016.~~

~~General~~2021, and ~~administrative expenses increased due to an increase~~impairments of in-place lease intangibles in ~~professional fees, personnel and reporting costs in connection with our Company's growth.~~

~~Acquisition related expenses decreased due to~~the amount of approximately $4.3 million, partially offset by a decrease of $2.4 million from the sale of properties.

•Impairment losses were recorded in ~~real estate~~the aggregate amount of $47.4 million related to several properties ~~determined to be business combinations due to the adoption of ASU 2017-01,~~ ~~Business Combinations.~~ Acquisition fees and expenses associated with transactions determined to be business combinations are expensed as incurred. During the year ended December 31, 2017, we did not acquire any real estate properties determined to be business combinations as compared to 12 real estate properties determined to be business combinations for an aggregate purchase price of $207.4 million during the year ended December 31, ~~2016.~~

~~Asset management fees increased due to an increase~~2022. Impairment losses were recorded in the ~~weighted average~~aggregate amount of ~~our investments.~~

~~Depreciation and amortization increased due~~$27.8 million related to ~~an increase in~~several properties during the ~~weighted average depreciable basis of operating real estate investments.~~year ended December 31, 2021. The impaired properties for the year ended December 31, 2021 have all been subsequently sold.

Changes in interest and other expense, net, are summarized in the following table (amounts in thousands):


	Year Ended December 31,
	2022		2021		$ Change		% Change
Interest and other expense, net:
Interest on notes payable	$	—	$	4,162	$	(4,162)	(100.0)	%
Interest on credit facility	24,077		33,463		(9,386)		(28.0)	%
Other income, net	(305)		(3,110)		2,805		(90.2)	%
Total interest and other expense, net	$	23,772	$	34,515	$	(10,743)	(31.1)	%

Year Ended December 31,
2017 2016 Change
Interest expense, net:
Interest on notes payable $ (14,092 ) $ (466 ) $ (13,626 )
Interest on secured credit facility (8,183 ) (3,504 ) (4,679 )
Amortization of deferred financing costs (2,612 ) (1,061 ) (1,551 )
Cash deposits interest 195
117
78
Capitalized interest 2,137
524
1,613
Total interest expense, net (22,555 ) (4,390 ) (18,165 )

•Interest on notes payable ~~increased~~decreased due to ~~an increase in~~ the ~~outstanding principal balance on~~repayment of all of our notes payable related to ~~$468.1 million as of December 31, 2017, as compared to $153.0 million as of December 31, 2016.~~healthcare properties on July 22, 2021, with proceeds from the Data Center Sale.

•Interest on ~~secured~~ credit facility ~~increased~~decreased $6.7 million primarily due to ~~an increase~~a reduction in the weighted average outstanding principal balance on ~~the secured~~our credit facility ~~coupled~~of $212.0 million, which was paid in 2021 with ~~an increase in interest rates.~~

~~Capitalized interest increased~~the proceeds from the Data Center Sale and a decrease of $0.9 million due to ~~an increase~~a reduction in the weighted average ~~accumulated expenditures~~interest rate as a result of entering into the Unsecured Credit Facility (as defined below). In addition, interest on ~~development properties to $39.5~~credit facility includes $3.4 million and $5.0 million in loss on extinguishment of debt for the years ended December 31, 2022 and 2021, respectively.

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•Other income, net, primarily consisted of $0.2 million in lease termination settlement income from a former tenant at a disposed property for the year ended December 31, ~~2017, as compared to $11.2~~2022. Other expense, net, primarily consisted of $1.1 million ~~during~~in interest income from notes receivable and $2.6 million in income from a transaction services agreement for the year ended December 31, ~~2016.~~2021.

Liquidity and Capital Resources

Our principal uses of funds are for acquisitions of real estate and real estate-related investments, capital expenditures, operating expenses, distributions to, and share repurchases from, stockholders and principal and interest payments on any current and future indebtedness. While interest rates on variable rate debt have increased and we expect will continue to increase globally, we believe our exposure is limited at this time due to our hedging strategy, which has effectively fixed 83% of our outstanding debt as of December 31, 2022, allowing us to reasonably project our liquidity needs. Generally, cash for these items is generated from operations of our current and future investments. Our sources of funds are primarily operating cash flows, funds equal to amounts reinvested in the DRIP, our credit facility and other potential borrowings.

When we acquire a property, we prepare a capital plan that contemplates the estimated capital needs of that investment. In addition to operating expenses, capital needs may also include, for example, costs of refurbishment, tenant improvements or other major capital expenditures. The capital plan also sets forth the anticipated sources of the necessary capital, which may include a line of credit, operating cash generated by the investment, additional equity investments from us, and when necessary, capital reserves. The capital plan for each investment will be adjusted through ongoing, regular reviews of our portfolio or, as necessary, to respond to unanticipated additional capital needs.

Short-term Liquidity and Capital Resources

For at least the next twelve months, we expect our principal demands for funds will be for operating expenses, including our general and administrative expenses, as well as the acquisition of real estate and real estate-related investments and funding of capital improvements and tenant improvements, distributions to and repurchases from stockholders, and interest payments on our credit facility. We expect to meet our short-term liquidity requirements through net cash flows provided by operations, funds equal to amounts reinvested in the DRIP and borrowings on our credit facility and potential other borrowings.

We believe we will have sufficient liquidity available to meet our obligations in a timely manner, under both normal and stressed conditions, for the next twelve months.

Long-term Liquidity and Capital Resources

Beyond the next twelve months, we expect our principal demands for funds will be for costs to acquire additional real estate properties, interest and principal payments on our credit facility, long-term capital investment demands for our real estate properties and our distributions necessary to maintain our REIT status.

We currently expect to meet our long-term liquidity requirements through proceeds from cash flows from operations and borrowings on our credit facility and potential other borrowings.

We expect to pay distributions to our stockholders from cash flows from operations; however, we have used, and may continue to use, other sources to fund distributions, as necessary, such as funds equal to amounts reinvested in the DRIP. To the extent cash flows from operations are lower due to lower-than-expected returns on the properties held or the disposition of properties, distributions paid to stockholders may be lower. We currently expect that substantially all net cash flows from our operations will be used to fund acquisitions, certain capital expenditures identified at acquisition, ongoing capital expenditures, interest and principal payments on outstanding debt and distributions to our stockholders.

Material Cash Requirements

In addition to the cash we need to conduct our normal business operations, we expect to require approximately $22,878,000 in cash over the next twelve months, of which $20,203,000 will be required for the payment of estimated interest on our outstanding debt (calculated based on our effective interest rates as of December 31, 2022) and $2,675,000 related to our various obligations as lessee. We cannot provide assurances, however, that actual expenditures will not exceed these estimates.

As of December 31, 2022, we had approximately $12,917,000 in cash and cash equivalents. For the year ended December 31, 2022, we paid capital expenditures of $8,440,000 that primarily related to the completion of a development property, which was placed into service during the period, and re-developing another real estate property.

As of December 31, 2022, we had material obligations beyond 12 months in the amount of approximately $758,114,000, inclusive of $639,748,000 related to principal and estimated interest payments on our outstanding debt (calculated based on our effective interest rates as of December 31, 2022) and $118,366,000 related to our various obligations as lessee.

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One of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. As of December 31, 2022, we had $583,000,000 of principal outstanding under our Unsecured Credit Facility. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of December 31, 2022, we were in compliance with all such covenants and requirements on our Unsecured Credit Facility (as defined below).

As of December 31, 2022, the aggregate notional amount under our derivative instruments was $485,000,000. We have agreements with each derivative counterparty that contain cross-default provisions; if we default on our indebtedness, then we could also be declared in default on our derivative obligations, resulting in an acceleration of payment of any net amounts due under our derivative contracts. As of December 31, 2022, we were in compliance with all such cross-default provisions.

Debt Service Requirements

Credit Facility

As of December 31, 2022, the maximum commitments available under the Revolving Credit Agreement, were $500,000,000, which may be increased, subject to lender approval, through incremental term loans and/or revolving loan commitments in an aggregate amount not to exceed $1,000,000,000. The maturity date for the Revolving Credit Agreement is February 15, 2026, which, at our election, may be extended for a period of six-months on no more than two occasions, subject to certain conditions, including the payment of an extension fee. The Revolving Credit Agreement was entered into on February 15, 2022, to replace our prior $500,000,000 revolving line of credit, which had a maturity date of April 27, 2022, with an option to extend for one twelve-month period. We did not exercise the option to extend. Upon closing of the Revolving Credit Agreement, we extinguished all commitments associated with the prior revolving line of credit. As of December 31, 2022, the Revolving Credit Agreement had an aggregate outstanding principal balance of $8,000,000.

As of December 31, 2022, the maximum commitments available under the 2024 Term Loan Agreement, were $300,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $600,000,000. The 2024 Term Loan Agreement has a maturity date of December 31, 2024, and, at our election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions, including the payment of an extension fee. The 2024 Term Loan Agreement was entered into simultaneously with the Revolving Credit Agreement’s execution, on February 15, 2022, to replace our prior term loan, which was paid off in its entirety upon closing of the Revolving Credit Agreement and the 2024 Term Loan Agreement. As of December 31, 2022, the 2024 Term Loan Agreement had an aggregate outstanding principal balance of $300,000,000.

As of December 31, 2022, the maximum commitments available under the 2028 Term Loan Agreement, were $275,000,000, of which $205,000,000 was drawn at closing to pay down our Revolving Credit Agreement in its entirety. The remainder of the commitments were available for three months following the closing date, or the Availability Period, and were available in no more than three subsequent draws with a minimum of $20,000,000 per draw, or the remaining commitments available. After the Availability Period, the undrawn portion was no longer available. If the committed amount was not fully drawn within 60 days of closing, we were required to pay a fee to the lenders, calculated as 0.25% per annum on the average daily amount of the undrawn portion, payable quarterly in arrears, until the earlier of (i) the date when the commitments have been funded in full, or (ii) August 17, 2022. The 2028 Term Loan Agreement may be increased, subject to lender approval, to an aggregate amount not to exceed $500,000,000 and has a maturity date of January 31, 2028. The 2028 Term Loan Agreement is pari passu with our Revolving Credit Agreement and 2024 Term Loan Agreement. On July 12, 2022 and July 20, 2022, we drew $50,000,000 and $20,000,000, respectively, on the 2028 Term Loan Agreement. As of July 20, 2022, the 2028 Term Loan Agreement commitments were fully funded. As of December 31, 2022, the 2028 Term Loan Agreement had an aggregate outstanding principal balance of $275,000,000.

The Unsecured Credit Facility has aggregate commitments available of $1,075,000,000, as of December 31, 2022. Generally, the proceeds of loans made under our Unsecured Credit Facility may be used for acquisition of real estate investments, funding of tenant improvements and leasing commissions with respect to real estate, repayment of indebtedness, funding of capital expenditures with respect to real estate, and general corporate and working capital purposes.

During the year ended December 31, 2022, we drew $70,000,000 on the Revolving Credit Agreement to fund acquisitions and we repaid $57,000,000 on the Revolving Credit Agreement, with proceeds from dispositions and cash flows from operations.

As of December 31, 2022, we had a total pool availability under our Unsecured Credit Facility of $1,075,000,000 and an aggregate outstanding principal balance of $583,000,000; therefore, $492,000,000 was available to be drawn under our Unsecured Credit Facility. We were in compliance with all the financial covenant requirements as of December 31, 2022.

Financing

For these purposes, the fair value of each asset is equal to the purchase price paid for the asset or, if the asset was appraised subsequent to the date of purchase, then the fair value is equal to the value reported in the most recent independent

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appraisal of the asset. Our policies do not limit the amount we may borrow with respect to any individual investment. As of December 31, 2022, our borrowings were approximately 24.3% of the fair value of our real estate-related investments.

Cash Flows

Year Ended December 31, ~~2016~~2022 Compared to Year Ended December 31, ~~2015~~2021


	Year Ended December 31,
(in thousands)	2022		2021		Change		% Change
Net cash provided by operating activities	$	121,675	$	136,942	$	(15,267)	(11.1)	%
Net cash (used in) provided by investing activities	$	(142,812)	$	1,226,842	$	(1,369,654)	(111.6)	%
Net cash provided by (used in) financing activities	$	1,340	$	(1,398,813)	$	1,400,153	(100.1)	%

Cash flows from discontinued operations are not separately disclosed on the consolidated statements of cash flows for the years ended December 31, 2021 and 2020.

~~Changes in our revenues are summarized in~~Operating Activities

•Net cash provided by operating activities decreased primarily due to us owning fewer properties subsequent to the ~~following table (amounts in thousands):~~

Year Ended December 31,
2016 2015 Change

Same store rental and parking revenue $ 7,533
$ 7,530
$ 3
Non-same store rental and parking revenue 42,158
11,453
30,705
Same store tenant reimbursement revenue 312
312
—
Non-same store tenant reimbursement revenue 6,420
1,974
4,446
Other operating income 8
17
(9 )
Total revenue $ 56,431
$ 21,286
$ 35,145

~~In addition, there was~~Data Center Sale on July 22, 2021, partially offset by an increase in ~~contractual~~ rental ~~revenue~~revenues resulting from ~~average annual rent escalations of 1.97% at our same store properties, which was offset by straight-line rental revenue.~~

~~Non-same store rental and parking revenue, and tenant reimbursement revenue increased $30.7 million due to~~ the acquisition of ~~43 operating~~ properties and placement of development properties in service since January 1, ~~2015.~~

~~Changes~~2021 coupled with a decrease in interest paid as a result of entering into the Unsecured Credit Facility and the pay-off of all our ~~expenses are summarized in the following table (amounts in thousands):~~

Year Ended December 31,
2016 2015 Change

Same store rental expenses $ 473
$ 492
$ (19 )
Non-same store rental and parking expenses 7,691
2,344
5,347
General and administrative expenses 3,105
2,133
972
Acquisition related expenses 5,339
10,250
(4,911 )
Asset management fees 4,925
1,895
3,030
Depreciation and amortization 19,211
7,053
12,158
Total expenses $ 40,744
$ 24,167
$ 16,577

~~Non-same store rental and parking expenses, certain of which are subject to reimbursement by our tenants, increased primarily due to the acquisition of 43 operating properties since January 1, 2015.~~

~~General and administrative expenses increased primarily due to an increase in professional and legal fees, an increase in personnel costs and an increase in other administrative costs,~~notes payable on July 22, 2021, in connection with ~~our Company's growth.~~the Data Center Sale.

Investing Activities

~~Acquisition related expenses decreased due to a decrease~~•Net cash used in ~~real estate properties determined to be business combinations due to the adoption of ASU 2017-01,~~ ~~Business Combinations.~~ Acquisition fees and expenses associated with transactions determined to be business combinations are expensed as incurred. During the year ended December 31, 2016, we acquired 12 real estate properties determined to be business combinations for an aggregate purchase price of $207.4 million as compared to 21 real estate properties determined to be business combinations for an aggregate purchase price of $366.4 million during the year ended December 31, 2015.

~~Asset management fees increased due to an increase in the weighted average of our investments.~~

~~Depreciation and amortization increased due to an increase in the weighted average depreciable basis of operating real estate investments.~~

~~Interest on notes payable increased due to an increase in the outstanding principal balance on notes payable to $153.0 million as of December 31, 2016, as compared to $0 as of December 31, 2015.~~

~~Interest on secured credit facility increased due to an increase in the weighted average outstanding principal balance on the secured credit facility.~~

~~Capitalized interest increased due to an increase in the average accumulated expenditures on development properties to $11.2 million~~investing activities for the year ended December 31, ~~2016, as compared~~2022, was due to ~~having no~~the purchase of real estate properties and payment of capital expenditures primarily related to the completion of a development ~~properties~~property, which was placed into service during the period, and re-developing another real estate property, partially offset by proceeds from the sale of a property. Net cash provided by investing activities for the year ended December 31, ~~2015.~~2021, was primarily due to the Data Center Sale and the collection of a note receivable, partially offset by the purchase of real estate properties, payment of capital expenditures related to a data center property and three healthcare properties and consideration paid for the Internalization Transaction.

~~Net cash provided by operating activities increased primarily due the acquisition of our new operating properties, partially offset by increased operating expenses.~~

stock. Net cash used in ~~investing~~financing activities ~~increased primarily~~for the year ended December 31, 2021, was due to ~~an increase in investments in real estate of $161.3 million and an increase in capital expenditures of $7.0 million, offset by a decrease in real estate deposits, net, of $0.2 million.~~

~~Net cash provided by financing activities increased primarily due to an increase in proceeds from~~payments on notes payable and debt extinguishment as a result of ~~$153.0 million, a net increase in~~the Data Center Sale, payments on our credit facility primarily with proceeds from the ~~secured credit facility~~Data Center Sale, payments of ~~$77.5 million~~ ~~and a decrease in offering~~ deferred financing costs, ~~related to the issuance of common stock of $16.0 million, offset by a decrease in proceeds from the issuance of common stock of $86.6 million, an increase in~~ ~~distributions to our stockholders of $11.3 million, an increase in~~ repurchases of our common stock under our share repurchase program, distributions to our common stockholders, including a special cash distribution, and payment of ~~$2.8 million~~offering costs on issuance of common stock, partially offset by proceeds from our credit facility.

Distributions to Stockholders

We have paid, and ~~an increase~~may continue to pay, distributions from sources other than from our cash flows from operations. For the year ended December 31, 2022, our cash flows provided by operations of approximately $121,675,000 covered 100% of our ordinary distributions paid (total ordinary distributions were approximately $90,144,000, of which $65,310,000 was cash and $24,834,000 was reinvested in ~~deferred financing costs~~shares of ~~$2.4 million.~~our common stock pursuant to the DRIP) during such period. For the year ended December 31, 2021, our cash flows provided by operations of approximately $136,942,000 covered 100% of our distributions paid (total ordinary distributions were approximately $100,748,000, of which $73,164,000 was cash and $27,584,000 was reinvested in shares of our common stock pursuant to the DRIP) during such period. Additionally, the Board declared a special cash distribution of $1.75 per share of Class A, Class I, Class T and Class T2 common stock. The special cash distribution was funded with the proceeds from the sale of the data center properties on July 22, 2021. The special cash distribution was paid on July 30, 2021 to stockholders of record at the close of business on July 26, 2021, in the aggregate amount of approximately $392,685,000.

We do not currently have any limits on the sources of funding distribution payments to our stockholders. We may pay distributions from any source, such as the sale of assets, the sale of additional securities, and offering proceeds and we do not

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~~Distributions~~currently have any limits on the amounts we may pay from such sources. Funding distributions from the sale of additional securities could dilute a stockholder's interest in us if we sell shares of our common stock to third party investors. Funding distributions to our stockholders will result in us having less funds available for acquiring properties or real estate-related investments. Our inability to acquire additional properties or real estate-related investments may have a negative effect on our ability to generate sufficient cash flows from operations to pay distributions. As a result, the return investors may realize on their investment may be reduced and investors who invest in us before we generate significant cash flows may realize a lower rate of return than later investors. Payment of distributions from any of the above-mentioned sources could restrict our ability to generate sufficient cash flows from operations, affect our profitability and/or affect the distributions payable upon a liquidity event, any or all of which may have an adverse effect on an investment in us.

For federal income tax purposes, distributions to common stockholders are characterized as ordinary dividends, capital gain distributions, or nontaxable distributions. To the extent that we make a distribution in excess of our current or accumulated earnings and profits, such excess will be a nontaxable return of capital, reducing the tax basis in each U.S. stockholder’s shares. Further, the amount of distributions in excess of a U.S. stockholder’s tax basis in such shares will be taxable as a realized gain.

The following table shows the sources of distributions paid during the years ended December 31, 2022 and 2021 (amounts in thousands):


	Year Ended December 31,
Character of Distributions (1):	2022		2021
Ordinary dividends	40.94	%	27.91	%
Capital gain distributions	—	%	—	%
Nontaxable distributions	59.06	%	72.09	%
Total	100.00	%	100.00	%

	Year Ended December 31,
Character of Special Distribution (1):	2022		2021
Ordinary dividends	—	%	12.39	%
Capital gain distributions	—	%	86.66	%
Nontaxable distributions	—	%	0.95	%
Total	—	%	100.00	%

(1)Attributable to Class A shares, Class I shares, Class T shares and Class T2 shares of common stock.

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The amount of distributions payable to our stockholders is determined by ~~our board of directors~~the Board and is dependent on a number of factors, including our funds available for distribution, financial condition, lenders' restrictions and limitations, capital expenditure requirements, corporate law restrictions and the annual distribution requirements needed to maintain our status as a REIT under the ~~Code. Our board~~Internal Revenue Code of ~~directors~~1986, as amended. The Board must authorize each distribution and may, in the future, authorize lower amounts of distributions or not authorize additional distributions and, therefore, distribution payments are not guaranteed. ~~Our Advisor may also defer, suspend and/or waive fees and expense reimbursements if we have not generated sufficient cash flow from our operations and other sources to fund distributions.~~ Additionally, our organizational documents permit us to pay distributions from unlimited amounts of any source, and we may use sources other than operating cash flows to fund distributions, including ~~proceeds from our Offerings,~~funds equal to amounts reinvested in the DRIP, which may reduce the amount of capital we ultimately invest in properties or other permitted investments.

We have funded distributions with operating cash flows from our properties ~~proceeds raised~~and funds equal to amounts reinvested in ~~our Offerings.~~the DRIP. To the extent that we do not have taxable income, distributions paid will be considered a return of capital to stockholders.

The following table shows the sources of distributions paid during the years ended December 31, ~~2017~~2022 and ~~2016~~2021 (amounts in thousands):

For the Year Ended December 31,
2017 2016
Distributions paid in cash - common stockholders $ 28,994
$ 17,659

Distributions reinvested 32,264
22,889

Total distributions $ 61,258
$ 40,548

Source of distributions:
Cash flows provided by operations ⁽¹⁾
$ 28,994
47% $ 17,659
44%
Offering proceeds from issuance of common stock pursuant to the DRIP ⁽¹⁾
32,264
53% 22,889
56%
Total sources $ 61,258
100% $ 40,548
100%


	Year Ended December 31,
	2022					2021
Distributions paid in cash - common stockholders	$	65,310				$	465,849	(1)
Distributions reinvested (shares issued)	24,834					27,584
Total distributions	$	90,144				$	493,433
Source of distributions:
Cash flows provided by operations	$	65,310	72	%	(2)	$	73,164		15	%	(2)
Offering proceeds from issuance of common stock pursuant to the DRIP	24,834		28	%	(2)	27,584			5	%	(2)
Proceeds from real estate disposals	—		—	%		392,685			80	%	(2)
Total sources	$	90,144	100	%		$	493,433		100	%


~~(1)~~	~~Percentages were calculated by dividing the respective source amount by the total sources of distributions.~~

(1)Includes a special cash distribution declared by the Board of $1.75 per share of Class A, Class I, Class T and Class T2 common stock. The special cash distribution was funded with the proceeds from the Data Center Sale on July 22, 2021. The special cash distribution was paid on July 30, 2021, to stockholders of record at the close of business on July 26, 2021, in the aggregate amount of approximately $392,685,000.

(2)Percentages were calculated by dividing the respective source amount by the total sources of distributions.

Total distributions declared but not paid on Class A shares, Class I shares and Class T shares as of December 31, ~~2017~~2022, were approximately ~~$6.6 million~~$7,719,000 for common stockholders. These distributions were paid on January ~~2, 2018.~~6, 2023.

~~For~~Share Repurchase Program

Our SRP allows for repurchases of shares of our common stock when certain criteria are met. Under the SRP, we can only repurchase shares due to death or involuntary exigent circumstances, subject in each case to the terms and limitations of the SRP, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation and DRIP funding limitations. See Part II, Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" for more information on the SRP.

During the year ended December 31, ~~2017,~~2022, we ~~declared and paid distributions of approximately $61.3 million to~~repurchased 1,123,183 Class A ~~stockholders,~~shares, Class I ~~stockholders~~shares and Class T ~~stockholders, including~~ shares ~~issued pursuant to the DRIP, as compared to FFO (as defined below)~~of common stock (981,772 Class A shares, 31,666 Class I shares and 109,745 Class T shares), for an aggregate purchase price of approximately $9,217,000 (an average of $8.21 per share). During the year ended December 31, ~~2017~~2021, we repurchased 1,133,901 Class A shares, Class I shares and Class T shares of common stock (1,055,054 Class A shares, 11,836 Class I shares and 67,011 Class T shares), for an aggregate purchase price of approximately ~~$62.4 million, which covered 100%~~$9,528,000 (an average of our distributions paid during such period. The payment of distributions from sources other than FFO may reduce the amount of proceeds available for investment and operations or cause us to incur additional interest expense as a result of borrowed funds.$8.40 per share).

~~For a discussion of distributions paid subsequent to December 31, 2017, see Note 21—"Subsequent Events" to the consolidated financial statements included in this Annual Report on Form 10-K.~~

Commitments and Contingencies

For a discussion of our commitments and contingencies, see Note ~~18—~~17—"Commitments and Contingencies" to the consolidated financial statements that are a part of this Annual Report on Form 10-K.

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~~Debt Service Requirements~~

One of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. As of December 31, 2017, we had $468.1 million in notes payable outstanding principal and $220.0 million outstanding principal under the secured credit facility. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of December 31, 2017, we were in compliance with all such covenants and requirements on our mortgage loans payable and the secured credit facility.Non-GAAP Financial Measures

In ~~addition, during~~ the year ended December 31, 2017, we entered into eight derivative instruments for the purpose of managing or hedging our interest rate risk. As of December 31, 2017, the aggregate notional amount under our derivative instruments was $347.7 million. We have agreements with each derivative counterparty that contain cross-default provisions, whereby if we default on certain of our unsecured indebtedness, then we could also be declared in default on our derivative obligations, resulting in an acceleration of payment thereunder. As of December 31, 2017, we were in compliance with all such cross-default provisions.

~~Contractual Obligations~~

As of December 31, 2017, we had approximately $688.1 million of principal debt outstanding, of which $468.1 million related to notes payable and $220.0 million related to the secured credit facility. See Note 8—"Notes Payable" and Note 9—"Credit Facility" to the consolidated financial statements that are a part of this Annual Report on Form 10-K for certain terms of the debt outstanding.

~~Our contractual obligations as of December 31, 2017 were as follows (amounts in thousands):~~

Less than
1 Year 1-3 Years 3-5 Years More than
5 Years Total
Principal payments—fixed rate debt $ 99
$ 1,901
$ 77,312
$ 141,124
$ 220,436
Interest payments—fixed rate debt 9,530
19,047
15,591
22,469
66,637
Principal payments—variable rate debt fixed through interest rate swap ⁽¹⁾
314
104,606
242,779
—
347,699
Interest payments—variable rate debt fixed through interest rate swap ⁽²⁾
15,128
25,713
15,913
—
56,754
Principal payments—variable rate debt 120,000
—
—
—
120,000
Interest payments—variable rate debt ⁽³⁾
4,445
—
—
—
4,445
Capital expenditures 21,572
—
—
—
21,572
Ground lease payments 545
1,089
1,089
5,206
7,929
Total $ 171,633
$ 152,356
$ 352,684
$ 168,799
$ 845,472


~~(1)~~	As of December 31, 2017, we had $347.7 million outstanding principal on notes payable and borrowings under the secured credit facility that were fixed through the use of interest rate swap agreements.


~~(2)~~	~~We used the fixed rates under our interest rate swap agreements as of December 31, 2017 to calculate the debt payment obligations in future periods.~~


~~(3)~~	~~We used LIBOR plus the applicable margin under our variable rate debt agreement as of December 31, 2017 to calculate the debt payment obligations in future periods.~~

~~Off-Balance Sheet Arrangements~~

~~As of December 31, 2017, we had no off-balance sheet arrangements.~~

~~Related-Party Transactions and Arrangements~~

We have entered into agreements with our Advisor and its affiliates whereby we agree to pay certain fees to, or reimburse certain expenses of, our Advisor or its affiliates for acquisition fees and expenses, organization and offering expenses, asset and property management fees and reimbursement of operating costs. Refer to Note 10—"Related-Party Transactions and Arrangements" to our consolidated financial statements that are a part of this Annual Report on Form 10-K for a detailed discussion of the various related-party transactions and agreements.

~~Funds from Operations and Modified Funds from Operations~~

~~One of our objectives is to provide cash distributions to our stockholders from cash generated by our operations. The purchase of~~ real estate ~~assets~~industry, analysts and ~~real estate-related investments,~~investors employ certain non-GAAP supplemental financial measures in order to facilitate meaningful comparisons between periods and among peer companies. We believe that these measures are useful to investors to consider because they may assist them to better understand and measure the ~~corresponding expenses associated with that process, is a key operational feature~~performance of our business ~~plan in order~~over time and against similar companies. We use the following non-GAAP financial measures: Funds From Operations, or FFO, Core Funds From Operations, or Core FFO, and Adjusted Funds From Operations, or AFFO.

Net (Loss) Income and FFO, Core FFO and AFFO

A description of FFO, Core FFO, and AFFO and reconciliations of these non-GAAP measures to ~~generate cash from operations. Due to certain unique operating characteristics of real estate companies,~~net (loss) income, the most directly comparable GAAP measure, are provided below.

The National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated athe FFO measure, ~~known as funds from operations, or FFO,~~ which we believe is an appropriate ~~supplemental~~additional measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net (loss) income ~~(loss)~~ as determined under GAAP.

We define FFO, consistent with NAREIT’s definition, as net (loss) income ~~(loss) (computed~~(calculated in accordance with GAAP), excluding gains (or losses) from sales of ~~property~~real estate assets and ~~asset impairment write-downs,~~impairments of real estate assets, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. To date, we do not have any investments in unconsolidated partnerships or joint ventures.

We, along with ~~others~~many of our peers in the real estate industry, consider FFO to be an appropriate supplemental measure of a REIT’s operating performance, because it is based on a net income (loss) analysis of ~~property~~real estate portfolio performance that excludes non-cash items such as real estate depreciation and amortization and ~~asset impairment write-downs,~~real estate impairments, which we believe provides a ~~more complete~~useful understanding of our performance to the investors and to our management, and when compared to year over year, FFO reflects the impact on our operations from trends in occupancy.

~~Historical accounting convention (in accordance with GAAP) for real estate assets requires companies~~We calculate Core FFO by adjusting FFO to ~~report their investment in real estate at its carrying value, which consists~~remove the effect of capitalizing the cost of acquisitions, development, construction, improvements and significant replacements, less depreciation and amortization and asset impairment write-downs, if any, which is not necessarily equivalent to the fair market value of their investment in real estate assets.

~~The historical accounting convention requires straight-line depreciation of buildings and improvements, which implies~~items that ~~the value of real estate assets diminishes predictably over time, which could be the case if such assets~~ are not ~~adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order~~expected to maintain the value disclosed. We believe that, since the fair value of real estate assets historically rises and falls 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 historical accounting for depreciation could be less informative.

In addition, we believe it is appropriate to disregard asset impairment write-downs as they are a non-cash adjustment to recognize losses on prospective sales of real estate assets. Since losses from sales of real estate assets are excluded from FFO, we believe it is appropriate that asset impairment write-downs in advancement of realization of losses should be excluded. Impairment write-downs are based on negative market fluctuations and underlying assessments of general market conditions, which are independent ofimpact our operating performance ~~including, but not limited to, a significant adverse change in the financial condition of our tenants, changes in supply~~on an ongoing basis and demand for similar or competing properties, changes in tax, real estate, environmental and zoning law, which can change over time. When indicators of potential impairment suggest that the carrying value of real estate and related assets may not be recoverable, we assess the recoverability by estimating whether we will recover the carrying value of the asset through undiscounted future cash flows and eventual disposition (including, but not limited to, net rental and lease revenues, net proceeds on the sale of property and any other ancillary cash flows at a property or group level under GAAP). If based on this analysis, we do not believe that we will be able to recover the carrying value of the real estate asset, we will record an impairment write-down to the extent that the carrying value exceeds the estimated fair value of the real estate asset. Testing for indicators of impairment is a continuous process and is analyzed on a quarterly basis. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and that we intend to have a relatively limited term of our operations,consider it ~~could be difficult to recover any impairment charges through the eventual sale of the property. No impairment losses have been recorded to date.~~

In developing estimates of expected future cash flow, we make certain assumptions regarding future market rental income amounts subsequent to the expiration of current lease arrangements, property operating expenses, terminal capitalization and discount rates, the expected number of months it takes to re-lease the property, required tenant improvements and the number of years the property will be held for investment. The use of alternative assumptions in the future cash flow analysis could result in a different determination of the property’s future cash flows and a different conclusion regarding the existence of an asset impairment, the extent of such loss, if any, as well as the carrying value of the real estate asset.

Publicly registered, non-listed REITs, such as us, typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operations. While other start up entities may also experience significant acquisition activity during their initial years, we believe that publicly registered, non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after the acquisition activity ceases. We will use the proceeds raised in our offering to acquire real estate assets and real estate-related investments, and we intend to begin the process of achieving a liquidity event (i.e., listing of our shares of common stock on a national securities exchange, a merger or sale, the sale of all or substantially all of our assets, or another similar transaction) within five to seven years after the completion of our offering stage, which is generally comparable to other publicly registered, non-listed REITs. Thus, we do not intend to continuously purchase real estate assets and intend to have a limited life. Due to these factors and other unique features of publicly registered, non-listed REITS, the Investment Program Association, or the IPA, an industry trade group, has standardized a measure known as modified funds from operations, or MFFO, which we believe to be ~~another appropriate~~a useful supplemental measure because it provides investors with additional information to ~~reflect the operating performance~~understand our sustainable performance. These include severance arrangements, write offs of ~~a publicly registered, non-listed REIT. MFFO is a metric used by management to evaluate sustainable performance~~previously recorded straight-line rents, amortization of above- and ~~dividend policy. MFFO is not equivalent to our net income (loss) as determined under GAAP.~~below-market leases (including ground leases) and loss on extinguishment of debt.

We ~~define MFFO, a non-GAAP measure, consistent with the IPA’s definition:~~calculate AFFO by adjusting Core FFO ~~further adjusted~~ for the following items included in the determination of GAAP net ~~income~~ (loss)~~; acquisition fees and expenses; amounts related to~~ income: deferred rent, current period straight-line ~~rental income and~~rent, discount amortization of above and below market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income (loss); nonrecurring gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, adjustments related to contingent purchase price obligations where such adjustments have been included in the derivation of GAAP net income (loss), and after adjustments for a consolidated and unconsolidated partnership and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. Our MFFO calculation complies with the IPA’s Practice Guideline, described above. In calculating MFFO, we exclude paid and accrued acquisition fees and expenses that are reported in our consolidated statements of comprehensive income (loss), amortization of above and below-market leases, amounts related to straight-line rents (which are adjusted in order to reflect such payments from a GAAP accrual basis to closer to an expected to be received cash basis of disclosing the rent and lease payment) and ineffectiveness of interest rate swaps. The other adjustments included in the IPA’s guidelines are not applicable to us.

Since MFFO excludes acquisition fees and expenses, it should not be construed as a historic performance measure. Acquisition fees and expenses are paid in cash by us, and we have not set aside or put into escrow any specific amount of proceeds from our offerings to be used to fund acquisition fees and expenses. Acquisition fees and expenses include payments to our Advisor or its affiliates and third parties. Such fees and expenses will not be reimbursed by our Advisor or its affiliates and third parties, and therefore if there are no further proceeds from the sale of shares of our common stock to fund future acquisition fees and expenses, such fees and expenses will need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the sale of properties, or from ancillary cash flows. As a result, the amount of proceeds available for investment and operations would be reduced, or we may incur additional interest expense as a result of borrowed funds. Nevertheless, our Advisor or its affiliates will not accrue any claim on our assets if acquisition fees and expenses are not paid from the proceeds of our offerings. Under GAAP, acquisition fees and expenses related to the ~~acquisition~~deferred liability in connection with the Internalization Transaction, amortization of ~~properties determined to be business combinations are expensed as incurred, including investment transactions that are no longer under consideration,~~deferred financing costs and are included in acquisition related expenses in the accompanying consolidated statements of comprehensive income (loss) and acquisition fees and expenses associated with transactions determined to be an asset acquisition are capitalized.

All paid and accrued acquisition fees and expenses have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the real estate asset, these fees and expenses and other costs related to such property. In addition, MFFO may not be an indicator of our operating performance, especially during periods in which properties are being acquired.

In addition, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss) in determining cash flows from operations in accordance with GAAP.

We use MFFO and the adjustments used to calculate it in order to evaluate our performance against other publicly registered, non-listed REITs, which intend to have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to publicly registered, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and

hence the use of such measures may be useful to investors. For example, acquisition fees and expenses are intended to be funded from the proceeds of our offering and other financing sources and not from operations. By excluding acquisition fees and expenses, the use of MFFO provides information consistent with management’s analysis of the operating performance of its real estate assets. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such charges that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.stock-based compensation.

Presentation of this information is intended to assist management and investors in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO, Core FFO and ~~MFFO~~AFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO, Core FFO and ~~MFFO~~AFFO are not necessarily indicative of cash ~~flow~~flows available to fund cash needs and should not be considered as an alternative to net (loss) income ~~(loss)~~ as an indication of our performance, as an indication of our liquidity, or indicative of funds available for our cash needs, including our ability to make distributions to our stockholders. FFO, Core FFO and ~~MFFO should be reviewed in conjunction with other measurements as an indication of our performance. MFFO has limitations as a performance measure. However, it~~AFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating ~~periods, and~~periods. All of our non-GAAP financial measures should be reviewed in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a useful measure in evaluating net asset value since impairment write-downs are taken into account in determining net asset value but not in determining MFFO.

~~FFO and MFFO,~~conjunction with other measurements as ~~described above, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating~~an indication of our ~~operational~~ performance. The method used to evaluate the value and performance of real estate under GAAP should be ~~construed~~considered as a more relevant measure of operating performance and considered more ~~prominently~~prominent than the non-GAAP financial measures presented here.

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Reconciliation of Net (Loss) Income to FFO, Core FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO. MFFO has not been scrutinized to the level of other similar non-GAAP performance measures by the SEC or any other regulatory body.AFFO

The following istable presents a reconciliation of net (loss) income ~~(loss)~~ attributable to common stockholders, which is the most directly comparable GAAP financial measure, to FFO, Core FFO and ~~MFFO~~AFFO for the years ended December 31, ~~2017, 2016~~2022 and ~~2015~~2021 (amounts in ~~thousands, except share data and per share amounts)~~thousands):


	Year Ended December 31,
		2022		2021
Net (loss) income attributable to common stockholders		$	(7,978)	$	402,660
Adjustments:
Depreciation and amortization		77,099		81,999
Gain on real estate disposition from continuing operations		(460)		(89)
Gain on real estate dispositions from discontinued operations		—		(395,801)
Impairment losses		47,424		27,837
FFO		$	116,085	$	116,606
Adjustments:
Severance arrangements		889		56
Write off of straight-line rent related to prior periods		2,434		70
Amortization of above (below) market lease intangibles, including ground leases		1,044		(434)
Loss on extinguishment of debt		3,367		28,751
Core FFO		$	123,819	$	145,049
Adjustments:
Deferred rent		1,535		—


Straight-line rental income		(9,695)		(15,665)
Amortization of discount of deferred liability		—		272
Amortization of deferred financing costs		1,679		3,425
Stock-based compensation		4,180		2,379
AFFO		$	121,518	$	135,460

For the Year Ended
December 31,
2017 2016 2015
Net income (loss) attributable to common stockholders $ 21,279
$ 11,297
$ (4,767 )
Adjustments:
Depreciation and amortization 41,133
19,211
7,053
FFO attributable to common stockholders $ 62,412
$ 30,508
$ 2,286
Adjustments:
Acquisition related expenses ⁽¹⁾
$ —
$ 5,339
$ 10,250
Amortization of intangible assets and liabilities ⁽²⁾
(1,817 ) (500 ) (72 )
Straight-line rents ⁽³⁾
(10,596 ) (6,263 ) (2,449 )
Ineffectiveness of interest rate swaps (58 ) (144 ) —
MFFO attributable to common stockholders $ 49,941
$ 28,940
$ 10,015
Weighted average common shares outstanding - basic 101,714,148
66,991,294
28,658,495
Weighted average common shares outstanding - diluted 101,731,944
67,007,124
28,658,495
Weighted average common shares outstanding - diluted for FFO 101,731,944
67,007,124
28,669,183
Net income (loss) per common share - basic $ 0.21
$ 0.17
$ (0.17 )
Net income (loss) per common share - diluted $ 0.21
$ 0.17
$ (0.17 )
FFO per common share - basic $ 0.61
$ 0.46
$ 0.08
FFO per common share - diluted $ 0.61
$ 0.46
$ 0.08


~~(1)~~	In evaluating investments in real estate assets, management differentiates the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for publicly registered, non-listed REITs that have completed their acquisitions activities and have other similar operating characteristics. By

excluding expensed acquisition related expenses, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition fees and expenses include payments in cash to our Advisor and third parties. Acquisition fees and expenses incurred in a business combination, under GAAP, are considered operating expenses and as expenses are included in the determination of net income (loss), which is a performance measure under GAAP. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property.

~~(2)~~

Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment, and certain intangibles are assumed to diminish predictably in value over time and are amortized, similar to depreciation and amortization of real estate-related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that by excluding charges related to amortization of these intangibles, MFFO provides useful supplemental information on the performance of the real estate.

~~(3)~~

Under GAAP, rental revenue is recognized on a straight-line basis over the terms of the related lease (including rent holidays if applicable). This may result in income recognition that is significantly different than the underlying contract terms. By adjusting for the change in deferred rent receivables, MFFO may provide useful supplemental information on the realized economic impact of lease terms, providing insight on the expected contractual cash flows of such lease terms, and aligns with our analysis of operating performance.

The following is a reconciliation of net loss attributable to common stockholders, which is the most directly comparable GAAP financial measure, to FFO and MFFO for the following quarterly periods (amounts in thousands, except share data and per share amounts):

Quarter Ended
December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017
Net income attributable to common stockholders $ 6,408
$ 5,439
$ 4,641
$ 4,791
Adjustments:
Depreciation and amortization 12,646
11,852
9,025
7,610
FFO attributable to common stockholders $ 19,054
$ 17,291
$ 13,666
$ 12,401
Adjustments:
Amortization of intangible assets and liabilities ⁽¹⁾
(854 ) (616 ) (222 ) (125 )
Straight-line rents ⁽²⁾
(2,910 ) (2,844 ) (2,610 ) (2,232 )
Ineffectiveness of interest rate swaps (42 ) (14 ) (10 ) 8
MFFO attributable to common stockholders $ 15,248
$ 13,817
$ 10,824
$ 10,052
Weighted average common shares outstanding - basic 119,651,271
105,388,118
94,910,818
86,482,927
Weighted average common shares outstanding - diluted 119,666,234
105,405,297
94,925,665
86,499,543
Net income per common share - basic $ 0.05
$ 0.05
$ 0.05
$ 0.06
Net income per common share - diluted $ 0.05
$ 0.05
$ 0.05
$ 0.06
FFO per common share - basic $ 0.17
$ 0.16
$ 0.14
$ 0.14
FFO per common share - diluted $ 0.17
$ 0.16
$ 0.14
$ 0.14

~~(1)~~


~~(2)~~	Under GAAP, rental revenue is recognized on a straight-line basis over the terms of the related lease (including rent holidays if applicable). This may result in income recognition that is significantly different than the underlying

contract terms. By adjusting for the change in deferred rent receivables, MFFO may provide useful supplemental information on the realized economic impact of lease terms, providing insight on the expected contractual cash flows of such lease terms, and aligns with our analysis of operating performance.

~~Subsequent Events~~

~~For a discussion of subsequent events, see Note 21—"Subsequent Events" to the consolidated financial statements that are a part of this Annual Report on Form 10-K.~~

~~Impact of Recent Accounting Pronouncements~~

~~Refer to Note 2—“Summary of Significant Accounting Policies” to the consolidated financial statements that are a part of this Annual Report on Form 10-K for further explanation.~~

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk.

We have obtained variable rate debt financing to fund certain property acquisitions and we are exposed to such changes in the one-month ~~LIBOR.~~Term SOFR. Loans under the Unsecured Credit Facility may be made as Base Rate Loans or SOFR Loans, at our election, and all of our interest rate swap agreements are indexed to SOFR. Our objectives in managing interest rate risk ~~seek~~are to limit the impact of interest rate ~~changes~~fluctuations on operations and cash flows, and to lower overall borrowing costs. To achieve these objectives, we will borrow primarily at interest rates with the lowest margins available and, in some cases, with the ability to convert variable interest rates to fixed rates.

As of December 31, 2022, we had 12 interest rate swap agreements outstanding, which mature on various dates from April 2023 to January 2028, with an aggregate notional amount under the swap agreements of $485,000,000. Of the 12 interest rate swap agreements outstanding, three interest rate swap agreements with an aggregate notional amount of $150,000,000 have an effective date of May 1, 2023, and will replace two interest rate swaps with an aggregate notional amount of $150,000,000 that have a maturity date of April 27, 2023. As of December 31, 2022, the aggregate settlement asset value was $29,182,000. The settlement value of these interest rate swap agreements is dependent upon existing market interest rates and swap spreads. As of December 31, 2022, an increase of 50 basis points in the market rates of interest would have resulted in an increase to the settlement asset value of these interest rate swaps to a value of $36,261,000. These interest rate swap agreements were designated as cash flow hedging instruments.

As of December 31, 2022, of the $583,000,000 total principal debt outstanding, $98,000,000 was subject to variable interest rates, indexed to Term SOFR, with an interest rate of 5.5% per annum. As of December 31, 2022, an increase of 50 basis points in the market rates of interest would have resulted in an increase in interest expense of approximately $490,000 per year.

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The following table summarizes our principal debt outstanding related to our credit facility as of December 31, 2022 (amounts in thousands):


	December 31, 2022

Variable rate revolving line of credit	$	8,000
Variable rate term loans fixed through interest rate swaps	485,000
Variable rate term loans	90,000
Total principal debt outstanding (1)	$	583,000

(1)As of December 31, 2022, the weighted average interest rate on our total debt outstanding was 3.4%.

We have entered, and may continue to enter, into additional derivative financial instruments, such as interest rate swaps, in order to mitigate our interest rate risk on a given variable rate financial instrument. To the extent we do, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, it does not possess credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We manage the market risk associated with interest rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. We have not entered, and do not intend to enter, into derivative or interest rate swap transactions for speculative purposes. We may also enter into rate-lock arrangements to lock interest rates on future borrowings.

In addition to changes in interest rates, the value of our future investments will be subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants, which may affect our ability to refinance our debt, if necessary.

~~The following table summarizes our principal debt outstanding as of December 31, 2017 (amounts in thousands):~~

December 31, 2017
Notes payable:
Fixed rate notes payable $ 220,436
Variable rate notes payable fixed through interest rate swaps 247,699
Variable rate notes payable —
Total notes payable 468,135
Secured credit facility:
Variable rate secured credit facility fixed through interest rate swaps 100,000
Variable rate secured credit facility 120,000
Total secured credit facility 220,000
Total principal debt outstanding ⁽¹⁾
$ 688,135


~~(1)~~	~~As of December 31, 2017, the weighted average interest rate on our total debt outstanding was 4.19%.~~

As of December 31, 2017, $120.0 million of the $688.1 million total principal debt outstanding was subject to variable interest rates with a weighted average interest rate of 3.70% per annum. As of December 31, 2017, an increase of 50 basis points in the market rates of interest would have resulted in a change in interest expense of approximately $0.6 million per year.

As of December 31, 2017, we had 13 interest rate swap agreements outstanding, which mature on various dates from December 2020 to November 2022. As of December 31, 2017, the aggregate settlement asset value was $3.8 million. The settlement value of these interest rate swap agreements are dependent upon existing market interest rates and swap spreads. As of December 31, 2017, an increase of 50 basis points in the market rates of interest would have resulted in a settlement asset value of the interest rate swaps of $10.0 million.

We do not have any foreign operations and thus we are not exposed to foreign currency ~~fluctuations.~~fluctuation risks.

Item 8. Financial Statements and Supplementary Data.

See the index at Part IV, Item 15. Exhibits and Financial Statement ~~Schedules.~~Schedules

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we conducted an evaluation as of December 31, ~~2017~~2022, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of December 31, ~~2017,~~2022, were effective at a reasonable assurance level.

(b)Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Under the supervision, and with the participation, of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued in 2013 by the Committee of

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Sponsoring Organizations of the Treadway Commission, or the Original Framework. Based on our evaluation under the Original Framework, our management concluded that our internal control over financial reporting was effective as of December 31, ~~2017.~~2022.

This annual report does not include an attestation report of ~~the Company’s~~our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by ~~the Company’s~~our independent registered public accounting firm pursuant to the permanent deferral adopted by the Securities and Exchange Commission that permits ~~the Company~~us to provide only management’s report in this annual report.

(c) Changes in internal control over financial reporting. There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended December 31, ~~2017,~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this Item will be presented in our definitive proxy statement for our ~~2018~~2023 annual meeting of stockholders, which is expected to be filed with the SEC within 120 days after December 31, ~~2017,~~2022, and is incorporated herein by reference.

Our Board has adopted a Code of Business Conduct and Ethics that is applicable to all members of our Board, our officers and our employees. The policy may be located on our Investor website at https://investors.silarealtytrust.com by clicking on “About Us,” and then on “Governance Documents.” If, in the future, we amend, modify or waive a provision in the Code of Business Conduct and Ethics, we may, rather than filing a Current Report on Form 8-K, satisfy the disclosure requirement by posting such information on our website as necessary.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13.Certain Relationships and Related Transactions, and Director Independence.

Item 14.Principal Accounting Fees and Services.

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PART IV

Item 15.Exhibits and Financial Statement Schedules.

The following documents are filed as part of this Annual Report:

(a)(1) Consolidated Financial Statements:

The index of the consolidated financial statements contained herein is set forth on page F-1 hereof.

(a)(2) Financial Statement Schedules:

The financial statement schedules are listed in the index of the consolidated financial statements on page F-1 hereof.

No additional financial statement schedules are presented since the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is ~~enclosed~~disclosed in the Consolidated Financial Statements and notes thereto.

(a)(3)Exhibits:

The exhibits listed on the Exhibit Index are included, or incorporated by reference, in this Annual ~~Report.~~Report.

(b) Exhibits:

See Item 15(a)(3) above.

See Item 15(a)(2) above.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

OF ~~CARTER VALIDUS MISSION CRITICAL REIT II,~~SILA REALTY TRUST, INC.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

~~Carter Validus Mission Critical REIT II,~~Sila Realty Trust, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of ~~Carter Validus Mission Critical REIT II,~~Sila Realty Trust, Inc. ~~(and subsidiaries)~~and subsidiaries (the Company) as of December 31, ~~2017~~2022 and ~~2016,~~2021, the related consolidated statements of comprehensive income, ~~(loss),~~ stockholders’ equity, and cash flows for each of the years in the ~~three‑year~~three-year period ended December 31, ~~2017,~~2022, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2022 and ~~2016,~~2021, and the results of its operations and its cash flows for each of the years in the ~~three‑year~~three-year period ended December 31, ~~2017,~~2022, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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 in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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’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 Matter

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: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter 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.

Evaluation of real estate for impairment

As discussed in Notes 2 and 3 to the consolidated financial statements, the Company assesses the recoverability of the carrying value of its real estate for impairment whenever events or changes in circumstances indicate that such amounts may not be recoverable. If the carrying amount of a real estate asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized for the amount by which the carrying amount of the asset group exceeds its estimated fair value. The Company recognized impairment losses of $47,424,000 during the year ended December 31, 2022, a portion of which related to real estate. The real estate balance was $1,880,082,000 as of December 31, 2022.

We identified the evaluation of real estate for impairment as a critical audit matter. Subjective and challenging auditor judgment was required to evaluate certain assumptions used in the impairment tests, including the terminal capitalization rates used to estimate the undiscounted cash flows and the sales prices of comparable properties used to estimate the fair value.

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The following are the primary procedures we performed to address this critical audit matter. We evaluated the design of certain internal controls related to the Company’s real estate impairment process, including controls related to the assumptions noted above. For certain properties, we performed sensitivity analyses over terminal capitalization rates to assess the impact of changes in that assumption to the undiscounted cashflows. In addition, for certain properties we involved valuation professionals with specialized skills and knowledge, who assisted in (1) assessing terminal capitalization rates used by the Company to estimate the undiscounted cash flows by comparing them to publicly available market data for comparable entities, and (2) evaluating the sales prices of comparable properties used by the Company to estimate the fair value, including adjustments to such transactions, by comparing them to publicly available market data for an independent selection of sales of similar properties.

/s/ KPMG LLP

We have served as the Company’s auditor since 2014.

~~/s/ KPMG LLP~~

Tampa, Florida

March ~~21, 2018~~16, 2023

~~Certified Public Accountants~~

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~~PART 1. FINANCIAL INFORMATION~~

~~CARTER VALIDUS MISSION CRITICAL REIT II,~~

SILA REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	December 31, 2017			December 31, 2016				December 31, 2022		December 31, 2021
ASSETS	ASSETS						ASSETS
Real estate:							Real estate:
Land	$	223,277		$	154,385		Land	$	163,419	$	163,992
Buildings and improvements, less accumulated depreciation of $45,789 and $18,521, respectively	1,250,794			722,492
Buildings and improvements, less accumulated depreciation of $209,118 and $165,784, respectively							Buildings and improvements, less accumulated depreciation of $209,118 and $165,784, respectively	1,716,663		1,648,685
Construction in progress	31,334			20,123			Construction in progress	—		14,628
Total real estate, net	1,505,405			897,000			Total real estate, net	1,880,082		1,827,305
Cash and cash equivalents	74,803			50,446			Cash and cash equivalents	12,917		32,359
Acquired intangible assets, less accumulated amortization of $22,162 and $7,995, respectively	150,554			98,053
Other assets, net	47,182			24,539
Acquired intangible assets, less accumulated amortization of $90,239 and $71,067, respectively							Acquired intangible assets, less accumulated amortization of $90,239 and $71,067, respectively	167,483		181,639
Goodwill							Goodwill	21,710		23,284

Right-of-use assets							Right-of-use assets	37,443		24,033
Other assets							Other assets	100,167		66,365
Assets held for sale							Assets held for sale	—		22,570
Total assets	$	1,777,944		$	1,070,038		Total assets	$	2,219,802	$	2,177,555
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY						LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:							Liabilities:
Notes payable, net of deferred financing costs of $4,393 and $1,945, respectively	$	463,742		$	151,045
Credit facility, net of deferred financing costs of $601 and $876, respectively	219,399			219,124
Accounts payable due to affiliates	15,249			7,384
Credit facility, net of deferred financing costs of $2,412 and $3,226, respectively							Credit facility, net of deferred financing costs of $2,412 and $3,226, respectively	580,588		496,774
Accounts payable and other liabilities	27,709			17,184			Accounts payable and other liabilities	30,619		39,597
Intangible lease liabilities, less accumulated amortization of $2,760 and $634, respectively	61,294			6,873
Acquired intangible liabilities, less accumulated amortization of $5,923 and $4,444, respectively							Acquired intangible liabilities, less accumulated amortization of $5,923 and $4,444, respectively	11,946		12,962

Lease liabilities							Lease liabilities	41,554		26,394
Liabilities held for sale							Liabilities held for sale	—		698
Total liabilities	787,393			401,610			Total liabilities	664,707		576,425
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, $0.01 par value per share, 100,000,000 shares authorized; none issued and outstanding	—			—			Preferred stock, $0.01 par value per share, 100,000,000 shares authorized; none issued and outstanding	—		—
Common stock, $0.01 par value per share, 500,000,000 shares authorized; 126,559,834 and 83,109,025 shares issued, respectively; 124,327,777 and 82,744,288 shares outstanding, respectively	1,243			827
Common stock, $0.01 par value per share, 510,000,000 shares authorized; 241,425,332 and 238,226,119 shares issued, respectively; 226,255,969 and 224,179,939 shares outstanding, respectively							Common stock, $0.01 par value per share, 510,000,000 shares authorized; 241,425,332 and 238,226,119 shares issued, respectively; 226,255,969 and 224,179,939 shares outstanding, respectively	2,263		2,242
Additional paid-in capital	1,084,905			723,859			Additional paid-in capital	2,024,176		2,004,404
Accumulated distributions in excess of earnings	(99,309		)	(57,100		)
Accumulated other comprehensive income	3,710			840
Distributions in excess of accumulated earnings							Distributions in excess of accumulated earnings	(499,334)		(400,669)
Accumulated other comprehensive income (loss)							Accumulated other comprehensive income (loss)	27,990		(4,847)
Total stockholders’ equity	990,549			668,426			Total stockholders’ equity	1,555,095		1,601,130
Noncontrolling interests	2			2
Total equity	990,551			668,428
Total liabilities and stockholders’ equity	$	1,777,944		$	1,070,038		Total liabilities and stockholders’ equity	$	2,219,802	$	2,177,555

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

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~~CARTER VALIDUS MISSION CRITICAL REIT II,~~SILA REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(in thousands, except share data and per share amounts)

For the Year Ended
December 31,
2017 2016 2015
Revenue:
Rental and parking revenue $ 106,048
$ 49,699
$ 19,000
Tenant reimbursement revenue 19,047
6,732
2,286
Total revenue 125,095
56,431
21,286
Expenses:
Rental and parking expenses 26,096
8,164
2,836
General and administrative expenses 4,069
3,105
2,133
Acquisition related expenses —
5,339
10,250
Asset management fees 9,963
4,925
1,895
Depreciation and amortization 41,133
19,211
7,053
Total expenses 81,261
40,744
24,167
Income (loss) from operations 43,834
15,687
(2,881 )
Interest expense, net 22,555
4,390
1,886
Net income (loss) attributable to common stockholders $ 21,279
$ 11,297
$ (4,767 )
Other comprehensive income:
Unrealized income on interest rate swaps, net $ 2,870
$ 840
$ —
Other comprehensive income attributable to common stockholders 2,870
840
—
Comprehensive income (loss) attributable to common stockholders $ 24,149
$ 12,137
$ (4,767 )
Weighted average number of common shares outstanding:
Basic 101,714,148
66,991,294
28,658,495
Diluted 101,731,944
67,007,124
28,658,495
Net income (loss) per common share attributable to common stockholders:
Basic $ 0.21
$ 0.17
$ (0.17 )
Diluted $ 0.21
$ 0.17
$ (0.17 )


	Year Ended December 31,
		2022		2021		2020
Revenue:
Rental revenue		$	179,986	$	172,838	$	165,781
Expenses:
Rental expenses		17,950		17,712		16,397
General and administrative expenses		22,079		21,388		15,471
Internalization transaction expenses		—		—		3,640
Asset management fees		—		—		12,604
Depreciation and amortization		77,199		70,259		69,849


Impairment losses		47,424		27,837		—
Total expenses		164,652		137,196		117,961
Gain on real estate disposition		460		89		3,142

Interest and other expense, net		23,772		34,515		42,025
(Loss) income from continuing operations		(7,978)		1,216		8,937
Income from discontinued operations		—		401,444		27,839
Net (loss) income attributable to common stockholders		$	(7,978)	$	402,660	$	36,776
Other comprehensive income (loss) - unrealized gain (loss) on interest rate swaps, net		32,837		15,597		(15,740)
Comprehensive income attributable to common stockholders		$	24,859	$	418,257	$	21,036
Weighted average number of common shares outstanding:
Basic		225,320,043		223,325,293		221,436,617
Diluted		225,320,043		224,293,339		221,622,444
Net (loss) income per common share attributable to common stockholders:
Basic:
Continuing operations		$	(0.03)	$	—	$	0.04
Discontinued operations		—		1.80		0.13
Net (loss) income attributable to common stockholders		$	(0.03)	$	1.80	$	0.17
Diluted:
Continuing operations		$	(0.03)	$	—	$	0.04
Discontinued operations		—		1.79		0.13
Net (loss) income attributable to common stockholders		$	(0.03)	$	1.79	$	0.17

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

F-5

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~~CARTER VALIDUS MISSION CRITICAL REIT II,~~SILA REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~STOCKHOLDERS' EQUITY

(in thousands, except ~~for~~ share data)


	Common Stock
	No. of Shares	Par Value		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
Balance, December 31, 2021	224,179,939	$	2,242	$	2,004,404	$	(400,669)	$	(4,847)	$	1,601,130
Issuance of common stock under the distribution reinvestment plan	3,026,326	30		24,804		—		—		24,834
Vesting of restricted stock	172,887	—		—		—		—		—
Stock-based compensation	—	2		4,178		—		—		4,180

Other offering costs	—	—		(4)		—		—		(4)
Repurchase of common stock	(1,123,183)	(11)		(9,206)		—		—		(9,217)
Distributions to common stockholders	—	—		—		(90,687)		—		(90,687)
Other comprehensive income	—	—		—		—		32,837		32,837
Net loss	—	—		—		(7,978)		—		(7,978)
Balance, December 31, 2022	226,255,969	$	2,263	$	2,024,176	$	(499,334)	$	27,990	$	1,555,095


	Common Stock
	No. of Shares	Par Value		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balance, December 31, 2020	222,045,522	$	2,220	$	1,983,361	$	(311,264)	$	(20,444)	$	1,653,873
Issuance of common stock under the distribution reinvestment plan	3,243,363	33		27,551		—		—		27,584
Vesting of restricted stock	24,955	—		—		—		—		—
Stock-based compensation	—	—		2,379		—		—		2,379
Distribution and servicing fees	—	—		639		—		—		639
Other offering costs	—	—		(9)		—		—		(9)
Repurchase of common stock	(1,133,901)	(11)		(9,517)		—		—		(9,528)
Distributions to common stockholders	—	—		—		(492,065)		—		(492,065)
Other comprehensive income	—	—		—		—		15,597		15,597
Net income	—	—		—		402,660		—		402,660
Balance, December 31, 2021	224,179,939	$	2,242	$	2,004,404	$	(400,669)	$	(4,847)	$	1,601,130

Common Stock
No. of
Shares Par
Value Additional
Paid-in
Capital Accumulated Distributions in Excess of Earnings Accumulated Other Comprehensive Income Total
Stockholders’
Equity Noncontrolling
Interests Total
Equity
Balance, December 31, 2014 7,110,501
$ 71
$ 60,081
$ (3,049 ) $ —
$ 57,103
$ 2
$ 57,105
Issuance of common stock 40,361,130
404
401,007
—
—
401,411
—
401,411
Issuance of common stock under the distribution reinvestment plan 1,014,853
10
9,633
—
—
9,643
—
9,643
Vesting of restricted common stock 2,250
—
34
—
—
34
—
34
Commissions on sale of common stock and related dealer manager fees —
—
(38,163 ) —
—
(38,163 ) —
(38,163 )
Other offering costs —
—
(6,371 ) —
—
(6,371 ) —
(6,371 )
Repurchase of common stock (31,543 ) —
(311 ) —
—
(311 ) —
(311 )
Distributions declared to common stockholders —
—
—
(18,245 ) —
(18,245 ) —
(18,245 )
Net loss —
—
—
(4,767 ) —
(4,767 ) —
(4,767 )
Balance, December 31, 2015 48,457,191
$ 485
$ 425,910
$ (26,061 ) $ —
$ 400,334
$ 2
$ 400,336
Issuance of common stock 32,201,892
321
314,515
—
—
314,836
—
314,836
Issuance of common stock under the distribution reinvestment plan 2,413,899
24
22,865
—
—
22,889
—
22,889
Vesting of restricted common stock 4,500
—
58
—
—
58
—
58
Commissions on sale of common stock and related dealer manager fees —
—
(24,546 ) —
—
(24,546 ) —
(24,546 )
Distribution and servicing fees —
—
(6,213 ) —
—
(6,213 ) —
(6,213 )
Other offering costs —
—
(5,619 ) —
—
(5,619 ) —
(5,619 )
Repurchase of common stock (333,194 ) (3 ) (3,111 ) —
—
(3,114 ) —
(3,114 )
Distributions declared to common stockholders —
—
—
(42,336 ) —
(42,336 ) —
(42,336 )
Other comprehensive income —
—
—
—
840
840
—
840
Net income —
—
—
11,297
—
11,297
—
11,297
Balance, December 31, 2016 82,744,288
$ 827
$ 723,859
$ (57,100 ) $ 840
$ 668,426
$ 2
$ 668,428
Issuance of common stock 39,920,746
399
385,692
—
—
386,091
—
386,091
Issuance of common stock under the distribution reinvestment plan 3,536,813
35
32,229
—
—
32,264
—
32,264
Vesting of restricted common stock 6,750
—
76
—
—
76
—
76
Commissions on sale of common stock and related dealer manager fees —
—
(22,713 ) —
—
(22,713 ) —
(22,713 )
Distribution and servicing fees —
—
(9,617 ) —
—
(9,617 ) —
(9,617 )
Other offering costs —
—
(7,480 ) —
—
(7,480 ) —
(7,480 )
Repurchase of common stock (1,880,820 ) (18 ) (17,141 ) —
—
(17,159 ) —
(17,159 )
Distributions declared to common stockholders —
—
—
(63,488 ) —
(63,488 ) —
(63,488 )
Other comprehensive income —
—
—
—
2,870
2,870
—
2,870
Net income —
—
—
21,279
—
21,279
—
21,279
Balance, December 31, 2017 124,327,777
$ 1,243
$ 1,084,905
$ (99,309 ) $ 3,710
$ 990,549
$ 2
$ 990,551


	Common Stock
	No. of Shares	Par Value		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance, December 31, 2019	221,912,714	$	2,219	$	1,981,848	$	(240,946)	$	(4,704)	$	1,738,417	$	2	$	1,738,419
Issuance of common stock under the distribution reinvestment plan	3,531,178	35		30,518		—		—		30,553		—		30,553
Vesting of restricted stock	10,500	—		—		—		—		—		—		—
Stock-based compensation	—	—		437		—		—		437		—		437
Purchase of noncontrolling interest	—	—		—		—		—		—		(2)		(2)
Distribution and servicing fees	—	—		51		—		—		51		—		51
Other offering costs	—	—		(40)		—		—		(40)		—		(40)
Repurchase of common stock	(3,408,870)	(34)		(29,453)		—		—		(29,487)		—		(29,487)
Distributions to common stockholders	—	—		—		(107,094)		—		(107,094)		—		(107,094)
Other comprehensive loss	—	—		—		—		(15,740)		(15,740)		—		(15,740)
Net income	—	—		—		36,776		—		36,776		—		36,776
Balance, December 31, 2020	222,045,522	$	2,220	$	1,983,361	$	(311,264)	$	(20,444)	$	1,653,873	$	—	$	1,653,873

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

F-6

Table of Contents

~~CARTER VALIDUS MISSION CRITICAL REIT II,~~SILA REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	For the Year Ended December 31,										Year Ended December 31,
	2017			2016			2015				2022		2021		2020
Cash flows from operating activities:										Cash flows from operating activities:
Net income (loss)	$	21,279		$	11,297		$	(4,767	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net (loss) income attributable to common stockholders										Net (loss) income attributable to common stockholders	$	(7,978)	$	402,660	$	36,776
Adjustments to reconcile net (loss) income attributable to common stockholders to net cash provided by operating activities:										Adjustments to reconcile net (loss) income attributable to common stockholders to net cash provided by operating activities:
Depreciation and amortization	41,133			19,211			7,053			Depreciation and amortization	77,199		82,018		105,476
Amortization of deferred financing costs	2,612			1,061			721			Amortization of deferred financing costs	1,679		3,425		3,884
Amortization of above-market leases	309			36			26
Amortization of intangible lease liabilities	(2,126		)	(536		)	(98		)
Straight-line rent	(10,596		)	(6,263		)	(2,449		)
Amortization of above- and below-market leases										Amortization of above- and below-market leases	484		(1,098)		(4,680)
Other amortization expenses										Other amortization expenses	2,302		3,269		1,190
Gain on real estate disposition from continuing operations										Gain on real estate disposition from continuing operations	(460)		(89)		(3,142)
Gain on real estate dispositions of discontinued operations										Gain on real estate dispositions of discontinued operations	—		(395,801)		—
Loss on extinguishment of debt										Loss on extinguishment of debt	3,367		28,751		—
Impairment losses										Impairment losses	47,424		27,837		—
Straight-line rental income, net of write-offs										Straight-line rental income, net of write-offs	(7,261)		(15,665)		(21,323)
Stock-based compensation	76			58			34			Stock-based compensation	4,180		2,379		437
Ineffectiveness of interest rate swaps	(58		)	(144		)	—
Changes in operating assets and liabilities:										Changes in operating assets and liabilities:
Accounts payable and other liabilities	5,385			1,307			4,915			Accounts payable and other liabilities	(170)		(4,521)		(3,795)
Accounts payable due to affiliates	645			531			389
Other assets	(6,832		)	(1,583		)	(2,534		)	Other assets	909		3,777		(1,985)
Net cash provided by operating activities	51,827			24,975			3,290			Net cash provided by operating activities	121,675		136,942		112,838
Cash flows from investing activities:										Cash flows from investing activities:
Investment in real estate	(604,372		)	(535,447		)	(374,164		)
Acquisition costs capitalized subsequent	(44		)	—			—
Investments in real estate										Investments in real estate	(157,194)		(71,462)		(16,135)
Consideration paid for the internalization transaction										Consideration paid for the internalization transaction	—		(15,000)		(25,000)
Proceeds from real estate disposition										Proceeds from real estate disposition	22,822		1,308,009		28,542
Capital expenditures	(32,467		)	(8,253		)	(1,289		)	Capital expenditures	(8,440)		(25,285)		(28,797)
Real estate deposits, net	190			153			(75		)
Net cash used in investing activities	(636,693		)	(543,547		)	(375,528		)

Change in deposits and other costs for investments in real estate										Change in deposits and other costs for investments in real estate	—		(120)		(26)
Collection of notes receivable										Collection of notes receivable	—		30,700		—
Net cash (used in) provided by investing activities										Net cash (used in) provided by investing activities	(142,812)		1,226,842		(41,416)
Cash flows from financing activities:										Cash flows from financing activities:
Proceeds from issuance of common stock	386,091			314,836			401,411
Proceeds from notes payable	309,452			152,990			—
Payments on notes payable	(43		)	—			—			Payments on notes payable	—		(453,422)		(3,923)
Proceeds from credit facility	240,000			240,000			92,000			Proceeds from credit facility	845,000		15,000		140,000
Payments on credit facility	(240,000		)	(110,000		)	(39,500		)	Payments on credit facility	(762,000)		(453,000)		(110,000)
Payments for extinguishment of debt										Payments for extinguishment of debt	(4)		(29,244)		—
Payments of deferred financing costs	(3,564		)	(4,133		)	(1,799		)	Payments of deferred financing costs	(6,937)		(444)		(715)
Repurchases of common stock	(17,159		)	(3,114		)	(311		)
Repurchase of common stock										Repurchase of common stock	(9,217)		(9,528)		(29,487)
Offering costs on issuance of common stock	(32,079		)	(30,628		)	(46,611		)	Offering costs on issuance of common stock	(192)		(2,326)		(3,099)
Distributions to stockholders	(28,994		)	(17,659		)	(6,379		)
Net cash provided by financing activities	613,704			542,292			398,811
Distributions to common stockholders										Distributions to common stockholders	(65,310)		(465,849)		(76,517)
Purchase of noncontrolling interests										Purchase of noncontrolling interests	—		—		(2)
Net cash provided by (used in) financing activities										Net cash provided by (used in) financing activities	1,340		(1,398,813)		(83,743)
Net change in cash, cash equivalents and restricted cash	28,838			23,720			26,573			Net change in cash, cash equivalents and restricted cash	(19,797)		(35,029)		(12,321)
Cash, cash equivalents and restricted cash - Beginning of year	56,909			33,189			6,616			Cash, cash equivalents and restricted cash - Beginning of year	32,880		67,909		80,230
Cash, cash equivalents and restricted cash - End of year	$	85,747		$	56,909		$	33,189		Cash, cash equivalents and restricted cash - End of year	$	13,083	$	32,880	$	67,909
Supplemental cash flow disclosure:										Supplemental cash flow disclosure:
Interest paid, net of interest capitalized of $2,137, $524 and $0, respectively	$	20,867		$	3,341		$	1,055
Interest paid, net of interest capitalized of $44, $395 and $669, respectively										Interest paid, net of interest capitalized of $44, $395 and $669, respectively	$	17,361	$	38,558	$	55,129
Supplemental disclosure of non-cash transactions:										Supplemental disclosure of non-cash transactions:
Common stock issued through distribution reinvestment plan	$	32,264		$	22,889		$	9,643		Common stock issued through distribution reinvestment plan	$	24,834	$	27,584	$	30,553
Distribution and servicing fees accrued during the period	$	7,626		$	5,750		$	—
Liabilities assumed at acquisition	$	6,551		$	1,236		$	—
Accrued capital expenditures	$	2,643		$	4,221		$	—
Change in accrued distributions to common stockholders										Change in accrued distributions to common stockholders	$	543	$	(1,368)	$	24
Change in accounts payable and other liabilities related to capital expenditures and investments in real estate										Change in accounts payable and other liabilities related to capital expenditures and investments in real estate	$	(3,705)	$	(243)	$	2,752

Right-of-use assets obtained in exchange for new lease liabilities										Right-of-use assets obtained in exchange for new lease liabilities	$	15,305	$	625	$	3,914
Origination of note receivable related to real estate disposition										Origination of note receivable related to real estate disposition	$	—	$	—	$	28,000
Deferred internalization transaction purchase price										Deferred internalization transaction purchase price	$	—	$	—	$	14,674

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

F-7

Table of Contents

~~CARTER VALIDUS MISSION CRITICAL REIT II,~~SILA REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2017~~2022

Note 1—Organization and Business Operations

~~Carter Validus Mission Critical REIT II,~~Sila Realty Trust, Inc., or the Company, is a Maryland corporation, headquartered in Tampa, Florida, that ~~was formed on January 11, 2013. The Company~~has elected, and currently qualifies, to be taxed as a real estate investment trust, or a REIT, under the Internal Revenue Code of 1986, as amended, or the Code, for federal income tax ~~purposes,~~purposes. The Company invests in high-quality properties leased to long-term tenants. The Company is primarily focused on ~~September 11, 2015.~~ investing in strategic healthcare assets across the continuum of care, with emphasis on lower cost patient settings, which, the Company believes, typically generate predictable, durable and growing income streams. The Company may also make other real estate-related investments, which may include equity or debt interests in other real estate entities.

Substantially all of the Company’s business is conducted through ~~Carter Validus~~Sila Realty Operating Partnership, ~~II,~~ LP, a Delaware limited partnership, or the Operating ~~Partnership, formed on January 10, 2013.~~Partnership. The Company is the sole general partner of the Operating Partnership and ~~Carter Validus Advisors II, LLC, or the Advisor, is the special limited partner~~directly owns 100% of the Operating Partnership.

The Company ~~commenced~~formerly invested in data center properties and during the ~~initial public offering~~second quarter of ~~$2,350,000,000 in shares~~2021, the Company's board of ~~common stock,~~directors, or the ~~maximum offering amount, consisting~~Board, made a determination to sell the Company's data center properties. On May 19, 2021, the Company and certain of ~~up to $2,250,000,000 in shares in~~ its ~~primary offering~~wholly-owned subsidiaries entered into a purchase and ~~up to $100,000,000 in shares of common stock to be made available pursuant to the Company’s distribution reinvestment plan,~~sale agreement, or the ~~DRIP,~~PSA, for the sale of 29 data center properties owned by the Company, which constituted the entirety of the Company's data center segment. The decision of the Board to sell the data center properties, as well as the execution of the PSA, represented a strategic shift that had a major effect on ~~a “best efforts” basis,~~the Company's results and operations. On July 22, 2021, the Company completed the sale of its data center segment, or the ~~Initial Offering, pursuant to~~Data Center Sale, for an aggregate sale price of $1,320,000,000, and generated net proceeds of approximately $1,295,367,000. Concurrently, the Board declared a ~~registration statement on Form S-11, or the Registration Statement, filed with the Securities and Exchange Commission, or the SEC, under the Securities Act~~special cash distribution of 1933, as amended, or the Securities Act, which was declared effective on May 29, 2014. The Company ceased offering shares of common stock pursuant to the Initial Offering on November 24, 2017. At the completion of the Initial Offering, the Company had accepted investors' subscriptions for and issued approximately 125,095,000 shares$1.75 per share of Class A, Class I, ~~and~~ Class T ~~common stock, including shares of common stock issues pursuant to the DRIP, resulting in gross proceeds of $1,223,803,000.~~

On November 27, 2017, the Company commenced its follow-on offering of up to $1,000,000,000 in shares of common stock, or the Offering, and collectively with the Initial Offering and the DRIP Offering, the Offerings. Shares of common stock in the Offering are being publicly offered on a "best efforts" basis pursuant to a registration statement on Form S-11, or the Registration Statement, filed with the SEC under the Securities Act.

On October 13, 2017, the Company registered 10,893,246 of shares of common stock under the DRIP pursuant to a registration statement on Form S-3, or the DRIP Registration Statement, for a price of $9.18 per Class A share, Class I share and Class T share for a proposed maximum offering price of $100,000,000 in shares of common stock, or the DRIP Offering. The DRIP Registration Statement became automatically effective with the SEC upon filing and the Company commenced offering shares of common stock pursuant to the DRIP Registration Statement on December 1, 2017. On December 6, 2017, the Company filed a post-effective amendment to the DRIP Registration Statement to register 10,893,246 shares of Class A common stock, Class I common stock, Class T common stock and Class T2 common stock at $9.18 per share.

On June 2, 2017, the Company filed Articles Supplementary to the Second Articles of Amendment and Restatement with the State Department of Assessments and Taxation of Maryland reclassifying a portion of its Class A shares, Class I shares and Class T shares as Class T2 shares. On December 6, 2017, the Company filed Post-Effective Amendment No. 1 to the Registration Statement on Form S-11 to register Class T2 shares of common stock, which was declared effective by the SEC on November 27, 2017.

As of March 14, 2018, the Company ceased offering shares of Class T common stock in the Offering. Commencing March 15, 2018, the Company was offering, in any combination with a dollar value up to the maximum offering amount, Class A shares of common stock at a price of $10.200 per share, Class I shares of common stock at a price of $9.273 per share, and Class T2 shares of common ~~stock~~stock. The special cash distribution was funded with the proceeds from the Data Center Sale. The special cash distribution was paid on July 30, 2021 to stockholders of record at the close of business on July 26, 2021, in an aggregate amount of approximately $392,685,000. As a ~~price of $9.714 per share. The offering prices are based on the most recent estimated per share net asset value of each~~result of the ~~Class A common stock, Class I common stock and Class T common stock, and any applicable per share upfront selling commissions and dealer manager fees.~~

AsData Center Sale, the Company had no assets or liabilities related to the data center segment as of December 31, ~~2017, the Company had issued approximately 126,560,000 shares of Class A, Class I~~2021, and Class T common stock in the Offerings, resulting in receipt of gross proceeds of approximately $1,237,638,000, before share repurchases of $20,584,000, selling commissions and dealer manager fees of approximately $91,898,000 and other offering costs of approximately $23,357,000.

~~Substantially all~~subsequent. The operations of the ~~Company’s business is managed by~~data center segment have been classified as income from discontinued operations on the ~~Advisor. Carter Validus Real Estate Management Services II, LLC, or~~consolidated statements of comprehensive income for the Property Manager, an affiliate of the Advisor, serves as the Company’s property manager. The Advisor and the Property Manager have received, and will continue to receive, fees for services related to the acquisition and operational stages. The Advisor will also be eligible to receive fees during the liquidation stage. SC Distributors, LLC, an affiliate of the Advisor, or the Dealer Manager, serves as the dealer manager of the Offering. The Dealer Manager has received, and will continue to receive, fees for services related to the Offering.

The Company was formed to invest primarily in quality income-producing commercial real estate, with a focus on data centers and healthcare properties, preferably with long-term net leases to creditworthy tenants, as well as to make other real estate-related investments that relate to such property types, which may include equity or debt interests, including securities, in other real estate entities. The Company also may originate or invest in real estate-related notes receivable. The Company expects real estate-related notes receivable originations and investments to be focused on first mortgage loans, but also may include real estate-related bridge loans, mezzanine loans and securitized notes receivable. As ofyears ended December 31, ~~2017, the Company owned 53 real estate investments, consisting of 70 properties.~~2021 and 2020.

Except as the context otherwise requires, ~~“we,” “our,” “us,” and~~ the “Company” ~~refer~~refers to ~~Carter Validus Mission Critical REIT II,~~Sila Realty Trust, Inc., the Operating Partnership and ~~all~~their wholly-owned subsidiaries.

Note 2—Summary of Significant Accounting Policies

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such consolidated financial statements and the accompanying notes thereto are the ~~representation~~responsibility of management. These accounting policies conform to ~~accounting principles~~U.S. generally accepted ~~in the United States of America,~~accounting principles, or GAAP, in all material respects, and have been consistently applied in preparing the consolidated financial statements.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company, the Operating Partnership, and ~~all~~their wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements and accompanying notes in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates are made and evaluated on an ongoing basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates.

~~Cash and Cash Equivalents~~

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value.

Restricted Cash

Restricted cash consists of ~~restricted~~ cash held ~~in escrow and restricted bank deposits. Restricted cash held in escrow includes cash held in escrow accounts for capital improvements for certain properties as well as cash held by lenders~~ in escrow accounts for tenant and capital improvements ~~repairs and maintenance and other lender reserves for certain properties,~~ in accordance with the respective ~~lender’s loan agreement.~~tenants' lease agreements. Restricted cash ~~held in escrow~~ is reported in other assets, ~~net~~ in the accompanying consolidated balance sheets. ~~Restricted bank deposits consist~~

F-8

Table of tenant receipts for certain properties which are required to be deposited into lender-controlled accounts in accordance with the respective lender's loan agreement. Restricted bank deposits are reported in other assets, net in the accompanying consolidated balance sheets. See Note 6—"Other Assets, Net".Contents

~~On April 1, 2017, the Company adopted Accounting Standards Update, or ASU, 2016-18,~~ ~~Restricted Cash~~, or ASU 2016-18. ASU 2016-18 requires that a statement of cash flows explain the change during a reporting period in the total of cash, cash equivalents and restricted cash. This ASU states that transfers between cash, cash equivalents and restricted cash are not part of the Company’s operating, investing and financing activities. Therefore, restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. As required, the Company retrospectively applied the guidance in ASU 2016-18 to the prior periods presented, which resulted in a decrease of $2,491,000 in net cash used in investing activities and an increase of $2,040,000 in net cash provided by financing activities for the year ended December 31, 2016 and an increase of $995,000 in net cash used in investing activities for the year ended December 31, 2015 on the consolidated statements of cash flows.

The following table presents a reconciliation of the beginning of year and end of year cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the totals shown in the consolidated statements of cash ~~flows:~~

For the Year Ended
December 31,
Beginning of year: 2017 2016 2015
Cash and cash equivalents 50,446
31,262
3,694
Restricted cash 6,463
1,927
2,922
Cash, cash equivalents and restricted cash $ 56,909
$ 33,189
$ 6,616

End of year:
Cash and cash equivalents 74,803
50,446
31,262
Restricted cash 10,944
6,463
1,927
Cash, cash equivalents and restricted cash $ 85,747
$ 56,909
$ 33,189

~~Deferred Financing Costs~~

Deferred financing costs are loan fees, legal fees and other third-party costs associated with obtaining financing. These costs are amortized 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 unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Costs incurredflows (amounts in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. Deferred financing costs are recorded as a reduction of the related debt on the accompanying consolidated balance sheets.thousands):


	Year Ended December 31,
	2022		2021		2020
Beginning of year:
Cash and cash equivalents	$	32,359	$	53,174	$	69,342
Restricted cash	521		14,735		10,888
Cash, cash equivalents and restricted cash	$	32,880	$	67,909	$	80,230

End of year:
Cash and cash equivalents	$	12,917	$	32,359	$	53,174
Restricted cash	166		521		14,735
Cash, cash equivalents and restricted cash	$	13,083	$	32,880	$	67,909

Investment in Real Estate

Real estate costs related to the acquisition, development, construction and improvement of properties are capitalized. Repair and maintenance costs are expensed as incurred and significant replacements and ~~betterments~~improvements are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate ~~asset.~~assets. The Company considers the period of future benefit of an asset in determining the appropriate useful life. Real estate assets, other than land, are depreciated ~~or amortized~~ on a straight-line basis over each asset’s useful life. The Company anticipates the estimated useful lives of its assets by class as follows:



Buildings and improvements						15 – 40 years
Tenant improvements						Shorter of lease term or expected useful life
Furniture, fixtures, and equipment						3 – 10 years

Allocation of Purchase Price of Real Estate

Upon the acquisition of real estate properties, the Company evaluates whether the acquisition is a business combination or an asset acquisition. For both business combinations and asset acquisitions, ~~we allocate~~the Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings and improvements, and acquired intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases. For asset acquisitions, the Company capitalizes transaction costs and allocates the purchase price using a relative fair value method allocating all accumulated costs. For business combinations, the Company expenses transaction costs ~~associated as~~ incurred and allocates the purchase price based on the estimated fair value of each separately identifiable asset and liability. For the year ended December 31, 2022, all of the Company's acquisitions were determined to be asset acquisitions.

The fair ~~values~~value of the tangible assets of an acquired property (which includes land, buildings and improvements) ~~are~~is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and buildings and improvements based on management’s determination of the relative fair value of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, management includes real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market conditions.

measured over a period equal to the remaining non-cancelable term of the lease including any fixed rate bargain renewal periods, with respect to a below-market lease. The above-market and below-market lease values are capitalized as intangible lease assets or liabilities. Above-market lease values are amortized as an adjustment of rental income over the remaining terms of the respective leases. Below-market leases are amortized as an adjustment of rental income over the remaining terms of the respective leases, including any fixed rate bargain renewal periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above-market and below-market in-place lease values related to that lease would be recorded as an adjustment to rental income.

~~The fair values of in-place leases include~~includes an estimate of direct costs associated with obtaining a new tenant and opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on management’s consideration of current market costs to execute a similar lease. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. These lease intangibles are amortized to depreciation and amortization expense over the remaining terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed.

~~Acquisition Fees~~The amounts allocated to above-market and ~~Expenses~~

~~Acquisition fees and expenses associated with~~below-market leases are recorded based on the ~~acquisition~~present value of ~~properties determined~~the difference between: (i) the contractual amounts to be ~~business combinations~~paid pursuant to the in-place leases and (ii) an estimate of current market lease rates for the corresponding leases, measured over a period equal to the remaining non-cancelable term of the lease including any fixed rate bargain renewal periods, with respect to a below-market lease. These above-market and below market amounts are ~~expensed~~amortized as ~~incurred, including investment transactions~~an adjustment of rental revenue over the remaining terms of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above-market and below-market lease values related to that lease would be recorded as an adjustment to rental revenue.

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Held for Sale

The Company classifies a real estate property as held for sale upon satisfaction of all of the following criteria: (i) management commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition, subject only to terms that are ~~no longer under consideration,~~usual and ~~are included in acquisition related expenses in~~customary for sales of such properties; (iii) there is an active program to locate a buyer; (iv) the ~~accompanying consolidated statements~~sale of ~~comprehensive income (loss). Acquisition fees~~the property is probable and ~~expenses associated with transactions determined~~transfer of the asset is expected to be ~~an asset acquisition are capitalized in~~completed within one year; (v) the property is being actively marketed for sale; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Upon the determination to classify a property as held for sale, the Company ceases depreciation and amortization on the real estate ~~net in~~property held for sale, as well as the ~~accompanying consolidated balance sheets.~~amortization of any related intangible assets. Such properties are recorded at the lesser of the carrying value or estimated fair value less estimated costs to sell.

~~Impairment of Long Lived Assets~~Impairments

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate ~~and related intangible~~ assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate ~~and related intangible~~ assets may not be recoverable, the Company assesses the recoverability of the ~~assets~~asset group by estimating whether the Company will recover the carrying value of the asset group through its undiscounted future cash flows, ~~and its~~including eventual disposition. ~~If, based~~Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the asset ~~the Company will record~~group, an impairment ~~loss~~charge will be recorded to the extent that the carrying value exceeds the estimated fair value of the ~~asset. No impairment loss has been recorded to date.~~asset group.

When developing estimates of expected future cash flows, the Company makes certain assumptions regarding future market rental ~~income amounts~~rates subsequent to the expiration of current lease arrangements, property operating expenses, terminal capitalization and discount rates, ~~the number~~probability weighting of ~~months it takes to re-lease~~potential uses of the property, sale prices of comparable properties, required tenant improvements and the number of years the property will be held for investment. The use of alternative assumptions in the future cash flow analysis could result in a different determination of the property’s future cash flows and a different conclusion regarding the existence of an impairment, the extent of such loss, if any, as well as the carrying value of the real estate assets.

In addition, we determine fair value by using a direct capitalization method, a discounted cash flow method using the assumptions noted above, or by utilizing comparable market information based on the view of a market participant. The use of alternative assumptions in these approaches could result in a different determination of the property’s estimated fair value and a different conclusion regarding the existence of an impairment, the extent of such loss, if any, as well as the carrying value of the real estate assets.

The Company accounts for goodwill in accordance with Accounting Standards Codification, or ASC, 350, Intangibles - Goodwill and Other, and allocates its goodwill to its reporting units, which have been determined to be at the individual property level. Goodwill has an indefinite life and is not amortized.

The Company evaluates goodwill for impairment at least annually, as of the last day of each year, or upon the occurrence of a triggering event. A triggering event is an event or circumstance that would more-likely-than-not indicate that the fair value of a reporting unit is below its carrying value.

The Company has the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Under a qualitative assessment, the impairment analysis for goodwill represents an evaluation of whether it is more-likely-than-not the reporting unit's fair value is less than its carrying value, including goodwill. If a qualitative analysis indicates that it is more-likely-than-not that the estimated carrying value of a reporting unit, including goodwill, exceeds its fair value, the Company performs the quantitative analysis. The quantitative analysis consists of estimating the fair value of each reporting unit using discounted projected future cash flows and comparing those estimated fair values with the carrying values, which include the allocated goodwill. If the estimated fair value is less than the carrying value, the Company would then recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Deferred Financing Costs

Deferred financing costs are loan fees, legal fees and other third-party costs associated with obtaining and further modifying financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Deferred financing costs related ~~assets.~~to the term loan portion of the credit facility are recorded as a reduction of the related debt on the accompanying consolidated balance sheets. Deferred financing costs related to the revolving line of credit are recorded in other assets, net, in the accompanying consolidated balance sheets.

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Fair Value

ASC 820, Fair Value Measurements and Disclosures, or ASC 820, defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. ASC 820 emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement.

Fair value is defined by ASC 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—Inputs other than quoted prices for similar assets and liabilities in active markets that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).

Level 3—Unobservable inputs, only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.

Revenue Recognition and Tenant Receivables

The ~~following describes the methods the Company used to estimate the fair value of the Company’s financial assets and liabilities:~~

~~Cash and cash equivalents, restricted cash, tenant receivables, property escrow deposits, prepaid and other assets, accounts payable and accrued liabilities~~—The Company considered the carrying values of these financial instruments, assets and liabilities, to approximate fair value because of the short period of time between origination of the instruments and their expected realization.

~~Notes payable—Fixed Rate~~—The fair value is estimated by discounting the expected cash flows on notes payable at current rates at which management believes similar loans would be made considering the terms and conditions of the loan and prevailing market interest rates.

~~Notes payable—Variable Rate—The carrying value of variable rate notes payable approximates fair value because the interest rates adjust with current market conditions.~~

~~Secured credit facility—Fixed Rate~~—The fair value is estimated by discounting the expected cash flows on the fixed rate secured credit facility at current rates at which management believes similar borrowings would be made considering the terms and conditions of the borrowings and prevailing market interest rates.

~~Secured credit facility—Variable Rate~~—The carrying value of the variable rate secured credit facility approximates fair value as the interest is calculated at the London Interbank Offered Rate, plus an applicable margin. The interest rate resets to market on a monthly basis. The fair valuemajority of the Company's ~~variable rate secured credit facility~~revenue is ~~estimated based on the interest rates currently offered to the Company by financial institutions.~~

~~Derivative instruments—The Company’s derivative instruments consist of interest rate swaps. These swaps are carried at fair value to comply with the provisions of ASC 820. The fair value of these instruments~~derived from rental revenue, which is determined using interest rate market pricing models. The Company incorporated credit valuation adjustments to appropriately reflect the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize, or be liableaccounted for ~~on disposition of the financial assets and liabilities.~~

~~Revenue Recognition, Tenant Receivables and Allowance for Uncollectible Accounts~~

~~The Company recognizes revenue~~ in accordance with ~~Accounting Standards Codification, or~~ ASC ~~605,~~ ~~Revenue Recognition~~842, Leases, or ASC ~~605.~~842. Under ASC 605 requires that all four of the following basic criteria be met before revenue is realized or realizable and earned: (1) there is persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed and determinable; and (4) collectability is reasonably assured.

~~In accordance with ASC 840,~~ ~~Leases, minimum~~842, rental revenue is recognized on a straight-line basis over the term of the related lease (including rent holidays). For lease arrangements where it is not probable that the Company will collect all or substantially all of the remaining lease payments under the term of the lease, rental revenue is limited to the lesser of the rental revenue that would be recognized on a straight-line basis or the lease payments that have been collected from the lessee. Differences between rental ~~income~~revenue recognized and amounts contractually due under the lease agreements are credited or charged to ~~deferred~~straight-line rent ~~receivable or deferred rent liability, as applicable.~~receivable. Tenant ~~reimbursement revenue,~~reimbursements, which isare comprised of additional amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses, isare recognized ~~as revenue~~when the services are provided and the performance obligations are satisfied.

Share Repurchase Program

The Company’s Amended and Restated Share Repurchase Program, or the SRP, allows for repurchases of shares of the Company’s common stock upon meeting certain criteria. The SRP provides that all repurchases during any calendar year, including those redeemable upon death or a "Qualifying Disability" (as defined in the ~~period~~Company's SRP) of a stockholder, be limited to those that can be funded with equivalent proceeds raised from the DRIP during the prior calendar year and other operating funds, if any, as the Board, in its sole discretion, may reserve for this purpose.

Repurchases of shares of the Company’s common stock are at the sole discretion of the Board, provided, however, that the Company limits the number of shares repurchased during any calendar year to 5.0% of the total number of shares of common stock outstanding as of December 31st of the previous calendar year. The SRP is subject to terms and limitations, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation and DRIP funding limitations and any amendments to the plan. In addition, the Board, in its sole discretion, may suspend (in whole or in part) the SRP at any time, and may amend, reduce, terminate or otherwise change the SRP upon 30 days' prior notice to the Company’s stockholders for any reason it deems appropriate.

The Company will currently only repurchase shares due to death and involuntary exigent circumstances in accordance with the SRP, subject in each case to the terms and limitations of the SRP. Under the SRP, the Company may waive certain of the terms and requirements of the SRP in the event of the death of a stockholder who is a natural person, including shares held through an Individual Retirement Account or other retirement or profit-sharing plan, and certain trusts meeting the requirements of the SRP. The Company may also waive certain of the terms and requirements of the SRP in the event of an involuntary exigent circumstance, as determined by the Company or any of the executive officers thereof, in its or their sole discretion.

Distribution Policy

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of property acquisitions, capital expenditure requirements, and annual distribution requirements in order to maintain the Company’s status as a REIT.

Stock-based Compensation

On March 6, 2020, the Board approved the Amended and Restated 2014 Restricted Share Plan, or the A&R Incentive Plan, pursuant to which the ~~related expenses are incurred. Tenant reimbursements are recognized~~Company has the authority and ~~presented~~power to grant awards of restricted shares of its Class A common stock to its directors, officers and employees. The Company accounts for its stock awards in accordance with ASC ~~Subtopic 605-45,~~ ~~Revenue Recognition—Principal Agent Consideration,~~ or718-10, Compensation—Stock Compensation. ASC ~~605-45. ASC 605-45~~718-10 requires that ~~these reimbursements~~compensation cost for all stock awards be ~~recorded on a gross basis when~~calculated and amortized over the ~~Company~~service period (generally equal to the vesting period). For performance-based awards, compensation costs are recognized over the service period if it is probable that the ~~primary obligor~~performance condition will be satisfied, with ~~respect to purchasing goods and services from third-party suppliers, and thus, the Company has discretion in selecting the supplier and has credit risk.~~

~~Tenant receivables and unbilled deferred rent receivables are carried net~~changes of the ~~allowances for uncollectible current tenant receivables~~assessment at each reporting period and ~~unbilled deferred rent. An allowance will be maintained for estimated losses resulting from~~recording the inability of certain tenants to meet the contractual obligations under their lease agreements. The Company also maintains an allowance for deferred rent receivables arising from the straight-lining of rents. The Company’s determinationeffect of the ~~adequacy~~change in the compensation cost as a cumulative catch-up adjustment. The compensation costs for restricted stock are recognized based on the fair value of ~~these allowances is based primarily upon evaluations of historical loss experience,~~ the tenant’s financial condition, security deposits, letters of credit, lease guarantees and current economic conditions and other relevant factors. As of December 31, 2017, the Company did not have an allowancerestricted stock awards at grant date. Forfeitures are accounted for ~~uncollectible tenant receivables.~~as they occur.

Earnings Per Share

The Company calculates basic earnings per share by dividing net (loss) income ~~(loss)~~ attributable to common stockholders for the period by the weighted average shares of its common stock outstanding for that period. Diluted earnings per share ~~are~~is computed based on the weighted average number of shares outstanding and all potentially dilutive securities. Shares of non-vested restricted common stock and Performance DSUs give rise to potentially dilutive shares of common stock. For the years ended December 31, 2017 and 2016, diluted earnings per share reflected the effect of 18,000 and 16,000 shares, respectively, of non-vested shares of restricted common stock that were outstanding as of such period. For the year ended December 31, 2015, there were 15,750

~~shares of non-vested restricted common stock outstanding, but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during this period.~~

Reportable Segments

~~Accounting Standards Codification, or~~ ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an ~~enterprise’s~~entity’s reportable segments. As of December 31, ~~2017~~2022 and ~~2016,~~December 31, 2021, 100% of the ~~Company operated through two reportable business segments—commercial~~Company's consolidated revenues from continuing operations were generated from real estate investments in ~~data centers and healthcare. With the continued expansion of the~~healthcare properties. The Company’s ~~portfolio, segregation of the Company’s operations into two reporting segments is useful in assessing the~~chief operating decision maker evaluates operating performance of ~~the Company’s business in the same way that management reviews performance and makes operating decisions. See Note 11—"Segment Reporting" for further discussion~~healthcare properties on ~~the~~an individual property level, which are aggregated into one reportable ~~segments of the Company.~~segment due to their similar economic characteristics.

Derivative Instruments and Hedging Activities

As required by ASC 815, Derivatives and Hedging, or ASC 815, the Company records all derivative instruments at fair value as assets and liabilities ~~in the statement of financial position at fair value.~~on its consolidated balance sheets. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. ~~For~~

In accordance with the fair value measurement guidance in Accounting Standards Update, or ASU, 2011-04, Fair Value Measurement, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments ~~not designated as hedging instruments, the income or loss is recognized in the consolidated statements of comprehensive income (loss) during the current period.~~that are subject to master netting agreements on a net basis by counterparty portfolio.

The Company is exposed to variability in expected future cash flows that are attributable to interest rate changes in the normal course of business. The Company’s primary strategy in entering into derivative contracts is to add stability to future cash flows by managing its exposure to interest rate ~~movements.~~fluctuations. The Company utilizes derivative instruments, including interest rate swaps, to effectively convert some of its variable rate debt to fixed rate debt. The Company does not enter into derivative instruments for speculative purposes.

In accordance with ASC 815, the Company designates interest rate swap contracts as cash flow hedges of floating-rate borrowings. For derivative instruments that are designated and qualify as cash flow hedges, the ~~effective portion of the income~~gains or ~~loss~~losses on the derivative ~~instrument is~~instruments are reported as ~~a component of~~ other comprehensive income (loss) - unrealized gain (loss) on interest rate swaps, net in the consolidated statements of comprehensive income ~~(loss)~~ and are reclassified into earnings in the same line item associated with the forecasted transaction ~~and~~in the same period during which the hedged ~~transaction affects~~transactions affect earnings. ~~The ineffective portion of the income or loss on the derivative instrument is recognized in the consolidated statements of comprehensive income (loss) during the current period.~~

~~In accordance with the fair value measurement guidance ASU 2011-04,~~ ~~Fair Value Measurement~~, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

~~Concentration of Credit Risk and Significant Leases~~

As of December 31, 2017, the Company had cash on deposit, including restricted cash, in certain financial institutions that had deposits in excess of current federally insured levels; however, the Company has not experienced any losses in such accounts. The Company limits its cash investments to financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits. To date, the Company has experienced no loss or lack of access to cash in its accounts.

As of December 31, 2017, the Company owned real estate investments in 37 MSAs, two of which accounted for 10.0% or more of contractual rental revenue. Real estate investments located in the Atlanta-Sandy Springs-Roswell, Georgia MSA and the Oklahoma City, Oklahoma MSA accounted for 12.1% and 10.0%, respectively, of contractual rental revenue for the year ended December 31, 2017.

~~As of December 31, 2017, the Company had no exposure to tenant concentration that accounted for 10.0% or more of contractual rental revenue for the year ended December 31, 2017.~~

~~Stockholders’ Equity~~

The Company’s charter authorizes the issuance of up to 600,000,000 shares of stock, consisting of 175,000,000 shares of Class A common stock, 75,000,000 shares of Class I common stock, 175,000,000 shares of Class T common stock and 75,000,000 shares of Class T2 common stock, $0.01 par value per share, and 100,000,000 shares of preferred stock, $0.01 par value per share. As of December 31, 2017, the Company was not offering Class T2 shares. Other than the different fees with respect to each class and the payment of a distribution and servicing fee out of amounts otherwise distributable to Class T stockholders, Class A shares, Class I and Class T shares have identical rights and privileges, such as identical voting rights. The

net proceeds from the sale of the three classes of shares will be commingled for investment purposes and all earnings from all of the investments will proportionally accrue to each share regardless of the class.

As of December 31, 2017, the Company had 126,559,834 shares of Class A, Class I and Class T common stock issued and 124,327,777 shares of Class A, Class I and Class T common stock outstanding, and no shares of preferred stock issued and outstanding. As of December 31, 2016, the Company had 83,109,025 shares of Class A and Class T common stock issued and 82,744,288 shares of Class A and Class T common stock outstanding, and no shares of preferred stock issued and outstanding. The charter authorizes the Company’s board of directors, without stockholder approval, to designate and issue one or more classes or series of preferred stock and to set or change the voting, conversion or other rights, preferences, restrictions, limitations as to dividends or other distributions and qualification or terms or conditions of repurchase of each class of stock so issued.

~~Share Repurchase Program~~

The Company’s share repurchase program allows for repurchases of shares of the Company’s common stock when certain criteria are met. The share repurchase program provides that all repurchases during any calendar year, including those redeemable upon death or a Qualifying Disability of a stockholder, are limited to those that can be funded with equivalent proceeds raised from the DRIP Offering during the prior calendar year and other operating funds, if any, as the board of directors, in its sole discretion, may reserve for this purpose.

Repurchases of shares of the Company’s common stock are at the sole discretion of the Company’s board of directors. The Company will limit the number of shares repurchased pursuant to the share repurchase program as follows: during any calendar year, the Company will not repurchase in excess of 5.0% of the number of shares of common stock outstanding on December 31^st of the previous calendar year. In addition, the Company’s board of directors, in its sole discretion, may amend, suspend, reduce, terminate or otherwise change the share repurchase program upon 30 days' prior notice to the Company’s stockholders for any reason it deems appropriate.

During the year ended December 31, 2017, the Company received valid repurchase requests related to 1,880,820 Class A shares, Class T shares and Class I shares of common stock (1,793,424 Class A shares, 81,939 Class T shares and 5,457 Class I shares), or 2.27% of shares outstanding as of December 31, 2016, all of which were redeemed in full for an aggregate purchase price of approximately $17,159,000 (an average of $9.12 per share). During the year ended December 31, 2016, the Company received valid repurchase requests related to 333,194 Class A shares of common stock, or 0.69% of shares outstanding as of December 31, 2015, all of which were redeemed in full for an aggregate purchase price of approximately $3,114,000 (an average of $9.35 per share). No shares of Class T common stock were requested to be, or were, repurchased during the year ended December 31, 2016. No shares of Class I common stock were requested to be, or were, repurchased during the year ended December 31, 2016.

~~Distribution Policy and Distributions Payable~~

In order to maintain its status as a REIT, the Company is required to make distributions each taxable year equal to at least 90% of its REIT taxable income, computed without regard to the dividends paid deduction and excluding capital gains. To the extent funds are available, the Company intends to continue to pay regular distributions to stockholders. Distributions are paid to stockholders of record as of the applicable record dates. As of December 31, 2017, the Company paid aggregate distributions, since inception, of approximately $118,258,000 ($53,192,000 in cash and $65,066,000 of which were reinvested in shares of common stock pursuant to the DRIP). Distributions are payable to stockholders from legally available funds therefor. The Company declared distributions per share of common stock in the amounts of $0.62 and $0.63 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the Company had distributions payable of approximately $6,566,000. Of these distributions payable, approximately $3,164,000 was paid in cash and approximately $3,402,000 was reinvested in shares of common stock pursuant to the DRIP on January 2, 2018.

Distributions to stockholders are determined by the board of directors of the Company and are dependent upon a number of factors relating to the Company, including funds available for the payment of distributions, financial condition, the timing of property acquisitions, capital expenditure requirements, and annual distribution requirements in order to maintain the Company’s status as a REIT under the Code.

Income Taxes

The Company currently qualifies and is taxed as a REIT under Sections 856 through 860 of the Code. Accordingly, it will generally not be subject to corporate U.S. federal or state income tax to the extent that it makes qualifying distributions to stockholders, and provided it satisfies, on a continuing basis, through actual investment and operating results, the REIT requirements, including certain asset, income, distribution and stock ownership tests. If the Company fails to qualify as a REIT, ~~and does not qualify for certain statutory relief provisions,~~ it ~~will~~would be subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it lost its REIT qualification, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Accordingly,

failure to qualify as a REIT could have a material adverse impact on the results of operations and amounts available for distribution to stockholders.

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The dividends paid deduction of a REIT for qualifying dividends paid to its stockholders is computed using the Company’s taxable income as opposed to net income reported in the consolidated financial statements. Taxable income, generally, will differ from net income reported in the consolidated financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company has concluded that there was no impact related to uncertain tax ~~provisions~~positions from results of operations of the Company for the years ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015.~~2020. The ~~United States of America is the jurisdiction for the Company, and the~~ earliest tax year currently subject to examination ~~will be 2015.~~is 2019.

~~Recently Issued Accounting Pronouncements~~Reclassifications

~~On May 28, 2014,~~During the ~~Financial Accounting Standards Board, or~~current year, the ~~FASB, issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~, or ASU 2014-09. The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and 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. ASU 2014-09 defines a five-step process to achieve this core principle, which may require more judgment and estimates within the revenue recognition process than are required under existing GAAP. The Company has ~~preliminarily determined the revenue stream that could be most significantly impacted by this ASU relates to parking revenue. The Company~~ determined that ~~the revenue recognition from parking revenue will be generally consistent with current recognition methods,~~certain expenses, previously presented within general and therefore will not have material changes to the consolidated financial statements as a result of adoption. For the year ended December 31, 2017, parking revenue was less than 10% of consolidated revenue. In August 2015, the FASB issued ASU 2015-14, ~~Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date~~, or ASU 2015-14. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date, which was annual reporting periods beginning after December 15, 2016, and the interim periods within that year. On March 17, 2016, the FASB issued ASU 2016-08, ~~Revenue from Contracts with Customers (Principal versus Agent Considerations),~~ or ASU 2016-08, which improves the implementation guidance on principal versus agent considerations. ASU 2016-08 clarifies that an entity is a principal when it controls the specified good or service before that good or service is transferred to the customer, and is an agent when it does not control the specified good or service before it is transferred to the customer. The effective date of this update is the same as the effective date of ASU 2015-14.

~~As the majority of the Company's revenue is derived from real estate lease contracts, as discussed in relation to ASU 2016-02,~~ ~~Leases~~, the Company does not expect that the adoption of ASU 2014-09 or related amendments and modifications will have a material impact on the consolidated financial statements. Recoveries from tenants to be impacted by ASU 2014-09 will not be addressed until the Company's adoption of ASU 2016-02, ~~Leases,~~ considering its revisions to accounting for common area maintenance described below. The Company also continues to evaluate the scope of revenue-related disclosures it expects to provide pursuant to the new requirements. The standard permits the use of either a retrospective or cumulative effect transition method and permits the use of certain practical expedients. The Company currently anticipates using the modified retrospective method, however, this determination is subject to change. The Company will adopt the standard on its effective date beginning with the first quarter of 2018.

~~On February 25, 2016, the FASB issued ASU 2016-02, Leases, or ASU 2016-02. ASU 2016-02 establishes the principles to increase the transparency about the assets and liabilities arising from leases. ASU 2016-02 results in a~~administrative expenses, are more faithful representation of the rights and obligations arising from leases by requiring lessees to recognize the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions and aligns lessor accounting and sale leaseback transactions guidance more closely ~~to comparable guidance in Topic 606,~~ ~~Revenue from Contractswith Customers, and Topic 610,~~ ~~Other Income~~. Under ASU 2016-02, a lessee is required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The Company is a lessee on a limited number of ground leases, which will result in the recognition of a right of use asset and lease liability upon the adoption of ASU 2016-02. Lessor accounting remains largely unchanged, apart from the narrower scope of initial direct costs that can be capitalized. The new standard will result in certain costs, such as legal costs related to lease negotiations, being expensed rather than capitalized. In addition, ASU 2016-02 requires lessors to identify the lease and non-lease components, such as the reimbursement of common area maintenance, contained within each lease. The non-lease components would have to be evaluated under the revenue recognition guidance of ASU 2014-09. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. In January 2018, the FASB proposed an amendment to ASU 2016-02 to simplify the guidance by allowing lessors to elect a practical expedient to allow lessors to not separate non-lease components from a lease, which would provide the Company with the option of not bifurcating certain common area maintenance recoveries as a non-lease component. The Company will evaluate the impact of this amendment to the ASU when it is final.

~~On June 16, 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments-Credit Losses,~~ or ASU 2016-13. ASU 2016-13 requires more timely recording of credit losses on loans and other financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other such commitments. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 require the Company to measure all expected credit losses based upon historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminates the “incurred loss” methodology in current GAAP. ASU 2016-13 is effective for fiscal years, and interim periods within, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within, beginning after December 15, 2018. The Company is in the process of evaluating the impact ASU 2016-13 will have on the Company’s consolidated financial statements. The Company believes that certain financial statements' accounts will be impacted by the adoption of ASU 2016-13, including allowances for doubtful accounts with respect to accounts receivable and straight-line rents receivable.

~~On August 26, 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows, or ASU 2016-15. ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 addresses eight classification issues~~ related to the ~~statement~~operations of ~~cash flows: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon bonds; 3) contingent consideration payments made after~~its properties. As a ~~business combination; 4) proceeds from~~result, these amounts have been reclassified to rental expenses for all prior periods to conform to the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investees; 7) beneficial interests in securitization transactions; and 8) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Entities should apply this ASU using a retrospective transition method to eachcurrent period ~~presented. The Company adopted ASU 2016-15 effective October 1, 2017. The adoption of ASU 2016-15 had no impact on the Company's consolidated statements of cash flows.~~presentation.

~~On February 23, 2017, the FASB issued ASU 2017-05, Clarifying the Scope~~ ~~of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,~~ or ASU 2017-05. ASU 2017-05 clarifies the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets. Partial sales of nonfinancial assets are common in the real estate industry and include transactions in which the seller retains an equity interest in the entity that owns the assets or has an equity interest in the buyer. ASU 2017-05 is effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. Early adoption is permitted. The Company is in process of evaluating the impact ASU 2017-05 will have on the Company’s consolidated financial statements. The Company does not expect that the adoption of ASU 2017-05 will have a material impact on the consolidated financial statements.

~~On August 28, 2017, the FASB issued ASU 2017-12,~~ ~~Targeted Improvements to Accounting for Hedging Activities~~, or ASU 2017-12. The objectives of ASU 2017-12 are to (i) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and (ii) reduce the complexity of and simplify the application of hedge accounting by preparers. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, and interim periods therein. Early adoption is permitted. The Company is in process of evaluating the impact of ASU 2017-12 will have on the Company’s consolidated financial statements.

Note 3—Real Estate Investments

2022 Real Estate Property Acquisitions

During the year ended December 31, ~~2017,~~2022, the Company purchased 19seven real estate properties ~~all of~~in five separate transactions, or the 2022 Acquisitions, which were each determined to be asset acquisitions. The Company allocated the purchase price of the 2022 Acquisitions to tangible assets, consisting of land, building and improvements, tenant improvements, and acquired intangible assets and liabilities, consisting of in-place and above and below market leases, based on the relative fair value method of allocating all accumulated costs.

The following table summarizes the consideration transferred for the ~~properties acquired~~2022 Acquisitions during the year ended December 31, ~~2017:~~2022:


Property Description	Date Acquired	Ownership Percentage	Consideration Transferred (amount in thousands)
Yukon Healthcare Facility	03/10/2022	100%	$	19,554
Pleasant Hills Healthcare Facility	05/12/2022	100%	14,303
Prosser Healthcare Facilities (1)	05/20/2022	100%	8,593
Tampa Healthcare Facility II	07/20/2022	100%	51,259
Escondido Healthcare Facility	07/21/2022	100%	63,485
Total			$	157,194

Property Description Date Acquired Ownership Percentage Purchase Price (amounts in thousands)
Tempe Data Center 01/26/2017 100% $ 16,224
Norwalk Data Center 03/30/2017 100% 58,835
Aurora Healthcare Facility 03/30/2017 100% 11,531
Texas Rehab - Austin 03/31/2017 100% 36,945
Texas Rehab - Allen 03/31/2017 100% 23,691
Texas Rehab - Beaumont 03/31/2017 100% 9,649
Charlotte Data Center II 05/15/2017 100% 16,646
250 Williams Atlanta Data Center 06/15/2017 100% 168,588
Sunnyvale Data Center 06/28/2017 100% 38,105
Texas Rehab - San Antonio 06/29/2017 100% 14,853
Cincinnati Data Center 06/30/2017 100% 10,503
Silverdale Healthcare Facility 08/25/2017 100% 9,856
Silverdale Healthcare Facility II 09/20/2017 100% 7,144
King of Prussia Data Center 09/28/2017 100% 19,885
Tempe Data Center II 09/29/2017 100% 15,568
Houston Data Center 11/16/2017 100% 76,388
Saginaw Healthcare Facility 12/21/2017 100% 18,462
Elgin Data Center 12/22/2017 100% 2,771
Oklahoma City Data Center 12/27/2017 100% 48,728
Total $ 604,372

(1) The Prosser Healthcare Facilities consist of three healthcare properties.

The following table summarizes ~~management's~~the Company's purchase price allocation of the ~~acquisitions~~2022 Acquisitions during the year ended December 31, ~~2017,~~2022 (amounts in thousands):

Total
Land $ 68,535

Buildings and improvements 533,011

In-place leases 64,476

Above market leases 1,448

Total assets acquired 667,470

Below market leases (56,547 )
Liabilities assumed at acquisition (6,551 )
⁽¹⁾
Total liabilities acquired (63,098 )
Net assets acquired $ 604,372


~~(1)~~	~~Of this amount, the Company assumed a note payable collateralized by a real estate asset in the principal amount of $5,736,000 at the acquisition date~~	Total
Land		$	2,646
Building and ~~tenant~~ improvements ~~on two properties in the amount of $815,000.~~		136,938
Tenant improvements		4,840
In-place leases		12,779
Above-market leases		454
Total assets acquired		157,657
Below-market leases		(463)
Net assets acquired		$	157,194


Maryland			46-1854011
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

~~Maryland~~		~~46-1854011~~
~~(State or Other Jurisdiction of~~ ~~Incorporation or Organization)~~	~~(I.R.S. Employer~~ ~~Identification No.)~~

~~4890 West Kennedy Blvd.,~~1001 Water Street, Suite ~~650~~800 Tampa, FL ~~33609~~33602		(813) 287-0101
(Address of Principal Executive Offices; Zip Code)			(Registrant’s Telephone ~~Number)~~Number, Including Area Code)


Tenant	Total Number of Leases	Leased Sq Ft	2022 Rental Revenue (in thousands)		Percentage of 2022 Rental Revenue
Post Acute Medical, LLC, and its affiliates (1)	15	708,817	$	27,279	15.2	%


Location	Total Number of Leases	Leased Sq Ft	2022 Rental Revenue (in thousands)	Percentage of 2022 Rental Revenue
Houston-The Woodlands-Sugar Land, TX	5	490,742	19,828	11.0	%



Industry	Total Number of Leases	Gross Leased Area (Sq Ft)	2017 Contractual Rental Revenue (in thousands)⁽¹⁾		Percentage of 2017 Contractual Rental Revenue
Data Centers	42	2,948,000	$	42,308	46.2	%
Healthcare	72	2,124,070	49,194		53.8	%
	114	5,072,070	$	91,502	100.0	%



Location	Total Number of Leases	Gross Leased Area (Sq Ft)	2017 Contractual Rental Revenue (in thousands)⁽¹⁾		Percentage of 2017 Contractual Rental Revenue
Atlanta-Sandy Springs-Roswell, Georgia	15	977,912	$	11,062	12.1	%
Oklahoma City, Oklahoma	11	398,543	8,950		10.0	%
	26	1,376,455	$	20,012	22.1	%



☒						ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



				Page
			PART I
Item 1.			Business	2
Item 1.1A.			~~Business~~Risk Factors	29
Item ~~1A.~~1B.			~~Risk Factors~~	13
~~Item 1B.~~	Unresolved Staff Comments	4319
Item 2.			Properties	4419
Item 3.			Legal Proceedings	4723
Item 4.			Mine Safety Disclosures	4723

PART II
Item 5.			Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4823
Item 6.			~~Selected Financial Data~~[Reserved]	5327
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	5428
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk	7238
Item 8.			Financial Statements and Supplementary Data	7339
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	7339
Item 9A.			Controls and Procedures	7339
Item 9B.			Other Information	7341
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	41
			PART III
Item 10.			Directors, Executive Officers and Corporate Governance	7442
Item 11.			Executive Compensation	7442
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7442
Item 13.			Certain Relationships and Related Transactions, and Director Independence	7442
Item 14.			Principal Accounting Fees and Services	7442

PART IV
Item 15.			Exhibits and Financial Statement Schedules	7543
Item 16.			Form 10-K Summary

SIGNATURES


~~(1)~~	~~Contractual rental revenue is based on the total revenue, excluding straight-line rental revenue, recognized and reported in the accompanying consolidated statements of comprehensive income (loss).~~



Real Estate Investments	MSA/µSA	Segment	Number of Properties	Date Acquired	Year Constructed	Year Renovated	Physical Occupancy	Gross Leased Area (Sq Ft)	Encumbrances, $ (in thousands) ⁽⁸⁾
Grand Rapids Healthcare Facility	Grand Rapids-Wyoming, MI	Healthcare	1	12/07/2016	2008	N/A	92.68%	98,992	30,450
Corpus Christi Surgery Center	Corpus Christi, TX	Healthcare	1	12/22/2016	1992	N/A	100%	25,102	^—
Chicago Data Center II	Chicago-Naperville-Elgin, IL-IN-WI	Data Center	1	12/28/2016	1987	2016	100%	115,352	⁽¹⁾
Blythewood Data Center	Columbia, SC	Data Center	1	12/29/2016	1983	N/A	100%	64,637	⁽¹⁾
Tempe Data Center	Phoenix-Mesa-Scottsdale, AZ	Data Center	1	01/26/2017	1977	1983/2008/2011	100%	44,244	⁽¹⁾
Aurora Healthcare Facility	Chicago-Naperville-Elgin, IL-IN-WI	Healthcare	1	03/30/2017	2002	N/A	100%	24,722	⁽¹⁾
Norwalk Data Center	Bridgeport-Stamford-Norwalk, CT	Data Center	1	03/30/2017	2013	N/A	100%	167,691	34,200
Texas Rehabilitation Hospital Portfolio	⁽⁹⁾	Healthcare	4	⁽⁹⁾	⁽⁹⁾	⁽⁹⁾	100%	214,468	50,400
Charlotte Data Center II	Charlotte-Concord-Gastonia, NC-SC	Data Center	1	05/15/2017	1989	2016	100%	52,924	⁽¹⁾
250 Williams Atlanta Data Center	Atlanta-Sandy Springs-Roswell, GA	Data Center	1	06/15/2017	1989	2007	90.45%	900,590	116,200
Sunnyvale Data Center	San Jose-Sunnyvale-Santa Clara, CA	Data Center	1	06/28/2017	1992	1998	100%	76,573	⁽¹⁾
Cincinnati Data Center	Cincinnati, OH-KY-IN	Data Center	1	06/30/2017	1985	2001	100%	69,826	⁽¹⁾
Silverdale Healthcare Facility	Bremerton-Silverdale, WA	Healthcare	1	08/25/2017	2005	N/A	100%	26,127	⁽¹⁾
Silverdale Healthcare Facility II	Bremerton-Silverdale, WA	Healthcare	1	09/20/2017	2007	N/A	100%	19,184	⁽¹⁾
King of Prussia Data Center	Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	Data Center	1	09/28/2017	1960	1997	100%	50,000	12,503
Tempe Data Center II	Phoenix-Mesa-Scottsdale, AZ	Data Center	1	09/29/2017	1998	N/A	100%	58,560	⁽¹⁾
Houston Data Center	Houston-The Woodlands-Sugar Land, TX	Data Center	1	11/16/2017	2013	N/A	100%	103,200	48,607
Saginaw Healthcare Facility	Saginaw, MI	Healthcare	1	12/21/2017	2002	N/A	100%	87,843	⁽¹⁾
Elgin Data Center	Chicago-Naperville-Elgin, IL-IN-WI	Data Center	1	12/22/2017	2000	N/A	84.45%	55,523	5,736
Oklahoma City Data Center	Oklahoma City, OK	Data Center	1	12/27/2017	2008/2016	N/A	100%	92,456	^—
			70					5,072,070	$468,135



Period	Total Number of Shares Repurchased	Average Price Paid per Share		Total Numbers of Shares Purchased as Part of Publicly Announced Plans and Programs	Approximate Dollar Value of Shares Available that may yet be Repurchased under the Program
10/01/2017 - 10/31/2017	429,484	$	9.18	429,484	$	—
11/01/2017 - 11/30/2017	211,438	$	9.18	211,438	$	—
12/01/2017 - 12/31/2017	273,288	$	9.18	273,288	$	—
Total	914,210			914,210



	As of and for the Year Ended December 31,												As of and for the Period from January 11, 2013 (Date of Inception) to December 31,
Selected Financial Data	2017			2016			2015			2014			2013
Balance Sheet Data:
Total real estate, net	$	1,505,405		$	897,000		$	410,514		$	82,615		$	—
Cash and cash equivalents	$	74,803		$	50,446		$	31,262		$	3,894		$	200
Acquired intangible assets, net	$	150,554		$	98,053		$	54,633		$	6,442		$	—
Total assets	$	1,777,944		$	1,070,038		$	506,627		$	97,866		$	200
Notes payable, net	$	463,742		$	151,045		$	—		$	—		$	—
Credit facility, net	$	219,399		$	219,124		$	89,897		$	37,500		$	—
Total liabilities	$	787,393		$	401,610		$	106,291		$	40,761		$	—
Total equity	$	990,551		$	668,428		$	400,336		$	57,105		$	200
Operating Data:
Total revenue	$	125,095		$	56,431		$	21,286		$	337		$	—
Rental and parking expenses	$	26,096		$	8,164		$	2,836		$	51		$	—
Acquisition related expenses	$	—		$	5,339		$	10,250		$	1,820		$	—
Depreciation and amortization	$	41,133		$	19,211		$	7,053		$	185		$	—
Income (loss) from operations	$	43,834		$	15,687		$	(2,881	)	$	(2,142	)	$	—
Net income (loss) attributable to common stockholders	$	21,279		$	11,297		$	(4,767	)	$	(2,294	)	$	—
Funds from operations attributable to common stockholders ⁽¹⁾	$	62,412		$	30,508		$	2,286		$	(2,109	)	$	—
Modified funds from operations attributable to common stockholders ⁽¹⁾	$	49,941		$	28,940		$	10,015		$	(296	)	$	—
Per Share Data:
Net income (loss) per common share attributable to common stockholders:
Basic	$	0.21		$	0.17		$	(0.17	)	$	(1.86	)	$	—
Diluted	$	0.21		$	0.17		$	(0.17	)	$	(1.86	)	$	—
Distributions declared for common stock	$	63,488		$	42,336		$	18,245		$	755		$	—
Distributions declared per common share	$	0.62		$	0.63		$	0.64		$	0.61		$	—
Weighted average number of common shares outstanding:
Basic	101,714,148			66,991,294			28,658,495			1,233,715			—
Diluted	101,731,944			67,007,124			28,658,495			1,233,715			—
Cash Flow Data:
Net cash provided by (used in) operating activities	$	51,827		$	24,975		$	3,290		$	(1,705	)	$	—
Net cash used in investing activities	$	(636,693	)	$	(543,547	)	$	(375,528	)	$	(92,513	)	$	—
Net cash provided by financing activities	$	613,704		$	542,292		$	398,811		$	97,712		$	200


~~(1)~~	Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Funds from Operations and Modified Funds from Operations” for a discussion of our funds from operations and modified



	Year Ended December 31,
Character of Class A Distributions:	2017		2016		2015
Ordinary dividends	36.49	%	34.23	%	33.81	%
Nontaxable distributions	63.51	%	65.77	%	66.19	%
Total	100.00	%	100.00	%	100.00	%

	Year Ended December 31,
Character of Class I Distributions:	2017		2016		2015
Ordinary dividends	36.49	%	—	%	—	%
Nontaxable distributions	63.51	%	—	%	—	%
Total	100.00	%	—	%	—	%

	Year Ended December 31,
Character of Class T Distributions:	2017		2016		2015
Ordinary dividends	25.93	%	23.07	%	—	%
Nontaxable distributions	74.07	%	76.93	%	—	%
Total	100.00	%	100.00	%	—	%



	For the Year Ended December 31,
	2017			2016
Distributions paid in cash - common stockholders	$	28,994		$	17,659
Distributions reinvested	32,264			22,889
Total distributions	$	61,258		$	40,548
Source of distributions:
Cash flows provided by operations ⁽¹⁾	$	28,994	47%	$	17,659	44%
Offering proceeds from issuance of common stock pursuant to the DRIP ⁽¹⁾	32,264		53%	22,889		56%
Total sources	$	61,258	100%	$	40,548	100%



	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Principal payments—fixed rate debt	$	99	$	1,901	$	77,312	$	141,124	$	220,436
Interest payments—fixed rate debt	9,530		19,047		15,591		22,469		66,637
Principal payments—variable rate debt fixed through interest rate swap ⁽¹⁾	314		104,606		242,779		—		347,699
Interest payments—variable rate debt fixed through interest rate swap ⁽²⁾	15,128		25,713		15,913		—		56,754
Principal payments—variable rate debt	120,000		—		—		—		120,000
Interest payments—variable rate debt ⁽³⁾	4,445		—		—		—		4,445
Capital expenditures	21,572		—		—		—		21,572
Ground lease payments	545		1,089		1,089		5,206		7,929
Total	$	171,633	$	152,356	$	352,684	$	168,799	$	845,472



	Quarter Ended
	December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
Net income attributable to common stockholders	$	6,408		$	5,439		$	4,641		$	4,791
Adjustments:
Depreciation and amortization	12,646			11,852			9,025			7,610
FFO attributable to common stockholders	$	19,054		$	17,291		$	13,666		$	12,401
Adjustments:
Amortization of intangible assets and liabilities ⁽¹⁾	(854		)	(616		)	(222		)	(125		)
Straight-line rents ⁽²⁾	(2,910		)	(2,844		)	(2,610		)	(2,232		)
Ineffectiveness of interest rate swaps	(42		)	(14		)	(10		)	8
MFFO attributable to common stockholders	$	15,248		$	13,817		$	10,824		$	10,052
Weighted average common shares outstanding - basic	119,651,271			105,388,118			94,910,818			86,482,927
Weighted average common shares outstanding - diluted	119,666,234			105,405,297			94,925,665			86,499,543
Net income per common share - basic	$	0.05		$	0.05		$	0.05		$	0.06
Net income per common share - diluted	$	0.05		$	0.05		$	0.05		$	0.06
FFO per common share - basic	$	0.17		$	0.16		$	0.14		$	0.14
FFO per common share - diluted	$	0.17		$	0.16		$	0.14		$	0.14



	December 31, 2017
Notes payable:
Fixed rate notes payable	$	220,436
Variable rate notes payable fixed through interest rate swaps	247,699
Variable rate notes payable	—
Total notes payable	468,135
Secured credit facility:
Variable rate secured credit facility fixed through interest rate swaps	100,000
Variable rate secured credit facility	120,000
Total secured credit facility	220,000
Total principal debt outstanding ⁽¹⁾	$	688,135


		Page
			~~Page~~
Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm(KPMG LLP, Tampa, FL, Auditor ID: 185)	~~F-2~~F-2
	Consolidated Balance Sheets as of December 31, ~~2017~~2022 and ~~2016~~2021	~~F-3~~F-4
	Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Years Ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020	~~F-4~~F-5
	Consolidated Statements of Stockholders' Equity for the Years Ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020	~~F-5~~F-6
	Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2017, 2016~~2022, 2021 and ~~2015~~2020	~~F-6~~F-7
	Notes to Consolidated Financial Statements	~~F-7~~F-8

Financial Statement Schedules
	Schedule III — Real Estate Assets and Accumulated Depreciation	~~S-1~~S-1



	Total
Land	$	68,535
Buildings and improvements	533,011
In-place leases	64,476
Above market leases	1,448
Total assets acquired	667,470
Below market leases	(56,547		)
Liabilities assumed at acquisition	(6,551		)	⁽¹⁾
Total liabilities acquired	(63,098		)
Net assets acquired	$	604,372


	December 31, 2021
Assets:
Real estate:
Land	$	22,241

Total real estate, net	22,241




Other assets, net	329
Assets held for sale	$	22,570
Liabilities:

Accounts payable and other liabilities	698


Liabilities held for sale	$	698



	December 31, 2017		December 31, 2016
In-place leases, net of accumulated amortization of $21,776 and $7,918, respectively (with a weighted average remaining life of 11.0 years and 12.8 years, respectively)	$	148,594	$	97,232
Above-market leases, net of accumulated amortization of $358 and $58, respectively (with a weighted average remaining life of 2.8 years and 7.4 years, respectively)	1,344		196
Ground lease interest, net of accumulated amortization of $28 and $19, respectively (with a weighted average remaining life of 65.8 years and 66.8 years, respectively)	616		625
	$	150,554	$	98,053


Year	Amount
2023	$	22,221
2024	21,195
2025	19,204
2026	17,503
2027	15,926
Thereafter	71,434
	$	167,483


	December 31, 2022		December 31, 2021
Below-market leases, net of accumulated amortization of $5,923 and $4,444, respectively (with a weighted average remaining life of 8.4 years and 9.3 years, respectively)	$	11,946	$	12,962


Year	Operating
2023	$	2,675
2024	2,746
2025	2,768
2026	2,715
2027	2,681
Thereafter	107,456
Total undiscounted rental payments	121,041
Less imputed interest	(79,487)
Total lease liabilities	$	41,554
Weighted average IBR	5.5		%
Weighted average remaining lease term	37.5 years


		Year Ended December 31,
	Location in Consolidated Statements of Comprehensive Income		2022		2021		2020
Operating lease costs:
Ground lease costs (1)	Rental expenses		$	2,246	$	1,846	$	1,741
Ground lease costs (2)	Income from discontinued operations		—		414		880
Corporate operating lease costs	General and administrative expenses		741		1,129		264
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases			$	531	$	1,067	$	270



	December 31, 2017		December 31, 2016
Deferred financing costs, related to the revolver portion of the secured credit facility, net of accumulated amortization of $3,426 and $1,789, respectively	$	1,850	$	3,071
Real estate escrow deposits	100		290
Restricted cash	10,944		6,463
Tenant receivables	4,916		3,126
Straight-line rent receivable	19,321		8,725
Prepaid and other assets	6,117		1,082
Derivative assets	3,934		1,782
	$	47,182	$	24,539


	December 31, 2022		December 31, 2021
Accounts payable and accrued expenses	$	5,387	$	9,409
Accrued interest expense	1,941		1,626
Accrued property taxes	2,421		2,913
Accrued personnel costs	3,940		4,198
Distribution and servicing fees	—		182
Distributions payable to stockholders	7,719		7,355
Performance DSUs distributions payable	573		394
Tenant deposits	877		802
Deferred rental income	7,761		7,100
Derivative liabilities	—		5,618

	$	30,619	$	39,597


	Weighted Average Contractual Rate	December 31, 2022		December 31, 2021

Variable rate revolving line of credit	5.47%	$	8,000	$	—
Variable rate term loans fixed through interest rate swaps	2.95%	485,000		400,000
Variable rate term loans	5.47%	90,000		100,000
Total credit facility, principal amount outstanding	3.37%	583,000		500,000
Unamortized deferred financing costs related to the term loan credit facility		(2,412)		(3,226)
Total credit facility, net of deferred financing costs		$	580,588	$	496,774



							Interest Rates ⁽¹⁾
Notes payable:	December 31, 2017			December 31, 2016			Range			Weighted Average	Maturity Date
Fixed rate notes payable	$	220,436		$	51,000		4.0%	-	4.8%	4.3%	12/11/2021	-	07/01/2027
Variable rate notes payable fixed through interest rate swaps	247,699			71,540			3.7%	-	5.1%	4.6%	10/28/2021	-	11/16/2022
Variable rate notes payable	—			30,450
Total notes payable, principal amount outstanding	$	468,135		$	152,990
Unamortized deferred financing costs related to notes payable	(4,393		)	(1,945		)
Total notes payable, net of deferred financing costs	$	463,742		$	151,045


~~(1)~~	~~Range of interest rates and weighted average interest rates are as of December 31, 2017.~~



Year	Total Amount
2018	$	413
2019	1,971
2020	4,536
2021	155,119
2022	164,972
Thereafter	141,124
	$	468,135



Entity	Fee	December 31, 2017		December 31, 2016
Carter Validus Advisors II, LLC and its affiliates	Asset management fees	$	1,017	$	627
Carter Validus Real Estate Management Services II, LLC	Property management fees	463		252
Carter Validus Real Estate Management Services II, LLC	Construction management fees	39		323
Carter Validus Advisors II, LLC and its affiliates	General and administrative costs	182		138
Carter Validus Advisors II, LLC and its affiliates	Offering costs	167		289
SC Distributors, LLC	Distribution and servicing fees	13,376		5,750
Carter Validus Advisors II, LLC and its affiliates	Acquisition expenses and fees	5		5
		$	15,249	$	7,384



	Data Centers			Healthcare			For the Year Ended December 31, 2017
Revenue:
Rental, parking and tenant reimbursement revenue	$	62,377		$	62,718		$	125,095
Expenses:
Rental and parking expenses	(17,571		)	(8,525		)	(26,096		)
Segment net operating income	$	44,806		$	54,193		98,999

Expenses:
General and administrative expenses							(4,069		)
Asset management fees							(9,963		)
Depreciation and amortization							(41,133		)
Income from operations							43,834
Interest expense, net							(22,555		)
Net income attributable to common stockholders							$	21,279



	Data Centers			Healthcare			For the Year Ended December 31, 2016
Revenue:
Rental, parking and tenant reimbursement revenue	$	12,929		$	43,502		$	56,431
Expenses:
Rental and parking expenses	(2,509		)	(5,655		)	(8,164		)
Segment net operating income	$	10,420		$	37,847		48,267

Expenses:
General and administrative expenses							(3,105		)
Acquisition related expenses							(5,339		)
Asset management fees							(4,925		)
Depreciation and amortization							(19,211		)
Income from operations							15,687
Interest expense, net							(4,390		)
Net income attributable to common stockholders							$	11,297